Coronavius – Busines Financial Support and How to Get it

With the drastic economic impact of the Coronavirus hitting many businesses and their staff, numerous relief packages have been released that will assist with immediate cashflows for Business. The measures that may assist with your immediate cashflows are summarised below:

Jobkeeper Payment

What is it?

A subsidy in the form of fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months to continue paying employees.
Note, this will also be applicable to the self-employed. Payments are expected to be made by the ATO from the first week of May and will be backdated to 30 March.
This subsidy must be fully passed on to each employee. For some staff it will be a raise to $1,500 per fortnight. For those staff receiving more than $1,500 it will offset your out of pocket costs.

Am I eligible?

Assuming you are not a bank or have turnover of more than $1b, a business must show that:

  • their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month);

The employer must have been in an employment relationship with eligible employees as at 1 March 2020, and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments. Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments

This will be paid per eligible employee. An employee will be eligible if:

  • are currently employed by the eligible employer (including those stood down or re-hired);
  • were employed by the employer at 1 March 2020;
  • are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
  • are at least 16 years of age;are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
  • are not in receipt of a JobKeeper Payment from another employer.

What do I need to do to claim?

This will need to be applied for via the ATO. Start by registering your interest with the ATO at https://www.ato.gov.au/general/gen/JobKeeper-payment/

Boosting cash flow for employers

What is it?

Tax free payment equal to 100% of your PAYG withheld.
Tranche 1 is for January to June and is calculated based on your March to June Activity Statements. Minimum rebate payment will be $10,000 and Maximum will be $50,000.
Tranche 2 is for July to October. This will be a payment matching the amount you qualified for in the first tranche and will be paid in line with your activity statement lodgements.

Am I eligible?

You must have been a small business in the 2019 income year, with annual turnover of more than zero and under $50m. Your business must have been operational before 12th of March 2020 and report wages paid in any of your activity statements from March 2020.

What do I need to do to claim?

Lodge your activity statements and have either lodged your 2019 business tax return or reported sales on a previous activity statement (since 1 July 2018) which confirms your eligibility as a small business. The ATO will then automatically apply the amount on lodgement of your activity statements.

Anything Else?

This will only result in a cash refund to you where it puts your ATO account in credit. Otherwise, it will offset your current outstanding ATO debts.
Also, be aware of the anti-avoidance provisions or taking steps to artificially inflate your entitlements. Where this is found to have occurred your entitlement will be reduced to zero and penalties are likely to apply. The explanatory memorandum issued by Parliament terms this as:
the entity (or an associate or agent of an entity) has not engaged in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the first cash flow boost or increase the entitlement of the entity to the first cash flow boost.

Victorian State Government Grant

What is it?

The Victorian Government is providing a grant of up to $10,000 for businesses that were directly impacted by the mandated shutdowns. The grant can go towards expenditure such as:

  • Meeting business costs, including utilities, salaries, rent
  • Seeking financial, legal or other advice to support business continuity planning
  • Developing the business through marketing and communications activities
  • Other supporting activities related to the operation of the business.

Am I Eligible?

To be an eligible business, you must:

What do I need to do to claim?

An application must be made to the state government by 1 June 2020 and can be made at:
https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-fund

Apprentice Subsidy

What is it?

A wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for nine months. The subsidy is up to a maximum of $21,000 (or $7,000 per quarter).

Am I eligible?

Businesses employing fewer than 20 full-time employees who retain an apprentice or trainee are eligible to claim. Or, where a small business is not able to retain an apprentice, the subsidy will be available to the new employer of that apprentice, regardless of the new employer’s size.

What do I need to do to claim?

An application needs to be lodged through an Australian Apprenticeships Support Network such as Äpprenticeship Support Australia. Applications can be made from 1 April.
For more information see: australianapprenticeships

Payroll Tax Refund (Victoria)

What is it?

Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived and any amounts paid so far refunded.

What do I need to do to claim?

The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year. Reimbursements will start from 27th of March 2020.
You will need to log in to the PTXExpress website and click “apply for refund” and enter your bank details into the system.
Eligible businesses must continue to lodge returns but do not need to make further payments for this financial year.
These businesses can also defer paying payroll tax for the first quarter of the 2020-21 financial year.

Loan Guarantee Scheme

What is it?

The Government will guarantee 50 per cent of new loans issued by eligible lenders to Small and Medium Enterprises. The Loan can be up to $250,000 and will be unsecured. This is anticipated to encourage more lending by banks to SMEs to assist with short-term cashflow.

Am I Eligible?

To be an eligible loan it must be:

  • SMEs, including sole traders, with a turnover of up to $50 million.
  • Maximum total size of loans of $250,000 per borrower.
  • Loans will be up to three years, with an initial six month repayment holiday.
  • Unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

What do I need to do to claim?

The Scheme will be available for new loans made by participating lenders until 30 September 2020. The loan will still be subject to the banks lending criteria. Contact your bank or mortgage broker to apply.

Liquor License Fees Waived (Victoria)

What is it?

The 2020 renewable liquor licence fees waived.

What do I need to do to claim?

If you have not paid yet, you will not be required to pay. If you have paid already the regulator is currently working with the state revenue office on a mechanism to have these reimbursed.

ATO Payment Deferral Options

What is it?

The ATO has release guidance on measures you can implement with them to assist with short-term cashflow including:

  • Defer due dates for tax payments due after 23rd of January 2020
  • Remit interest and penalties incurred after 23rd of January 2020
  • Allow variation of your tax instalments for the March/June quarters to nil and claim back tax already paid as a refund on your BAS without interest or penalties if you subsequently have an income tax liability for the 2020 year.
  • Adjust an existing payment arrangement to assist down

What do I need to do to claim?

Contact the ATO and discuss your circumstances and issues.

WHAT ELSE CAN I DO?

The above stimulus helps, but for most businesses will go nowhere near the value of $ losses they will incur. Step 1 for any business should be to forecast your business cashflow out to June 2021, factoring in extended shutdowns and a sluggish economy when things re-open. Then implement any changes you can do to keep things going including:

  • Repayment deferals on loans, equipment finance etc. https://www.ausbanking.org.au/campaigns/financial-hardship/
  • Reducing wage costs back to a sustainable level. Unfortunately, that may mean the loss of jobs or reductions in hours
  • Contact your landlord for a rent reduction or deferal during a shutdown period (they in turn may be able to negotiate a deferral on their loan payments)
  • Review all expenditures and cut or reduce all that can be. Including owners drawings.
  • Compare the cashflow of continuing to stay open and operate, with the option of closing the doors and lying dormant until things return to normal. A temporary shutdown may be your best option of staying in operation once things start returning to normal.

At all times, be aware of your obligations to not trade whilst insolvent and to take action quickly. If your business cannot get through these times, liquidation may be your only option.

The above is intended to be a guide only and each of the above contain various terms and conditions, not necessarily detailed which must be adhered to.