The following is a summary of key relief incentives released by the Federal and Victorian State Governments, the City of Melbourne and the ATO to assist businesses impacted by the economic downturn due to COVID-19 and what you need to do access these incentives.

Please note this article is prepared for business owners. There are other incentives that have been released for non business owners.

Importantly some relief measures are immediate whilst some will not provide benefit until a later point in time.

The summary is based on information released to date and there will be further relief packages. It is broken down into Federal and Victorian tax stimulus incentives:

This article is up to date as at 23 March 2020.

Cash Flow Boost – Federal Government

  • Tax free cash flow boost of minimum $20k and maximum $100k.
  • First payment from 28 April.

Who is eligible and what are the details?

  • Businesses established prior to 12 March 2020 and Not-for-Profits (NFPs) with an aggregated turnover of under $50 million and that employ workers.
  • Turnover is based on prior year turnover.
  • The incentive is calculated as 100% of PAYG withholding required to be withheld.
  • Therefore to quantify how much you are eligible, review how much PAYG withholding on an annual basis you would be expected to pay compared to the minimum or maximum amounts eligible.
  • The incentive period to receive the cash boost is effectively paid over time split into 2 “phases” as follows:
    • Phase 1: March to June 2020 (first payments from 28 April)
    • Phase 2: July to October 2020 (first payments from 21 July)
  • Therefore if you are entitled to $50k in Phase 1, then you will also benefit from $50k in Phase 2.

What do I need to do?

  • Calculate and lodge your activity statements for the March period onwards as soon as possible.
  • The ATO will calculate and pay / credit your entitlements based on data it has had once the activity statements are lodged.
  • There is no new form or process to undertake.

Supporting Apprentices and Trainees – Federal Government

  • Reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

Who is eligible and what are the details?

  • The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee.
  • The apprentice or trainee must have been in training with a small business as at 1 March 2020.
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.
  • Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.

What do I need to do?

  • Employers can register for the subsidy from early April 2020.
  • Final claims for payment must be lodged by 31 December 2020.

Payroll Tax Refunds – Victorian Government

  • Full payroll tax refunds up to $113,975 a year for the 2019/2020 year.
  • Refunds will start flowing back week commencing 23 March 2020.

Who is eligible and what are the details?

  • SMEs with a payroll of less than $3 million.

What do I need to do?

  • Automatic.
  • Refunds will start flowing back week commencing 23 March 2020.

Instant Asset Write Off – Federal Government

  • Increase the instant asset write-off threshold from $30,000 to $150,000.

Who is eligible and what are the details?

  • For businesses with an aggregated annual turnover of less than $500 million.
  • The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
  • Applies for new or second-hand assets first used or installed ready for use by 30 June 2020.
  • The instant asset write off threshold is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.

What do I need to do?

As this instant asset write off is a tax timing benefit, recommend to:

  1. consider whether there are critical asset investments you need to make in the business; and
  2. whether applying the instant asset write off will assist you minimise tax exposure that you would otherwise need to pay (i.e. the value of accelerated tax write off is less valuable if you don’t otherwise have net taxable income from which to pay corporate tax).

Investment Incentive – Federal Government

  • Eligible assets acquired and first used or installed by 30 June 2021 will be eligible for a 50% depreciation in the first year with the existing depreciation rules applying to the balance of the assets cost.

Who is eligible and what are the details?

  • For businesses with an aggregated annual turnover of less than $500 million.
  • New assets that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (i.e. plant, equipment and specified intangible assets, such as patents) acquired after announcement and first used or installed by 30 June 2021.
  • Does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

What do I need to do?

  • As tax depreciation is a tax timing benefit, recommend to i) consider whether there are critical asset investments you need to make in the business and ii) whether applying accelerated depreciation will assist you minimise tax exposure that you would otherwise need to pay (i.e. the value of accelerated tax write off is only really valuable if you otherwise have net taxable income from which to pay corporate tax).

Defer Payroll Tax – Victorian Government

  • Defer payroll tax for the first 3 months of the 2020 / 21 financial year until 1 January 2021.

Who is eligible and what are the details?

  • SMEs with a payroll of less than $3 million.

What do I need to do?

  • Not entirely clear but appears automatic deferral.

Rent relief – Victorian Government

  • Commercial tenants in Government buildings can apply for rent relief.

Who is eligible and what are the details?

  • Appears available to all tenants for Victorian Government buildings however details are limited.

What do I need to do?

  • Not entirely clear but appears you should contact your Victorian government lease contact to negotiate.

Business Support Fund – Victorian Government

  • $500 million to establish a Business Support Fund.

Who is eligible and what are the details?

  • The Fund will support the hardest hit sectors, including hospitality, tourism, accommodation, arts and entertainment, and retail.
  • The Victorian Government will work with the Victorian Chamber, Australian Hotels Association and Ai Group to administer the fund to help businesses survive and keep people in work.

What do I need to do?

  • Link to register interest to understand more here.

Coronavirus SME Guarantee Scheme – Federal Government

  • The Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.

Who is eligible and what are the details?

  • SMEs with a turnover of up to $50 million will be eligible to receive these loans.
  • The Government will provide eligible lenders with a guarantee for loans with the following terms:
  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to three years, with an initial six month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
  • The Government will encourage lenders to only incur interest on the amount they draw down.

What do I need to do?

  • The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.

ATO Assistance

The ATO encourages businesses impacted by the coronavirus to get in touch with the ATO to discuss relief options which will be tailored for each affected business. Options available to assist businesses impacted by COVID-19 include:

  1. Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
  2. Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
  3. Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
  4. Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
  5. Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

City of Melbourne Stimulus Package

The City of Melbourne is developing a local economic stimulus package valued at more than $10 million, which will include:

  1. A virtual Business Support Summit at Melbourne Town Hall
  2. Suspending fees for Food Act registrations and street trading permits for three months
  3. Halving rent for eligible tenants in Council owned buildings for three months
  4. Opportunities to deploy casual and part-time staff to enhance city cleanliness and amenity
  5. Developing a Rates Hardship Policy for consideration by the end of this month

Further details will be provided in due course.