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To date, several measures have been announced to support Australian businesses impacted by Coronavirus, and therefore, encouraging ongoing employment for their employees and long-term viability of otherwise successful businesses.
Business support snapshot
JobKeeper – supporting business to retain their people
The ‘job keeper’ payment to Australian employers is worth $130 billion and is focused on supporting businesses in retaining wages for their employees. With increased social distancing measures closing further businesses over the last week and more Australians limiting their spending as a result of staying home, many small businesses have either had their cashflow cut off or significantly reduced. The ‘job keeper’ program will allow these businesses to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for up to six months.
This financial support will allow businesses to continue to pay staff a wage so that when the crisis is over, they are better positioned to restart. Full details are available in the Treasury’s JobKeeper payment – Information for employers fact sheet.
Understand how a financial adviser can support you with your need for financial security. Get in touch.
Boosting cash flow for employers
Up to $100,000 was announced on 12th March to allow eligible small and medium-sized businesses and not for profits who employ people. In the Apr-Jun 2020 quarter “Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.” The same will apply for the Jul-Oct 2020 period.
Temporary relief for financially distressed businesses
During this period of disruption, many otherwise profitable and viable businesses could face temporary financial distress. The Government has created a safety net to support businesses to remain viable when the crisis is over by:
Lessening the threat of actions that would ordinarily push a business into insolvency and force the winding up of the business
Temporarily increasing the threshold at which creditors can issue a statutory demand as well as the time companies have to respond to demands they receive
Providing flexibility in the corporations’ Act 2001 to relieve directors from personal liability for trading while insolvent
Giving the ATO the power to tailor solutions for owners or directors of businesses that are struggling due to Coronavirus, including “temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.”
Under the Coronavirus SME Guarantee Scheme, the Government aims to enhance the lender’s willingness and ability to provide credit by:
Guaranteeing 50 percent for new short-term unsecured loans to SMEs
Removing red tape and providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers
On Sunday the 29th of March, the Government also announced that evictions will be put on hold for 6 months by the states and territories. They encouraged landlords and renters to discuss short term agreements and positioned that the pain being felt in these conditions should be shared between renters, landlords, lenders and the Government. More details were promised for later in the week.
Increasing the instant asset write-off
Business with an annual turnover of less than $500 million has until 30th of June to instantly write-off asset purchases up to $150,000.
Up to 30 June 2021, businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Wages subsidies are available for up to 50 per cent of an apprentice’s or trainee’s wage from 1 Jan to 30 Sep 2020. This is available to existing employers, or where they are not able to retain the apprentice or trainee, the subsidy will be available to a new employer, up to $21,000 per eligible apprentice or trainee over the three quarters.
The information about COVID-19 is changing quickly and the best way to stay up to date during this time is by downloading our app in the app store (just search for ‘Invest Blue’) and checking our newsfeed. You can also head straight to the website and monitor our Market Updates and Insights and News pages. For our clients, we recommend you regularly check your emailsand ensure your email address and details are up to date with us. You can update your details by emailing itspossible@investblue.com.au.
Get in touch with us today if you would like to find out how we can help.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
