Federal & State / Territory Governments have announced a range of measures to support Australian businesses, employees and citizens through the contraction. A summary of the major packages follow:
The Federal Government introduced changes on 24 March 2020 that provide six types of income support for individuals and three types of assistance for business, which are broadly as follows:
Business cash flow support measures, for businesses with a turnover up to $50m, are equal to the PAYG tax withheld on employee wages and is worth up to $50k per quarter for the March and June quarters in 2020. The Government will also guarantee 50% of unsecured loans from approved lenders to provide credit to SME’s, as a drawdown facility. The maximum loan is $250k for 3 years, with an initial 6-month repayment holiday.
Businesses turning over up to $500m will also be eligible for increased instant asset write-offs of up to $150k for assets first used or installed in the period 12 March to 30 June 2020. Businesses in this category can also benefit from a new investment incentive for the period 12 March 2020 to 30 June 2021 – 50% of the cost can be written off immediately. The remainder is depreciable at existing rates.
For smaller businesses employing up to 20 employees, including apprentices or trainees, a subsidy of 50% of apprentice / trainee wages, up to $21k per person, is available covering the period 1 January to 30 September 2020.
On 25 March 2020 the Government relaxed the personal liability obligations on directors of companies who might trade insolvent in the following six months, with the aim of minimising the number of companies that become insolvent. Directors can now focus on getting a company through the Covid-19 downturn but advice is they should continue to comply with the “Safe Harbour” provisions that give directors some protection if they follow certain guidelines.
On 29 March 2020, two further changes were introduced.
A JobKeeper payment of $1,500 per fortnight will be available from the Government to employees via their employer for businesses whose turnover has declined by more than 30% in a month (50% for companies with turnover in excess of $1billion). The expected cost of this package alone is $130bn.
From April 2020, any foreign investment– be that into an Australian business, company or real property – will be subject to Foreign Investment Review Board approval. Previously this only applied to investments greater than $55m into agribusinesses and $252m in companies or a business.
The Australian Tax Office has announced various measures, principally around timing of BAS payments, to assist business cash flows.
In addition, State governments have announced payroll tax and other changes. They vary by State.
For more on these measures contact your accountant in Australia, or we can provide a summary of the changes. (All amounts stated are in AUD).
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