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Boosting cashback for employers
The great news about this program is that you don’t have to lift a finger to gain access. As well, it is a cash back program. By way of business’ Business Activity Statements (BAS), the ATO will deliver credits to business that employ eligible workers and with aggregated annual turnover under $50 million. The minimum payment will be $20,000 with up to $100,000 available for the period from March to June, with another additional payment (minimum $20,000) made to eligible businesses in the July to October period. If your business is eligible, this program will result in payments from the ATO of at least $40,000.
This new wage subsidy plan is for businesses whose revenue has been heavily impacted by the COVID-19 crisis, including those who are self-employed. Dubbed the “jobkeeper allowance”, this program is for businesses with turnover of less than $1billion, where turnover has fallen by more than 30% a month. Or, for businesses with turnover of more than $1billion, turnover must have fallen by more than 50% in a month for this program to apply. As well, the Major Bank Levy cannot apply. If this program is applicable, employers will receive $1,500 for each employee for up to 6 months. Employers can use this jobkeeper allowance to subsidise employees’ salaries, or pay this amount directly to employees if they have been stood down for a period. Employees will need to pay tax on this amount, and the superannuation surcharge is not included.
Increase to the instant asset write off
Where your business’ annual turnover is less than $500,000 the instant asset write-off threshold has been increased from $30,000 to $150,000. This instant asset write-off applies from 12 March 2020 until 30 June 2020, for new or second‑hand assets which were first used or installed ready for use in this same timeframe. If you are purchasing a business asset in this timeframe, you should talk to your tax account to ensure your business is taking advantage of this amended tax rule.
Backing business investment - accelerated depreciation write offs for SMEs
Again, where your business’ annual turnover is less than $500,000, the Federal Government has introduced tax measures to benefit your business. Upon installation of eligible assets, your business will be able to deduct 50% of the asset cost for the first tax year, and then apply standard depreciation deduction rates. This applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. Again, talk to your tax accountant if you are installing new assets and want to take advantage of this program.
Supporting for wages paid to apprentices and trainees
If your business employs less than 20 staff, and at least one is an apprentice or trainee on the national needs list, you may be eligible for a cashback of 50% of their wage. You must have employed the worker at some point between 1 January 2020 and 30 September 2020. This payment will be made up to a maximum of $21,000 per apprentice or trainee and will be paid out every quarter. Your business will need to apply for this support, with applications are expected to open early next month.
Loan guarantee scheme
Also targeted at SME businesses with turnover less than $50 million, this program will provide businesses with loan guarantees, which the Government believes will enhance lenders’ willingness and ability to provide credit.
Temporary relief for financially distressed businesses
For a period of 6 months, there will be temporary changes to assist businesses to remain solvent during the COVID-19 crisis. For example, Director’s personal liability for trading while insolvent has been lifted temporarily, though charges will be made if fraud or dishonesty is involved. As well, a statutory demand by a creditor is often the cause for a company to enter liquidation. A statutory demand can usually be made for debts owing of $2,000 or higher. This has been increased to debts of $20,000 or higher, and the response time given to the company has been increased from 21 days to 6 months.
Assistance for impacted regions, communities and industries
The Federal Government has made known that $1 billion has been set aside to help businesses in certain regions, communities and industries who have been impacted by the COVID-19 crisis. It is not yet known in what form this assistance will come. Watch this space.
If you would like further information on these programs, please click here.
In these challenging times, it is also worth examining existing grant and incentive programs available to businesses. Any or all of these may provide a much needed cash injection for your business.
Research and Development Tax Incentive Program
The R&D Tax Incentive is a non-competitive, entitlement-based program. It is designed to encourage businesses in all industries to innovate and improve productivity. For the years ended June 2019 and 2020, the program offers two streams - a 43.5 percent refundable tax offset, essentially a cash payout, and a 38.5 percent non-refundable tax offset, for money spent on eligible R&D activities. Usually the due date for the R&D program is 30 April each year, relating to claims for the previous tax year. Given the COVID-19 crisis, this has been extended to 30 September for year ended 30 June 2019 claims. Please click here for further information on the R&D program.
Export Market Development Grant Program
Available for businesses with revenue of less than $50 million, this program provides a cash refund for various expenses relating to overseas marketing. Such expenses include overseas marketing trips, patent and trademark expenses, and overseas advertising, including online such as Google ads and Instagram. The grant pays out up to $150,000 each grant year, and businesses are able to apply up to 8 times. The program opens on 1 July this year. In light of the COVID-19 crisis and its impact on exporters, the program’s requirement for export sales for grants 3 onwards has been temporarily suspended for the 2020 grant year. Please click here for further information about the EMDG program.
Accelerating Commercialisation Grant
Grants of up to $1 million are available for businesses that have a novel product, process or service they wish to commercialise. This is a matched funding program, so businesses must be able to fund the same amount requested through the grant program. This program is open at all times for applications, with an Expression of Interest the first stage of the program. Please click here for further information.
We have also provided links to State Government COVID-19 assistance programs below:
If you would like any further assistance navigating this landscape, please contact Glasshouse Advisory.