The devastating coronavirus pandemic has hit small businesses hard. As a result, a number of sole traders are without work and many small businesses closed their doors and let go staff. Consequently, the Australian Government recently issued two rounds of stimulus packages to help business owners.
The first stimulus package on 12 March included a $17.6 billion stimulus package. While the second announcement on 23 March reflected the escalation of the pandemic with a stimulus package of $66 billion.
There is a lot of Coronavirus stimulus information for small businesses out there already. So, let’s cut to the chase and get straight into the specifics. To find out how these packages will help employees and the general public read our coronavirus stimulus package guide for individuals.
What’s in the coronavirus stimulus packages for small businesses?
First Announcement – $17.6 billion
The first stimulus announcement included a series of cash payments for small businesses, intended help them retain staff by covering wages and other business costs:
- Small businesses with apprentices can potentially receive up to $21,000 to keep apprentices in work through wage subsidies.
- Small to medium-sized businesses can potentially receive between $2,000 and $25,000 to help with cashflow.
Second Announcement – $66 billion
As the pandemic worsened, the coronavirus supplement and additional payments were introduced to protect sole trader income and keep small businesses running:
- Sole traders get access a “coronavirus supplement” of $550 a fortnight for the next six months.
- Not-for-profits as well as small businesses receive a tax-free cash payment of up to $100,000.
Third Announcment – $130 billion
The third announcement is the JobKeeper Payment. This payment allows businesses affected by COVID-19 to pay employees $1,500 per fortnight.
Read our JobKeeper Payments article for extensive detail on this payment.
The specifics: What exactly is in the coronavirus stimulus package for small business?
Income support payments for sole traders
One off payments of between $2,000 and $25,000 will be delivered as a credit once businesses lodge their activity statements.
Sole traders who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.
These payments to allow sole traders to continue receive income while their businesses recover and bridge the gap until they are able to generate income.
Cash payments for employers
Not-for-profits and small businesses with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 to help them retain staff and continue operating.
Small businesses as well as sole traders will be eligible to receive the cash flow boost if you:
- Held an ABN on 12 March 2020 and the business is still active,
- Has an aggregated annual turnover under $50 million (generally based on prior year turnover), and
- Made eligible payments you are required to withhold from (even if the amount you need to withhold is zero).
You do not need to apply for the cash flow boosts. If you are eligible for this part of the coronavirus stimulus package, the cash flow boosts will be automatically applied to your account when you lodge your activity statement for the relevant periods.
Instant asset write-off for eligible businesses
Until 30 June the instant asset write off threshold increases from $30,000 to $150,000. It also includes businesses up to $500 million in turnover (previously $50 million). (Find out more more information about this scheme.)
New accelerated depreciation rules
Businesses with up to $500 million in turnover can deduct an extra 50% of the asset cost in the year it is purchased.
Find out more about the temporary accelerated depreciation rule.
Small business coronavirus stimulus: Tax extensions and support for small businesses
Business owners affected by the pandemic may be eligible for a number of support measures and extensions. Therefore, we suggest you speak to your tax provider for more information as this part of the coronavirus stimulus for small business varies from business to business.
Options available to assist businesses impacted by COVID-19 include:
- Providing cash flow assistance for employers.
- Increasing the instant asset write-off, making more businesses eligible.
- Backing business investment by accelerating depreciation deductions.
- Extended deadlines on activity statements.
- GST reporting flexibility in order to get quicker access to GST refunds.
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts as well as instalment refunds for particular periods.
- Remission of tax liability interest and penalties issued after 22 January 2020.
- Low interest payment plans for existing and ongoing tax liabilities.
Employers still need to meet their super guarantee obligations for their employees.
Please note: This coronavirus information for small businesses article should not be relied upon as detailed advice. Each business is individual and unique. Therefore, please contact us for more detail about any of the above measures.