Federal Government Support: Cash Flow & Employment

It’s all about cash flow assistance and support in keeping Australians employed and working.

The Australian Government is supporting Australian businesses to manage cash flow challenges and retain employees during the Coronavirus health crisis.

The federal package is front-loaded, meaning a burst of money comes at the start – $11 billion over the next three months. Here are the highlights:

  •  $750 one-off cash payment to welfare recipients will be received by 6.5 million Australians including those on the age pension, Family Tax Benefit, Youth Allowance, Newstart, Austudy, Disability Support, parenting and carer payments. Paid into our account from March 31, 2020. Budget Cost: $4.8 billion in 2019-20.
  • Lower and higher deeming rates will be cut by half a percentage point, largely benefiting aged pensioners. Budget Cost: $600 million
  • Investment incentives for businesses with turnover up to $500 million. The instant asset write-off threshold has been lifted to $150,000 temporarily and a 15-month investment incentive will give businesses a 50 per cent deduction on the cost of eligible assets. Budget Cost: $3.9 billion
  • Up to 70,000 eligible employers are able to get a wage subsidy worth 50 per cent of apprentice or trainee wages paid from January 1, 2020 to September 30, up to $21,000 per person. Budget Cost: $1.3 billion
  • For employers with turnover under $50 million, a tax-free payment of $2000 to $25,000 will be paid to about 690,000 small and medium businesses. Budget Cost: $6.7 billion
  • For workers who fall sick or need to be isolated, Services Australia will offer a Major Personal Crisis exemption for 14 days for those who cannot meet current income-support obligations due to required isolation. This does not require a medical certificate unless a further extension is needed. Others may be covered under Youth Allowance, a Sickness Allowance or, after March 20, a JobSeeker Payment.

Boosting cash flow for employers

Helping small and medium businesses with aggregated annual turnover under $50 million to cover the costs of employee wages and salaries equal to 50 per cent of PAYG withheld for businesses that withhold tax, with a minimum of $2,000 and a maximum of $25,000 over six months. Businesses that pay salary and wages but are not required to withhold tax will also receive the minimum payment of $2,000. This will be a tax-free payment, benefiting around 690,000 businesses employing 7.8 million people.

Supporting apprentices and trainees

Helping businesses retain apprentices and trainees by offering a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for nine months. The subsidy of up to a maximum of $21,000, will be available to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee, or, where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. This will support up to 70,000 small businesses employing around 117,000 apprentices.

Source: https://treasury.gov.au/coronavirus/businesses

Business Investment

From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.

A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.

Cashflow Assistance

Tax-free payments of up to $25,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees.

Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.

If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $2,000 will still be made. The minimum $2,000 payment will be applied to the first activity statement lodgement.

Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.

Individual States Offering Support

Several of the individual states have jump in on the stimulus love, with the main focus being keeping Australians employed and in the workforce.

New South Wales

The New South Wales government has revealed a robust $2.3 billion package which is is aimed predominantly at larger businesses and those in severely affected areas of tourism and entertainment. However, it also waives many fees and charges for small businesses such as bars, cafes and restaurants and injects additional funds into employing extra public infrastructure cleaners for places such as transport assets, schools and other public buildings.

There is a waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). This means these businesses will save a quarter of their annual payroll tax bill in 2019-20. Also, the payroll tax threshold limit has been raised to $1 million.

They will also be bringing forward maintenance on public assets including social housing and crown land fencing.

Western Australia

The Western Australian state government has created a $607 million package that include one-off payroll tax grants of $17,500 for small businesses as well as a $1 million payroll tax threshold brought forward by six months to July 1, 2020. Small businesses impacted by COVID-19 may also be able to defer payroll tax payments until July 21, 2020.

They have also announced the freezing of household cost for bills such as electricity, water, registration and public transport. Typically, these would rise with inflation. Note: households will still need to pay these fees, only they will be less than previously announced.

Queensland

The Queensland government announced a fund to help businesses with both keeping staff employed and operational expenses.  They were quick to start providing mentoring sessions and financial workshops for small businesses, introduce payroll tax relief deferral to July 2020 and a tourism package of $27 million giving industry specific support for commercial fishers, tourism operators and liquor licence holders.

However, the announcement that got the most interest was the 12 month interest free loans of up to $250,000:  At time of writing, the fund is open for expression of interest via [email protected], but there’s no available detail on eligibility.

**We have made every effort to ensure this information is accurate and correct at the time of publishing**

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