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Ultimate Guidebook: Small business stimulus and relief packages

The Australian Government has announced several stimulus and relief packages, designed to sustain small businesses through the coronavirus (COVID-19) pandemic and keep employees in work. The government has stated that the measures are temporary, targeted and scalable. The main areas of support currently available to small businesses are:

SME Recovery Loan Scheme (updated)

SMEs with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years, to help manage the economic impacts of the pandemic. Requirements for small businesses to have received JobKeeper during the March 2021 quarter to be eligible for this scheme have been removed, with the new rules coming into effect on 1 October 2021.

The scheme provides business owners with an opportunity to refinance existing loans with a commercial lender with the following features:

  • a Government guarantee of 80 per cent of the loan amount
  • ability for lenders to offer a repayment holiday of up to 24 months
  • loans can be used for a range of purposes, including to support investment or refinancing existing debt
  • loans can be either unsecured or secured (excluding residential property)

To be eligible for the scheme, the loans must be approved by 31 December 2021.

JobMaker Hiring Credit

The Australian Government has announced the JobMaker Hiring Credit to encourage businesses to hire young people for new positions. Eligible employers can receive the payment for up to 12 months (from 7 October 2020 to 6 October 2021) for new jobs that employ an eligible young person. Under the program, employers will be credited $200 a week for additional employees aged 16 to 29 years and $100 a week for new employees aged 30 to 35 years who meet the eligibility criteria.

Who is eligible?

Read JobMaker Hiring Credit – what it is and who can apply for a summary of the eligibility criteria for employers and employees.

When will it be received?

From 1 February 2020, you will be able to claim the JobMaker Hiring Credit via the ATO.

Tax and FBT concessions

A number of tax and fringe benefits tax (FBT) concessions were announced as part of the 2020-21 Federal Budget. This includes:

  • a reduction in the tax rate for individuals
  • immediate deductions of some start-up expenses
  • changes to FBT on car parking and work-related electronic devices provided to employees
  • research and development (R&D) incentives
  • loss carry back provision.

Read our summary of the FBT and tax concessions announced in the Federal Budget to find out more.

Greater leniency for insolvency and bankruptcy

The threshold at which a creditor can take action against a small business has increased from $2,000 to $20,000. The mandatory response time has also increased from 21 days to 6 months. Temporary relief for directors from any personal liability for trading while insolvent has also been announced. Visit the Australian Financial Security Authority website to find out more.

On 1 January 2021new insolvency laws to help small business owners in financial distress were introduced.

Cash flow boost for employers

Eligible employers will receive between $20,000 and $100,000 in cash flow boost amounts. Under the measure, eligible entities receive cash flow boost credits when lodging activity statements for tax periods from March through to September 2020. Any eligible businesses that have not lodged an activity statement for any one or more of these tax periods will receive cash flow boosts when the lodge outstanding activity statements, provided they do so within two years after their due date. Visit the ATO website for more details.

SME Guarantee Scheme – phase 2

As part of the second phase of the SME Guarantee Scheme, the focus of the program will move beyond providing funding for working capital to providing businesses with access to longer and more affordable credit that can be used to help businesses fund a wider range of investments. Businesses will be eligible to borrow up to $1 million for a term of up to five years.

Who is eligible?

Businesses with a turnover of up to $50 million that pass the lenders’ credit assessment processes.

When will it be received?

The second phase of the scheme will start on 1 October 2020 and run until 30 June 2021.

Boosting Apprenticeship Commencements wage subsidy

Eligible employers can apply for a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage between 5 October 2020 and 30 September 2021. Businesses can be reimbursed up to a maximum of $7,000 per quarter. Visit the Department of Education, Skills and Employment website to find out more.

Increase in the instant asset write-off threshold and accelerated depreciation

The instant asset write-off threshold has been temporarily amended in response to COVID-19 to allow all businesses with an aggregated turnover of less than $5 billion to deduct the full costs of eligible depreciable assets of any costs, installed and ready for use between 6 October 2020 to 30 June 2022. The measure is referred to as temporary full expensing, and is an additional expansion of the threshold, which was earlier increased from $30,000 to $150,000.

Small businesses with an aggregated annual turnover of less than $50 million can also claim the full expense of second-hand purchases. Small businesses with aggregated turnover of less than $10 million can also deduct the balance of their simplified depreciation pool at the end of the income year, while full expensing applies.

When will it be received?

The instant asset write-off is generally claimed back via your business tax return.

Tax relief

The Australian Tax Office (ATO) will also consider relief for certain tax obligations to eligible businesses, including deferring tax payments up to four months.

If disruption to your business operations causes you to fall behind with your tax and super obligations, read the ATO’s information on COVID-19, call them on 1800 806 218 or speak to your tax professional so that they can work with you to find a solution.

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