The Australian Government has announced a number of ways they are offering financial relief to help businesses stay open through Coronavirus.
We don’t know about you, but a lot of the time, “government-speak” sounds a lot like gobble-de-gook! In an already confusing and uncertain time, we thought we’d do our bit to de-mystify what we can, and get to the bottom of what the stimulus package is going to mean for you.
So. There’s a few initiatives that have been announced to provide cash flow assistance for businesses, and we’re going to explain what they are, what they mean to you, and how you can get it – as well as give you some real-life examples.
1. Boosting cash flow for employers
What is it? The government is going to give money back to small businesses to help you pay staff wages.
What does it mean? The ATO will look at the PAYG employee tax you have paid as part of your quarterly or monthly Activity Statements, and release back 100% of that sum (up to a maximum of $50,000) to assist you to continue paying wages. An additional payment in the July – October period means small businesses will receive another payment of equal amount. ED NOTE: This information has been updated as at Sunday 22 March, 2020 to reflect the enhanced stimulus scheme announcement.
How do I get it? Depending on whether you lodge your ATO Activity Statements monthly or quarterly, the ATO will assess the statement, credit your account with the 100% and then refund it to your nominated bank account within 14 days. This is effective immediately – meaning that the next Activity Statement you lodge, whether it’s a March monthly or quarterly lodgement, you will see the 100% refund reflected in the assessment.
Sean owns a barber on the Gold Coast. He employs 12 hairdressers, with average salary of $50,000 per year. Sean reports withholding of $8,788 for his employees in each of his monthly BAS. Under the Government’s changes, Sean will be eligible to receive the payments on lodgement of his relevant BAS.
Sean’s business will receive:
- A credit of $26,364 for the March period, equal to 300 per cent of his total withholding.
- A credit of $8,788 for the April period.
- A credit of $8,788 for the May period.
- A credit of $6,060 for the June period, before he reaches the $50,000 cap. Sean will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the July period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the August period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the September period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
Under the previously announced Boosting Cash Flow for Employers measure, Sean’s business would have received a total payment of $25,000.
Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sean’s business will receive $100,000. This is an additional $75,000 to support his business. Sean may also benefit from the assistance for existing apprentices and trainees measure – read on.
2. Supporting Apprentices and Trainees
What is it? The government is providing money to small businesses so that you can keep apprentices and trainees.
What does it mean? If you are eligible, the government will pay 50% of the apprentice’s or trainee’s wage (up to $21,00) over the period of January 2020 to September 2020.
How do I get it? Eligible businesses must employ less than 20 full-time staff, and have an apprentice or trainee that was in training as of 1 March 2020. Contact an Australian Apprenticeship Support Network provider to undertake an eligibility assessment.
Jenny’s Hairdresser Salon is a small business that employs two apprentices.
Taylor is a first year Australian Apprentice, aged 20. She commenced her apprenticeship with Jenny’s Hairdresser Salon on 6 February 2020. Taylor receives a weekly wage of $532.89.
Lisa is a third year Australian Apprentice, aged 29. She commenced her apprenticeship with Jenny’s Hairdresser Salon on 18 November 2017. She receives a weekly wage of $772.71.
Jenny’s Hairdresser Salon are eligible for Supporting Apprentices and Trainees which pays 50 per cent of the apprentices’ wages that have been paid by Jenny’s Hairdresser Salon since 1 January 2020.
Jenny’s Hairdresser Salon will receive:
- $9,059 subsidy for employing Taylor for 6 February 2020 to 30 September 2020; and
- $15,068 subsidy for employing Lisa for 1 January 2020 to 30 September 2020.
3. Support for Sole Traders
If you operate as a sole trader and currently earn less than $1,075 as a result of loss of business due to coronavirus (i.e. if the salon you rent a chair from has decided to close) you may be eligible for newly-announced income support from the government. Find out here.
4. Unsecured Loan Guarantee Scheme
The government will provide a 50% guarantee for unsecured loans for you to inject as capital into your business, up to the amount of $250,000 with no repayments for 6 months. As an unsecured loan, you do not need to put any assets up as security, and you will not be charged interest on money you don’t use. Find out more here.
5. An increased write-off of your assets
This stimulus is designed to help salons claim a tax deduction for anything you have purchased to help run your business (i.e. a car to attend clients in their homes, furniture for your salon) up to the value of $150,000. This can be both new and second hand assets. For more information on writing off your assets, see here.
This information is correct and updates as of Sunday 20 March, 2020. There may be state-based nuances that apply to these initiatives, please check the websites listed below. We expect that in the coming weeks, the government will release an update and possibly more options of financial relief. We will update this article, and our Shortcuts community, with any more information as it is released.