A business report into the effects of the COVID-19 crisis on Australian businesses was recently released by the Department of Education, Skills and Employment. The business report revealed that the majority of Australian businesses are affected by reduced demand for their goods and services and a decreased cash flow.
The report was based on a telephone survey of over 250 businesses in March – April 2020. The report showed that around 67% of the impacted businesses had lower demands for goods and services, approximately 37% had cash flow issues, whereas about 33% had to change their business practices.
And the financial issues facing Australian business show no sign of slowing as the COVID-19 global pandemic continues to wreak havoc. During these challenging times, it’s more important than ever for Australian businesses to know where to turn for financial and other kinds of assistance.
In this article, we’ll take a look at the help that is available to Australian businesses.
Steps Taken By the Australian Government to Support Australian Businesses
Given the financial difficulties facing Australian businesses, the Australian Government announced a number of measures to help and support businesses impacted by the COVID-19 pandemic.
Businesses that have failed to pay bills on time, or have already missed a due date, can make use of the range of options offered by the government and support their business through these challenging times.
COVID-19 Business Support in NSW
Because of the recent restrictions and the stay-at-home orders issued in NSW due to COVID-19, both the Commonwealth and NSW Governments announced an expansion of the COVID‑19 Business Support Payment to provide financial support to impacted businesses.
Change in Rent or Lease Payment Due to COVID-19
Since rent is a major expense in business, there can be certain tax implications when rent concessions are given or received as a result of the COVID-19 pandemic.
It is essential that every business understands these changes well and knows their obligation as a landlord or a tenant.
The two types of rent concession are:
● A waiver, in which case the tenant is no longer required to pay the amount of rent that is waived; and
● A deferral, in which case the tenant still has to pay the rent amount deferred but can pay them later.
JobMaker Hiring Credit
The JobMaker hiring credit scheme provides an incentive to businesses for hiring additional young job seekers aged between 16 to 35 years. Eligible employers can use the JobMaker Hiring Credit Scheme for each eligible, additional employee that their business hired between 7 October 2020 and 6 October 2021. Employers have to register only once.
They must register first and then claim for payments. They can claim up to $200 per week for each eligible additional employee aged between 16 to 29 years old, including both ages. For each eligible additional employee who is aged between 30 to 35 years, both ages inclusive, they can claim up to $100 per week.
Cash Flow Boosts for Employers
The Australian government has offered tax-free cash flow boosts ranging between $20,000 and $100,000 to all eligible Australian businesses. When eligible businesses lodge their business activity statements (BAS statements), this booster payment is delivered to them through credits in the activity statement system.
Increase in the Instant Asset Write-off
The government has declared that the instant asset write-off threshold has been raised from $30,000 to $150,000 and will be valid until 31 December 2020. Businesses will be eligible for this benefit if they have an aggregated turnover of less than $500 million. The limit was $50 million previously.
Businesses that have a turnover of over $500 million cannot use this instant asset write-off. Moreover, from 1 January 2021, only small businesses having a turnover of $10 million or less will be able to avail of this write-off. Their threshold is also $1,000 only.
Business Investment Back-ups
Businesses that have an aggregated turnover of $500 million or less can now accelerate their depreciation deductions applicable on the purchase of certain new depreciable assets. This rule applies to only eligible assets that have been acquired and installed ready for use or first used within the period of 12 March 2020 to 30 June 2021.
Flexible Lodgment Support in Victoria
The eligible activity statements that were due to be lodged by August 2020 / September 2020 can now be lodged later without having to incur any late lodgment penalties. This will not affect the lodgment record as well.
However, this does not apply to:
● instalment notices (Forms R, S, T and N)
● significant global entities
● large market clients
● large excise clients
● large withholders
The general interest charge (GIC), on the other hand, will continue to apply as usual to any late payments. Businesses that are concerned about not being able to pay on time, or missing a due date, must contact the Australian Taxation Office or an experienced tax professional at the earliest to discuss their situation.
Companies Having Substituted Accounting Periods
Any company that has an approved substituted accounting period (SAP) for an early balance date, and is entitled to a refund, can lodge a company tax return before the due date of lodgment. They will receive a refund immediately if they are a full self-assessment taxpayer and have an approved SAP with a balancing period that has concluded. However, if any company having a debt with the Australian Taxation Office is due to receive a refund, then the refund or credit can be used for reducing the debt.
SME Recovery Loan Scheme
The SME Recovery Loan scheme is designed to not only support Australia’s economic recovery but also provide continued assistance to businesses receiving JobKeeper as well as eligible flood-affected businesses. Loans will be available until 31 December 2021.
Small Business Debt Restructuring
The Government has made various changes to the insolvency framework to be able to serve the small businesses in Australia, their employees, and their creditors better. As part of it, they have introduced a new debt restructuring process for eligible small businesses.
Temporary Full Expensing
The 2021-22 Budget has extended the temporary full expensing for an additional year and will be valid till 30 June 2023. This will render the projects that require longer lead times or are experiencing COVID-19 related supply chain disruptions eligible for temporary full expensing.
In a situation where many small to medium sized businesses have been impacted by the crisis caused by the COVID-19 pandemic, Australian Commonwealth, State and Territory Governments have taken steps to support and help these businesses.
Businesses that need support can contact the Australian Taxation Office or consult a legal expert to get help.
Farrah Motley | Director
M: 1300 003 077
A: Suite No. 99, Level 18, 324 Queen Street, Brisbane, Queensland Australia 4000