What stimulus can your business access?

Over the last fortnight, various Governments around Australia have announced a range of economic stimulus measures designed to support businesses in navigating the financial challenges of COVID-19. With all the information out there it is hard to know what businesses should be doing.

The following points are a high-level summary of recommended actions and available Government support.

Actions to consider/ implement

  1. Understand the starting position – Establish the current financial position (including tax lodgements, liabilities etc);
  2. Estimate the costs to continue – Make a realistic estimation of the monthly costs to continue the business through the virus period (the forecast) including potential Government assistance.
  3. Consider priority funding – Consider funding options and ability to prioritise Directors/Shareholders funding or increase bank facility, new equity or new finance facilities.
  4. Safe harbour review of the forecast or options – Consider safe harbour review to test the approach and the options available. Although insolvent trading provisions have been suspended for 6 months, Directors still have other responsibilities and potential exposure.
  5. Consider options and monitor – Explore alternatives like Voluntary Administration with a Holding DOCA approach if arrangements with creditors are not possible to be reached.

Federal Government tax business stimulus

  • $10,000 to $50,000 as a rebate of 100% of PAYG withholding from 1 January to 30 June 2020;
  • $10,000 to $50,000, equal to the credit above, to be made in July to 30 September 2020.
  • Increased instant asset write off to businesses with $500m turnover to $150,000 (applies from 12 March to 30 June 2020) and additional 50% tax depreciation to 30 June 2021; and
  • Wage assistance for each apprentice paid from 1 January to 30 September 2020.

Individuals (incl. employees)

Alternative funding stimulus

  • The Government will guarantee 50% of new loans issued by eligible lenders by 30 September 2020 to small and medium businesses.
  • Loan terms to be: unsecured, up to $250,000, 3-year term and no repayments for the first 6 months.
  • Temporary relief for business directors for trading while insolvent;
  • $715 million support for the aviation industry.

State Government tax stimulus

Each state has released different business stimulus measures. See below links to each state’s incentives: