Social distancing, travel bans, and a host of other factors engendered by the coronavirus disease 2019 (COVID-19) pandemic have had an adverse effect on Australia's economy. Many experts predict that the country is headed towards its first recession since 1991. Businesses across the spectrum, including SMBs, have felt the brunt of the COVID-19 outbreak.
In this article, we detail the key resources and opportunities that have been made available to Australian businesses.
On 12 and 22 March 2020, respectively, the Australian government announced its first and second economic stimulus packages to support households and businesses, effective immediately. It was estimated that up to 3.5 million businesses would receive direct assistance in one or more of the following ways:
1. Support for Business Investment:
This entails a commitment of $700 million, allowing the instant asset write-off threshold to be increased from $30,000 to $150,000. Businesses with an annual turnover below $500 million are eligible for this support, where the limit was previously set at $50 million. The intervention is effective between 12 March 2020 and 30 June 2020.
An additional $3.2 billion has been allocated to accelerate depreciation deductions. Until 30 June 2021, businesses with an annual turnover below $500 million can deduct 50% of the cost of new Division 40 assets upon installation. Standard depreciation rates will apply to the balance.
2. "Boosting Cash Flow for Employers" Payments:
SMBs and not-for-profits with employees and a turnover of less than $50 million may be entitled to a tax-free payment of up to $100,000. At the very least, eligible entities will receive $20,000. This is intended to help cover operating expenses.
Note that eligible businesses that withhold tax on salaries and wages will be paid up to 100% of what is withheld, where the maximum payout is $50,000. Those that aren't required to withhold tax will receive a minimum of $10,000.
This form of assistance should support approximately 690,000 businesses that employ an estimated 7.8 million workers, and roughly 30,000 not-for-profits. In terms of rollout, the Australian Taxation Office (ATO) will make payments from 28 April 2020. These will take the form of a credit in the activity statement system.
Another payment will be made to qualifying entities between July and October 2020. This will equal the sum of all prior "Boosting Cash Flow for Employers" payments made to each business. This will also take the form of one or more credits, depending on when businesses lodge their activity statements.
Businesses should note that they do not need to apply for these payments. Instead, they will be automatically calculated and delivered by the ATO. For further details, visit business.gov.au and ato.gov.au.
3. Income Support for Sole Traders and Self-Employed Individuals:
Sole traders and self-employed individuals who have had their businesses suspended or turnover markedly reduced are now eligible for the biweekly JobSeeker Payment or Youth Allowance JobSeeker. These individuals will also receive a Coronavirus Supplement of $550 each fortnight.
This expanded access to payments, as well as the Coronavirus Supplement, will be rolled out from 27 April and be valid for six months. Candidates can claim these payments online through myGov or by phoning Services Australia.
4. JobKeeper Payments:
Businesses that have been notably affected by COVID-19 will be able to access biweekly wage subsidies worth $1,500 (before tax) for each eligible employee. These can be used to pay full-time and part-time staff, including those being stood down, as well as casual workers who have been employed by the business for the past 12 months or more. Payments will be made for up to six months.
Worth noting is that the JobKeeper Payment can also be accessed by sole traders and self-employed individuals whose turnover has been reduced due to COVID-19. However, those who receive income support from Services Australia will need to declare this income appropriately, which could affect their eligibility for continued assistance.
Interested parties can visit business.gov.au to learn more about eligibility criteria and the application process. Note that the subsidy will be rolled out from 30 March 2020 and that employers should receive the first payment in May.
5. Wage Subsidies for Apprentices and Trainees:
A further $1.3 billion has been committed to supporting the work of roughly 120,000 apprentices and trainees through the provision of wage subsidies. Eligible employers can apply for subsidies of up to 50%. This form of relief may be drawn upon for the period spanning 1 January 2020 to 30 September 2020.
Naturally, small businesses that are unable to support the costs associated with retaining their apprentices will forego this support. Instead, apprentices' new employers will be eligible for the subsidy.
Note that employers will receive up to $21,000 per eligible apprentice or trainee, which equates to $7,000 per quarter. Businesses will be able to register for these wage subsidies from early April. For more on the application process, be sure to locate and contact an Australian Apprenticeship Support Network Provider.
6. Additional Support for Disproportionately Affected Entities:
A further $1 billion has been allocated to support those who have been particularly impacted by COVID-19. Businesses who are heavily dependent on international trade, for example, could use these funds to pinpoint other export markets. Moreover, plans to encourage domestic tourism could eventually spur growth within the hospitality industry.
7. Administrative Relief:
Beyond these financial commitments, the Australian government has announced less stringent tax obligations. This includes the option to defer certain payments by up to four months. Moreover, recipients of government grants could be given extensions on project milestones and reporting deadlines.
For now, the government is also raising the threshold at which creditors may issue statutory demands and providing companies with longer response times. Directors who trade while insolvent will benefit from temporary relief from all personal liability.
Deferment of Loan Repayments:
On 20 March 2020, Anna Bligh, CEO of the Australian Banking Association, announced that small businesses affected by COVID-19 would have their loan repayments deferred for six months. The offer applies to over $100 billion in existing loans. Depending on the uptake, it is thought that this could put up to $8 billion back into small businesses.
Coronavirus SME Guarantee Scheme:
The Australian government is set to establish the Coronavirus SME Guarantee Scheme with support from the Reserve Bank of Australia and the Prudential Regulation Authority. The Scheme is intended to help SMEs obtain working capital. To this end, the government will guarantee 50% of each applicable loan. Below are the salient terms:
- Only SMEs with a turnover of less than $50 million will be eligible.
- Loans are to be unsecured and capped at $250,000 per borrower.
- Term lengths should be a maximum of 3 years.
- Repayments need only be made from the seventh month after which the loan is awarded.
- Lenders' credit assessment processes still apply, but the uncertainty of the economic climate should be accounted for.
The Scheme will be rolled out in early April 2020 and will support all new loans secured by 30 September 2020. Interested parties should contact their financial institutions for further details.
The aforementioned interventions are available to businesses across the nation. Worth noting, however, is that there are various state and territory-specific initiatives. We've included some of the most salient ones below.
The Australian Capital Territory's COVID-19 Economic Survival Package:
The Australian Capital Territory (ACT) Government has devised and instituted the COVID-19 Economic Survival Package, which is intended to help sustain SMBs as well as families and households. The multifaceted initiative includes the following support for businesses:
Small businesses that use less than 100 megawatts of electricity per year will receive a rebate of $750. This will be added to their next electricity bill between June and July 2020.
Those who own commercial properties with an Average Unimproved Value of up to $2 million will receive a rebate, issued in the form of a credit, on their commercial rates fixed charge. This will be applied automatically in the fourth quarter. Furthermore, the 2020–2021 Fire and Emergency Services Levy will not be increased.
Commercial tenants of ACT Government-owned properties could receive rental relief for six months as of 1 April 2020, provided they can demonstrate that their operations have been markedly affected by COVID-19. Tenants should email the ACT Property Group to apply.
Selected businesses that purchase less than $3 million in liquor per year will have their liquor licensing and food business registration fees waived for 12 months as of 1 April 2020. Their 2020–2021 outdoor dining fees will also be waived. Those that have prepaid their food business registration fees will have 12 months added to their licenses.
Rideshare operators will have their rideshare vehicle license fees waived for 12 months as of 1 April 2020. Where licenses have been prepaid, individuals will have 12 months added to their licenses. Government-leased taxi plate fees will also be waived. Moreover, taxi drivers who lease privately-owned plates will receive a payment of up to $5,000.
The Clubs Diversification fund, which is currently worth $1.8 million, will be freed up to sustain community clubs. This includes retaining staff. The ACT Government has pledged an additional $1.5 million to meet this objective.
Businesses that are directly impacted by the ban on certain activities will not be required to pay payroll tax between April and September 2020. Prospective candidates should complete the online application form.
ACT businesses with wages of up to $10 million are able to defer their 2020–2021 payroll tax until 1 July 2022. No interest will be charged. Note that payroll tax returns need to be lodged per usual.
The Vocational Education and Training sector will be supported through increased subsidies for apprenticeships, traineeships, and other categories. No applications are required; adjustments will be made automatically.
The Canberra Business Advice and Support Service is designed to help small businesses address the effects of the recent environmental and health emergencies on their entities. Their interventions include four hours of one-on-one support and business development resources. Interested parties can call 6297 3121 to make a booking.
A business liaison team has been established to inform businesses about available support and to issue practical guidance to those that remain operational. Businesses can call 6205 0900.
Tax Relief Measures in New South Wales:
The New South Wales government has raised the tax-free threshold from $900,000 to $1 million for the 2020–2021 financial year beginning on 1 July.
In addition, businesses with grouped Australian wages of up to $10 million are eligible for payroll tax relief. Specifically, they will receive a 25% reduction in their annual tax liability when lodging their annual reconciliations. Businesses who lodge and pay on a monthly basis need not make payments between March and May of 2020.
Funding and Other Business Support in the Northern Territory:
NT businesses may be eligible for the Business Improvement Grant. This is intended for the purchase of products and services, and to cover the cost of permanent physical alterations to business's buildings and/or land. The grant is worth up to $20,000: half is awarded as a grant, and the remainder is provided when businesses contribute $10,000.
Note that businesses looking to render these improvement services (as opposed to receiving them) can register online as of 30 March 2020.
Another major intervention being offered in NT is the Immediate Work Grant which is designed to cover the costs of repairs, renovations, and upgrades within not-for-profit and community organizations. It is worth up to $100,000: half is provided as a grant, and the remainder is matched dollar-for-dollar against the business's own contributions.
Entities looking to apply for the grant can do so from April 20, 2020 at 12:00 a.m. AEST. Once more, local businesses hoping to offer their restorative and improvement services should register online from March 30, 2020.
Beyond these grants, there is also a Tourism Fast Track Support Program designed to assist businesses affected by the bushfires and/or COVID-19. Businesses will receive in-depth, tailored support designed to boost visitor numbers and revenue, and to lower expenditure. Further information about this seven-month program is available online.
Financial Relief and Low-Interest Loans in Queensland:
Queensland businesses have access to a range of interventions. These include:
Tax relief for SMBs with a payroll of up to $6.5 million. Businesses ought to have been affected by COVID-19, whether directly or indirectly. The package includes a two-month refund of their payroll tax, as well as a three-month payroll tax holiday. The remainder of 2020 payroll tax payments can be deferred.
Tax relief for large businesses, which are classified as those with payroll above $6.5 million. Once more, businesses must have been impacted by COVID-19. The package includes a two-month refund of their payroll tax. As with SMBs, large businesses will be able to defer the remainder of their 2020 payroll tax payments.
Fee waivers for tourism operators and hospitality providers. These include application fees for certain types of liquor licenses, registration renewal fees normally paid by Inbound Tour Operators, and daily fees associated with commercial activity agreements and permits.
The government will also issue rebates on passenger levies and marina charges. Furthermore, the Tourism Lease Rent Payments will be deferred.
Market Diversification and Resilience Grants to support food, fishing, and agriculture exporters plus their supply chain partners. This includes up to $7,500 for new equipment when applicants contribute 25% of the total costs and project funding of up to $50,000 when applicants cover 50% of the overall costs. Further details are available online.
Low-interest Jobs Support loans of up to $250,000, intended to help businesses retain staff and preserve operations. These ten-year loans feature no interest or repayment requirements during the first year. Applications close on 25 September 2020 or once the $500 million scheme has been depleted.
Financial Relief, Short-Term Licenses, and Deregulated Trading Hours in South Australia:
South Australia has also taken a multi-pronged approach that includes tax and fee waivers, job accelerator grants, deregulated shopping hours, and the granting of temporary liquor licenses.
Payroll Tax – Waivers and Deferrals:
Businesses with grouped wages of $4 million and below will receive a six-month payroll tax holiday. Specifically, they will not need to pay payroll tax for the months spanning April to September 2020. Businesses that were not required to pay payroll tax in 2018/19 will be required to apply for the waiver.
Businesses with grouped wages over $4 million that have been demonstrably impacted by COVID-19 can defer payroll tax payments for the period spanning April to September 2020. Successful applicants will need to honor the revised deadline of October 2020.
In both of the abovementioned instances, businesses still need to submit tax returns per usual. Those who apply should keep tabs on the Department of Treasury and Finance's website where pertinent documents are due to be made available.
Those that have been paying land tax quarterly between 2019 and 2020 can defer this year's third and fourth quarter payments by up to six months. No applications are required, and businesses need not contact RevenueSA in order to institute this arrangement.
In addition, land tax transitional relief will be raised from 50% to 100% of eligible taxpayers' increase in their 2020-2021 land tax assessment. Existing criteria still apply.
Less Stringent Job Accelerator Grant Eligibility Criteria:
Current Job Accelerator Grant (JAG) criteria require employers to have sustained their overall employment levels for one year in order to receive their second JAG payment. However, this may not be feasible due to the effects of COVID-19.
Rather than reviewing staff levels on the applicable two-year anniversary date, the government will review staffing levels valid on 31 January 2020 when assessing claims for the second JAG payment.
Reduced or Waived Liquor Licensing Fees:
The government is set to waive annual liquor licensing fees in the following categories: Liquor Production and Sales; Restaurant and Catering; Club; Residential; On Premises; Small Venue. Those who hold a General and Hotel license will receive a fee reduction if they have a bottleshop, and a complete waiver if they do not.
Licensees in each of the abovementioned categories can also apply for short-term licenses which will allow them to sell alcohol for takeaway or delivery. Applications opened on 26 March and can be made free of charge. Successful businesses will be required to observe the applicable restrictions.
Finally, businesses should note that Packaged Liquor Sales licensing fees won't be cut or waived. Businesses that think they may be entitled to a discount can request a fee reduction as of 1 June. All applications are to be made on the Consumer and Business Services website.
Deregulated Trading Hours:
Many regions of Australia have partially or almost fully deregulated shopping hours. Retailers in South Australia, however, are bound by the Shop Trading Hours Act 1977, which dictates the opening and closing times of stores located within the region.
Following the COVID-19 outbreak, though, the South Australian government has made an unprecedented decision to deregulate the trading hours of supermarkets and other non-exempt entities, which includes shops over 200 square meters.
This temporary exemption, which is effective between March 21 and April 19, will allow applicable retailers to trade 24 hours a day between Mondays and Fridays. These stores will also be allowed to operate between 12:00 a.m. and 9:00 p.m. on Saturdays, and between 9:00 a.m. and 9:00 p.m. on Sundays.
Worth noting is that these extended trading hours are to be adopted on a voluntary basis by retailers and employees alike and that they apply to Easter Monday. However, shops will be required to observe traditional opening hours on Good Friday and Easter Sunday.
It is hoped that the abovementioned exemption will aid consumers in their social distancing efforts while allowing existing employees to work additional shifts over the coming weeks, should they opt to do so. The exemption also has the potential to create new jobs amidst concerns about company downsizings.
Per section 5 of the Act, the exemption cannot be extended beyond 30 days.
Victoria's Economic Survival Package:
The Victorian Government has developed a $1.7 billion Economic Survival Package that includes:
A $500 million Business Support Fund to support sectors that have been disproportionately affected by COVID-19. These include tourism, hospitality, entertainment, retail, and more. Eligible businesses will each be able to access a grant of up to $10,000. Interested parties can view additional details, including application procedures, online.
Payroll tax waivers for businesses that have annual taxable wages of up to $3 million. This intervention is applicable to the 2019–2020 financial year. Eligible businesses will be reimbursed for payroll tax that they have already paid during the financial year. They can also defer their payroll tax payments for the first quarter of 2020–2021.
Waivers on renewable liquor license fees in 2020. Businesses that have paid this fee will receive a refund from the State Revenue Office.
The fast-tracking of outstanding supplier invoices. This entails payments that are made within five business days and is projected to release up to $750 million into the economy.
Land tax deferral for those who own one or more non-residential properties and have total taxable landholdings of less than $1 million. The revised deadline will be after December 2020. Candidates need not apply; instead, they will be contacted by the State Revenue Office.
Rent relief for commercial tenants who occupy government buildings.
Tasmania's Stimulus and Support Package:
The Tasmanian government has devised a Stimulus and Support Package that is designed to provide socio-economic sustenance to businesses within the area. The most salient components of this package include:
Freezes, Waivers, or Caps on Certain Charges:
Small businesses on tariffs 22, 75, 82, and 94, as well as those on market contracts that are eligible for these tariffs, will not need to pay their first water and electricity bill received after 1 April 2020. Electricity prices are set to be capped, and water prices will be fixed during the next financial year.
In addition, the Tasmanian government will freeze all fees and charges that are subject to the Government Fee Units Act 1997. All businesses that have been notably impacted by COVID-19 need not pay land tax for their commercial properties.
Also worth noting is that Tasmanian businesses that operate within the tourism, hospitality, or seafood sectors and have payrolls below $5 million will have their 2019–2020 payroll taxes waived. Moreover, taxi license fees will be waived for 2020.
Business Vehicle Registration Relief Package:
Small businesses hoping to suspend their activity can apply to have their business vehicle registrations frozen for up to twelve months. This applies to both light and heavy vehicles. Registrations can be reactivated for free once operations commence.
In addition to this form of relief, the Tasmanian government will waive registration fees for heavy vehicles weighing more than 4.5 tonnes. The government will also waive the road component of motor tax. However, businesses will still be required to pay the regulatory portion of their motor tax.
Applications for both forms of relief can be made online. Candidates will need to furnish their Australian Business Number, as well as other details pertaining to their business. This includes a declaration that their business's operations have ceased or suspended.
Grants and Loans:
The Department of State Growth will administer an assortment of business grants and loans:
The Small Business Emergency Support Grant is geared towards small businesses in designated, severely affected industries. These are worth $2,500 each. Businesses should determine their eligibility for the grant before applying online.
The Small Business Hardship Grant is designed to support small businesses in predetermined sectors. These are worth $15,000 each. The Tasmanian government has advised prospective candidates to apply for the Small Business Emergency Support Grant before seeking this form of assistance.
The Business Continuity Grant is intended to assist small businesses in weathering the economic effects of COVID-19 and to position Tasmania for speedy recovery once the pandemic subsides. Grants are worth up to $750 each. Prospective candidates should ascertain their eligibility before applying online.
Under the Business Support Loan Scheme, eligible businesses will have access to funding between $20,000 and $250,000. These are intended to support business viability, continuity, and sustainability. Applications can be submitted online.
Access to Qualified Staff:
Businesses that are looking to hire staff will have access to a pool of job-ready candidates. This could be a time and cost-saving alternative to traditional recruitment methods.
Cultural and Creative Industries Stimulus Package:
A dedicated package has been designed to support individuals and organizations involved in Tasmania's cultural sector. It includes new operational measures worth more than $2 million, as well as $1.5 million in funding. Arts organization contracts that are due to expire will also be extended by one year. Further details are available online.
Payroll Tax Relief and One-off Grants in Western Australia:
The Western Australian government will increase the payroll tax threshold to $1 million as of 1 July 2020. In addition, SMBs will be allowed to defer their 2019–2020 tax payments until 21 July 2020 upon application.
Beyond these interventions, the government will be awarding one-off grants to employers, or groups of employers, with annual Australian taxable wages above $1 million but less than $4 million. These payments, which are worth $17,500, will be made by check starting from July.
Resources for Australian Business Owners:
Below, we've rounded up a list of national and state-specific, authoritative resources that business owners can use to keep abreast of current affairs.
The Commonwealth of Australia:
- Coronavirus Information and Governmental Support for Businesses.
- Coronavirus (COVID-19) Business Support: Contact Details (Chat, Email, Phone).
- Australian Apprenticeship Support Network Locator.
- Australian Government Department of Health.
- National Coronavirus Health Information Line (available 24/7): 1800 020 080
New South Wales:
- New South Wales Department of Health: COVID-19 (Coronavirus).
- New South Wales Department of Finance, Services and Innovation, Fair Trading Division: Coronavirus (COVID-19) FAQs on Consumer and Business Rights.
- South Australia Consumer and Business Services: COVID-19 Update.
- South Australia Department of Health: Information for the Community - COVID-19.
- Tasmanian Chamber of Commerce and Industry: COVID-19 Business Resources.
- Tasmanian Department of Health: Coronavirus.
- Victorian Chamber of Commerce and Industry: COVID-19 (Coronavirus) Resources for Businesses.
- Victorian Department of Health and Human Resources: Coronavirus Disease (COVID-19).
What is the Australian government doing to assist businesses affected by the coronavirus?
All arms of government have committed a combined total of $189 billion, which is intended to support businesses and households. Key business-centered interventions include cash injections into SMBs, accelerated depreciation deductions, wage subsidies for apprentices and trainees, guarantees on new business loans, and deferments on tax payments.
What is the Coronavirus SME Guarantee Scheme?
Australia's Coronavirus SME Guarantee Scheme aims to help small and medium-sized enterprises (SMEs) obtain working capital in the form of unsecured loans. These are intended to help SMEs withstand the effects of the coronavirus. Under the Scheme, the Australian government will guarantee 50% of applicable loans. The Scheme will be enacted from early April 2020 and will support all new loans secured by 30 September 2020.