Financial Support for Employers and Business During COVID-19

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  • Financial Support for Employers and Business During COVID-19

Self Employed and Employers May Be Able To Access

  • Income support of $550 p/fn
  • Up to $100k for employers
  • Relaxation of Corporations Act for Directors
  • Significant asset write off
  • Apprentice support up to $21K
  • Enhanced credit options
  • $1,500 fortnightly Job Keeper payment
  • Deferred insurance and refunds
  • Power and electricity relief
  • Rent and tenancy relief + code of conduct
  • WA specific businesses

This area may be better addressed by your accountant, but we’re happy to provide an overview.

The government has announced a number of measures to help small businesses wade through this period and to hold onto staff wherever possible.

For the self employed they will be able to access similar income support to employed people where their income or time work has been reduced by more than 20%.

$100K Business Cashflow Support

The details on the potential $100k can be found here. This is quite a complex topic for this email so please feel free to get in touch with your accountant.

Relaxed Corporations Act and ATO

During what is expected to be a challenging period, the operation of creditors and insolvency will be somewhat relaxed, reducing the personal liability of directors where appropriate to potentially allow businesses to continue to trade under financial hardship in an attempt to ride out the COVID-19 impact.

The ATO has also made a statement saying that they will work with businesses to reduce the enforcement of tax payments where appropriate.

Asset Write Off

Asset write offs have increased from $30,000 per year to $150,000. Also, depreciation deductions can be increased on eligible assets of up to 50% of an eligible asset on installation.

Apprentices & Credit

For those who employ apprentices, they may be eligible for a whopping 50% wage subsidy up until the end of September.

The government has been working closely with the RBA and lending providers to provide facilities for SMEs to get access to credit easier.

You can find a comprehensive overview here.

For more detailed information we recommend you get in touch with your accountant.

Job Keeper Payment

The Job Keeper payment allows businesses to maintain employees without standing them down or making them go on extended leave so that, once things turn around, they may be able to bounce back very quickly with their existing staff and utilise them in the meantime. It is a flat payment of $1,500 per fortnight, no matter the employees salary.

It’s eligible to employees that have been with the business since the 1st of March 2020. It is understood that some businesses may still negotiate employee salary and work hours, however this will help them to continue working during this time.

Superannuation was not outlined to be required for these payments.

Which Businesses Are Eligible?

Small and Medium businesses that have had a hit to their turnover of more than 30% since March 1, to a similar time last in the last 12 months, will be eligible to keep their employees and pay them through the Job Keeper payment.

Large businesses with over $1 Billion in turnover will have to had been impacted by 50% or more.

Businesses will be able to apply for this payment through a button on the ATO’s website (coming soon).

Details around this exact support package are yet to be legislated and finalised as we write this, however, they have been verbally confirmed by the Federal Prime Minister and Treasurer. Further details can be found on the Treasury website here.

Self Employed

More information has been released around self employed people who may not be an employee of the business and do not draw a wage as such. To be eligible as a director or share holder of a business you need to comply with similar criteria to other businesses, but there may also be individual discretion involved to fit around your circumstances. More information can be found here.

Deferred Insurance

The ACCC is allowing insurers (Suncorp, Allianz, and QBE Insurance, as well as any other insurers or insurance brokers who choose to take part) to act in unison to provide relief to small and medium business owners in the form of:

  • Deferring premium payment for up to 6 months
  • Refunding unused premiums when cancelling with no fees
  • Continuing cover for unoccupied premises with no changes to premium
  • Refunding of unused premium for travel insurance with no fees

Power and electricity relief

In the eastern states there has been support provided from Energy Networks Australia to provide relief to network charges for small businesses that are mothballed. Electricity and gas network charges will not be applied from the start of April to the end of June 2020, if their consumption is less than a quarter what it was in 2019. We hope that this soon appears in WA as well.

Rent and Tenancy Relief

Scott Morrison suggested that landlords and tenants be flexible with each other to help each other get through. He believes that it is mutually beneficial for these relationships to continue and that they need each other on the other side. There is some legislation being drafted at the moment around exemptions and mandatory codes to follow.

Rent Code of Conduct

The Code of Conduct will apply to your business if it:

  • is eligible for the JobKeeper Wage Subsidy; and
  • earns less than $50 million per year.

The above sets out the minimum standards to be applied and parties are free to negotiate a different arrangement if that suits.

If you are eligible for rent relief under the Code, you and your landlord will be required to negotiate amendments to your lease to ensure it is Code-compliant.

The Code will also be enforced through a mandatory mediation process, overseen by the states and territories.

More details can be found here.

WA Specific Businesses

The Western Australian state government is following the lead from federal government initiatives and is providing support to local businesses where it can in the forms of:

  • $114 million in measures to support Western Australian small and medium businesses
  • payroll tax paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500
  • $1 million payroll tax threshold brought forward by six months to July 1, 2020
  • small and medium sized businesses affected by COVID-19 can now apply to defer payment of their 2019-20 payroll tax until July 21, 2020.

See the WA state government website for more details on their stimulus and other WA measures.

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