The coronavirus or COVID-19 pandemic has severely impacted Australian workers and businesses. In response to this crisis, the Commonwealth Government is providing emergency financial relief. This includes a $17.6-billion stimulus package followed by a second round of stimulus measures valued at $66.1 billion.
According to officials, these financial aids are designed to help businesses stay afloat and survive the crisis. Trades businesses are among the worst affected by the pandemic, so it’s important you know the stimulus packages that apply to you.
Instant asset write-off
Prior to the pandemic, trades businesses could write off equipment expenses that cost less than $30,000. Starting March 12, 2020, however, the Government temporarily increased the threshold of the instant asset write-off to $150,000. Write-offs can be claimed immediately as long as the asset is purchased before July 1, 2020.
This eliminates massive costs associated with purchasing new or secondhand equipment, vehicles, and heavy machinery to complete jobs. With less burden on cash flow, trades businesses can remain productive and profitable during the outbreak.
Businesses with an annual turnover of $500 million (increased from $50 million) are eligible for an asset write-off. To make a claim, you must acquire a receipt of the asset purchased and record it in your accounting software for tax time. Then, lodge the report to the Australian Taxation Office (ATO). You may also need to report assets purchased in your activity statements if they’re subject to Goods and Services Tax (GST) credit.
Additional investment incentive
Asset depreciation write-off will also be supported by the Australian Government to incentivise investments. Businesses can deduct 50% from the cost of new assets purchased in the year until June 30, 2021.
Similar to the instant asset write-off scheme, businesses with an annual turnover under $500 million are eligible for this incentive. However, it only applies to new asset purchases that cost more than $150,000. To opt for the incentive, you must report the purchased assets in your accounting software and activity statement for the ATO.
Apprentice wage subsidies
If your company has less than 20 employees and works with apprentices or trainees, you’re eligible for apprentice wage subsidies. These subsidies offer up to $21,000 spread across nine months for each apprentice under your employ. Payments start from January 1 to September 30, allowing you to finance and facilitate the training of budding tradies. This program is specifically built for small businesses that are likely to experience cash shortages during the coronavirus pandemic.
To qualify for these subsidies, you’ll have to complete an eligibility assessment by an Australian Apprenticeship Support Network (AASN) provider. It’s also possible to qualify for this scheme if you’ve hired an apprentice who recently became unemployed on March 1.
Enhanced cash flow payments
Substantial cash grants are available to businesses with an aggregated annual turnover of $50 million between April and July 2020. Companies will be credited 100% of their withholding tax on employee salaries and wages. The maximum amount businesses can receive from these payments is capped at $50,000 (previously $25,000 from the first stimulus package).
Meanwhile, minimum payments are being increased from $2,000 to $10,000 to eligible companies. These grants provide your businesses with short-term relief, considering that cash shortages will likely occur during this period.
Also, there are no extra steps required on your end to receive these payments. Just report your withholding tax payments as normal to the ATO, and the government agency will do the rest.
Aid for financially distressed businesses
The Commonwealth Government is providing safety nets for financially struggling businesses, so they can remain operational. For starters, the threshold at which creditors can issue warnings for debt payments has been increased from $2,000 to $20,000. Also, the time companies have to respond to these demands has increased from 21 days to 6 months. Finally, the Treasurer may temporarily provide targeted relief to companies affected by unforeseen events and government actions resulting from coronavirus.
Coronavirus SME guarantee scheme
To give businesses access to working capital, the government will guarantee 50% of new business loans issued by authorised lenders. Around $40 billion of lending has been allocated to this scheme to encourage lenders to approve loans.
Small- and medium-sized enterprises (SMEs) with an annual turnover of less than $50 million are eligible for this scheme. They can even secure a maximum loan of $250,000 paid over the course of three years. Loans are unsecured, meaning borrowers don’t need to provide an asset as security for the loan. What’s more, many banks are offering six-month loan repayment deferrals to ease the pressure on SMEs.
Make sure to contact your bank if loans are supported by the scheme. According to the government, you’ll be able to make these loans from April to September 2020.
The COVID-19 pandemic is a frightening time for both tradies and businesses, but you can bounce back. Maximising the right packages and staying organised are key to getting through to the other side of the crisis. WorkBuddy is a job management software that ties into your accounting systems and helps you regulate cash flow. It even comes with compliance features and forms to ensure the health and safety of your workers. Call us or request a free WorkBuddy demo today.