Due to the unstoppable spread of the Coronavirus pandemic, more commonly known as COVID-19, the Australian Government has slowly started to enhance community quarantine protocols. The rising number of cases in Australia has risen to an alarming rate, with the confirmed cases hitting 6,204 and 54 reported deaths as of writing.
What This Means For You
COVID-19 has threatened lives in various industries, as its increasing growth has prompted more serious reactions by both the public and private sectors. The aviation industry has already suffered insurmountable losses and many businesses have implemented limited operations, if not having been forced to permanently close down.
For many smaller businesses, a temporary shut down may seem the best decision to make. Although minor losses may be incurred, permanently closing down the business seems too drastic a measure for these trying times.
As sound as this logic may seem, however, employees are left without a salary for these coming times. It is now, more than ever, that they need the money to keep their family afloat. You, as a business owner, may find yourself with a conundrum: lose even more of your money by providing salaries without continuing business or possibly pushing your employees into a more desperate situation by cutting off their financial source.
Luckily, the government has provided a solution for this: the Economic Stimulus package.
The Government’s Economic Stimulus Package
Due to the overwhelming numbers of small businesses in Australia, the mass closure of businesses could permanently hamper the country’s economy. To help resolve this, the government released over $17.6 billion for the economic stimulus package mid-last month. Their goal is to somehow stem the economic impact caused by the pandemic by adding support to investments and businesses for them to keep the money moving.
The package consists of four parts: supporting business investments, providing cash flow assistance, targeted support for the most severely affected, and household stimulus payments. As a small business, what will impact you will be the first two parts.
Supporting Business Investment
$700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
$3.2 billion to back business investment by providing a time-limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50 percent of the asset cost in the year of purchase.
Cash flow assistance for businesses
$6.7 billion to Boost Cash Flow for Employers by up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff, between 1 January 2020 and 30 June 2020. The payment will be tax-free. This measure will benefit around 690,000 businesses employing around 7.8 million people. Businesses will receive payments of 50 percent of their Business Activity Statements or Instalment Activity Statement from 28 April with refunds to then be paid within 14 days.
$1.3 billion to support small businesses to support the jobs of around 120,000 apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 percent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
In these trying times, the help of the government is needed now more than ever. Although these benefits will help maintain your business for another few months, proper utilization is still necessary.
To fully understand the impact of the government stimulus package and how you can use it, get in touch with us today. We are an e-commerce accounting service that specializes in helping small businesses with their accounting needs.