How the government is helping businesses during the COVID-19 emergency

As of Monday, 18 May 2020

At Winc, we understand the obstacles your business may be facing in light of COVID-19 and accompanying changes to the ways we live and work. As we learn to navigate these challenges together, we will continue to support you in your transition to a new normal, now and in the future.

The Australian Government has put several measures in place to reduce the impact of COVID-19 on small and medium businesses nationwide. We have put together a summary so you can find out if your business is eligible to apply and will benefit from these key changes.

Helping Businesses Retain Employees

The JobKeeper Payment is available until 27 September 2020 to help businesses cover the costs of employee wages. This is a subsidy program that provides businesses with a payment of $1,500 per fortnight per employee for up to six months. You are eligible to apply if your business is not subject to the Major Bank Levy and has a turnover of less than $1 billion (with turnover reduced by over 30% relative to a similar period a year ago) or has a turnover of over $1 billion (with turnover reduced by over 50% relative to a similar period a year ago). Self-employed workers and not-for-profits are also be eligible to apply.

For more information click here.

Instant Asset Write-Off Boost

For new or second-hand assets first used or installed ready for use from 12 March until 30 June 2020, the Australian Government will increase the instant asset write-off (IAWO) threshold from $30,000 to $150,000. If your business has an aggregated annual turnover of less than $500 million, you have access to this benefit. This proposal applies to new or second-hand assets first used or installed ready for use in this timeframe. Some exclusions and limits apply.

For more information click here.

Business Investment Support

The Backing Business Investment (BBI) initiative is a 15-month incentive aiming to support economic growth over the short term by accelerating depreciation deductions. If your business has a turnover of less than $500 million, you can deduct 50% of the cost of an eligible asset on installation. Existing depreciation rules apply to the balance of the asset cost. This will cover eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. Deductions will be included in 2019-20 and 2020-21 tax returns.

For more information click here.

Cash Flow Support

This initiative provides cash flow support in two stages to eligible SMEs and not-for-profits that employ people. You are eligible to apply if your business has an aggregated annual turnover under $50 million. In the first stage, the Australian Government will provide a minimum of $10,000 and maximum of $50,000. This payment is delivered as an automatic credit in the activity statement system and is based on the actual amount of PAYG withholding. An additional payment will be introduced in the July – October 2020 period, where eligible businesses will receive an additional payment based on the payment they received in the first stage. Stage one payments will be delivered from 28 April 2020 and stage two payments from 21 July 2020.

For more information click here.

Helping Financially Distressed Businesses

The Government is providing temporary relief to financially distressed business by increasing the threshold at which creditors can issue a statutory demand from $2,000 to $20,000 and extending the time companies must respond to it, from 21 days to six months. Additionally, they are granting temporary relief for directors from any personal liability for trading while insolvent.

For more information click here.

Supporting Apprentices and Trainees

The Government is supporting small business in retaining apprentices and trainees. If you are an eligible employer, you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for nine months from 1 January 2020 to 30 September 2020 up to a maximum of $21,000 per apprentice or trainee. Where a small business is unable to retain an apprentice, the subsidy will be available to the new employer. Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

For more information click here.

Maintaining Flow of Credit

The Australian Government, Reserve Bank of Australia and the Australian Prudential Regulation Authority are working together to maintain the flow of credit for SMEs in the Australian economy by taking the following measures:

• Under the Coronavirus SME Guarantee Scheme, the government will provide a guarantee of 50% to eligible SME lenders to support approved short-term unsecured loans. This scheme will commence early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
• There will be a temporary exemption from responsible lending obligations for lenders issuing credit to small business customers. This will last six months and will apply to any credit for business purposes.
• The Reserve Bank of Australia (RBA) has given banks access to at least $90 billion in funding at a fixed interest rate of 0.25%, helping reduce interest rates for borrowers. They are also providing low-cost funding for banks that expand their lending, particularly to SMEs.
• The Government is providing the Australian Office of Financial Management (AOFM) with $15 billion to invest in and support non-ADI and smaller ADI lenders in the securitisation market.
• The Australian Prudential Regulatory Authority has announced temporary changes to its expectations regarding bank capital ratios. The changes will support banks’ lending to customers, particularly if they wish to take advantage of the new facility being offered by the RBA.
  

For more information click here.

During these unusual times you can stay up to date with Winc’s latest response to COVID-19 here or speak to your Account Manager to understand more about how Winc can support your current needs. You can also visit our website to explore our full range here.

References:

We encourage you to access reputable sources regarding new incentives put in place by the Australian Government to support businesses effected by COVID-19. Get the latest information by visiting these websites:

https://treasury.gov.au/
https://www.ato.gov.au/
https://www.business.gov.au/