Do we dare to dream?
Is it time for us to be cautiously optimistic?
After what seems like an eternity (longer if you have school-aged children learning from home), it appears there may be some light at the end of the tunnel. Australia has emerged as a global poster child for how to deal with COVID-19. Restrictions are slowly starting to lift, and like bears in spring, were cautiously emerging from our enforced hibernation.
However, this is not the time to get ahead of ourselves. We are by no means out of the woods yet. The virus has not gone away and will remain a persistent threat until a vaccine or cure arrives
The business world is starting to count its bruises. The prospect of getting back to work is encouraging, but huge numbers are still closed and may not be able to reopen for some time to come. The enormous economic impact and the persistent spectre of another outbreak will likely mean it will take some time for the economy to get back to normal.
In recent posts, we provided some insights into how virtual and serviced offices can help businesses manage through the COVID-19 crisis. That’s all well and good, but if your business has been pushed to the edge, you may need an external lifeline to stay afloat.
Fortunately, Governments have stepped up to the plate. Most of us are familiar with at least some of the measures implemented on the Federal level. However, if you’re a business owner or manager, you may be relieved to know that state and local governments are also answering the call in this time of need. Navigating the maze can be more than a little bit confusing, so we figured we’d make things somewhat simpler for you with this summary:
Federal COVID-19 relief measures
- JobKeeper payments
The government’s flagship policy has not been without its problems. Nevertheless, it’s impossible to deny that $130 billion distributed to an estimated 6 million Australians is a much-needed injection.
What: Fortnightly pre-tax payments of $1500 per worker paid to employers to subsidise lost wages.
Who: JobKeeper Payment is available to the following Companies:
- Small-medium businesses: With turnover of less than $1 billion, whose revenue has fallen by 30% or more
- Large businesses: With turnover of more than $1 billion, whose revenue has fallen by 50% or more.
- Self-employed & Sole Traders: Whose turnover has declined by 30% or more.
- Charities: Whose income has reduced by 15% or more
And for the Following Employees:
- Were employed by a qualifying employer in full-time, part-time, fixed-term or long-term casual basis on March 1st of this year.
- Aged 18 or over (some exceptions are available for 16-17 year-olds not enrolled in full-time schooling)
- An Australian resident for income tax and social security purposes.
- Not receiving certain other government assistance funds.
How: You can apply for the JobKeeper payment via the ATO website. Take care, however. Eligibility and other details may change from time to time, so make sure you have the most up-to-date information before applying.
- Temporary cash flow payments
Funds are available for small-medium sized businesses to help them meet immediate expenses, keep staff employed and stay afloat.
What: Staged payments totalling up to $100,000 available each quarter. Funds are intended to help cover bills such as rent, utilities and other costs. The first boost was made available in April, and the next payments will be sometime between June to September. Amount of the payment is based on the previous year’s turnover and employee tax withholdings.
Who: Payments are available as follows:
- Small-Medium businesses, not-for-profits and charities that had an ABN as at March 12, 2020, and are still operating.
- Those that are required to withhold employee tax will receive the full amount of their withholdings up to $50,000 per payment.
- Those not required to withhold tax will receive a minimum payment of $10,000 based on their turnover.
How: These payments are calculated automatically by the ATO.
- Apprenticeships & trainees
A subsidy is provided to small employers to help them retain apprentices and trainees that they would otherwise have had to let go.
What: Wage subsidy of up to 50% of the apprentice or trainee’s salary paid between January 1 and September 30 this year.
Who: Recipients must meet the following criteria:
- Apprentices & trainees in an Australian Apprenticeship on March 1, 2020.
- Employers with fewer than 20 employees.
- Group Training Organisations with members working at a host company that qualifies for the JobKeeper payment way also be eligible.
- SME guarantee scheme
The government has made it easier for small and medium-sized business to access emergency loans to help them manage through the economic lull.
What: Under the SME Guarantee Scheme, the government will guarantee up to 50% of loans made by enrolled financial institutions to businesses impacted by Coronavirus. This measure covers loans under the following criteria:
- Loans up to $250,000
- Repayment term of up to three years
- An initial repayment-free period of six months
- No security required
- The federal government has allocated a total of $40 billion to this scheme.
Who: SMEs with turnover less than $50 Million can access these loans through participating institutions. Additionally, the government has provided exemptions from the Fair Lending Act for qualifying institutions so that struggling businesses can receive funds faster and more easily.
How: Talk to your lender to determine whether they are one of the more than 40 lenders participating in the scheme. Please keep in mind that the decision to provide finance remains with the lender, so standard risk assessment procedures will still be in effect.
In addition to the SME Guarantee Scheme, the government has instructed lenders that the fair lending act is temporarily suspended for their existing borrowers. This will make the process of accessing finance significantly quicker and easier. So, if you have a current finance arrangement, speak to your lender.
- Business investments
The wheels of commerce must keep turning. To encourage organisations to continue investing in growth, several incentives have been introduced.
What: Until June, you can write off 50% of the value of investments of up to $150,000 in depreciable assets such as machinery, vehicles and others. This will ensure that your business can reap a significant tax advantage for the current financial year
Who: Companies with turnover of less than $500 million can claim the expanded depreciation on new and second-hand capital equipment and machinery that is installed or first used by June 30 of this year.
How: Speak to you accountant when preparing your FY 2020 corporate taxes.
Victorian state COVID-19 relief measures
Victoria’s state government has been pro-active in introducing a range of additional measures that can be of great assistance to local businesses. In conjunction with the federal policies detailed above, they represent a considerable lifeline, particularly for small businesses struggling to stay afloat, and their employees.
The state’s two flagships measures are as follows:
- Business support fund
This measure is an extension of the Commonwealth’s JobKeeper package. It provides a total of $500 million for additional one-off grants to those businesses in sectors hardest hit by the COVID-19 crisis.
What: $10,000 grants for the most highly affected businesses to use for costs such as rent, wages, utilities and other essential activities.
Who: To be eligible for the BSF, you must be:
- A company with a total wages bill of less than the payroll tax threshold of $650,000
- Participating in the Commonwealth Government’s JobKeeper program.
- The BSF was initially intended for the most vulnerable industries such as hospitality, food, entertainment, health and others. As the situation has developed, the criteria have been relaxed to include any business that meets the previous two conditions.
How: Applications can be completed at the Business Victoria website. However, you will need to be quick as they close on Monday, June 1. The Victorian Chamber of Commerce, Australian Hotels Association and the Australian Industry Group are partnering with the State Government to distribute the funds.
- Working for Victoria fund
An innovative program that allows workers who have lost their jobs due to Coronavirus to utilise their skills for State Government enterprises.
What: An online platform on which displaced workers can register their skills and job preference, and be matched with employment opportunities at registered employees.
Who: Any worker impacted by the pandemic can join the site. Any employee looking to connect with qualified candidates for open positions can post on the site.
How: Simply visit www.vic.gov.au/workingforvictoria to sign up.
Other measures instituted by the State Government include:
- Exemption from payroll tax and WorkCover payments for businesses participating in JobKeeper with taxable wage bills up to $3 million. These deferrals are in place until Q1 of FY2020/21.
- Liquor licensing fees for bars, pubs and other venues have been waived for 2020.
- Any business supplying goods or services to the State Government is guaranteed to receive payment within ten business days.
- Tenants in Government buildings can apply for rent relief.
- Land Tax payments for owners with at least one non-residential property and a total taxable property portfolio of less than $1 million are deferred until after December 31st.
- Landlords providing tenants COVD-19 impacted with rent relief, or are unable to secure new tenants are eligible for a 25% reduction in 2020 land tax.
- All fees and fines that were scheduled to increase in 2020 will be frozen at their pre-COVID-19 levels.
City of Melbourne COVID-19 relief measures
Not to be outdone, Our Fair City is offering further support for resident businesses to boost the local economy.
- COVID-19 grants
The City set aside $5 million worth of grants for SMEs and NFPs in the Melbourne. These grants were available for specific purposes, and the size of the allowance varies depending on the intended use.
What: The following grants are available:
- Up to $2,000 for training and professional development.
- Up to $5,000 for investment in digital or e-commerce activities.
- Up to $10,000 matching funds for capital works and investment.
How: Applications for this grant have now closed. However, as less than half of the designated funds were distributed, businesses still affected should contact the City of Melbourne’s COVID-19 Business Concierge line on 9658-9658 to discuss what options remain available.
However difficult this experience has been for all of us, it’s incredibly comforting to see how we have come together as a community to support each other during an unprecedented crisis. As we head towards what we hope will be a normalised economic environment, those hit hard by this pandemic can and should take advantage of the available assistance.
As you can see, many of the items listed above deal with commercial property and rents. If you’re rethinking where and how you operate, perhaps now would be a great time to give APSO a call today. We’re always happy to chat and see whether one of our outstanding serviced office, or virtual office solutions can help you weather the storm. We don’t require any lock-in contracts, so if you find yourself needing to make alternative arrangements in the short term, we’re here to help.