This is a guide to the various stimulus packages and financial difficulty measures in place to help small business owners in Western Australia navigate the economic uncertainty from COVID19
Cashflow assistance for businesses (PAYG)
If you have employees you can access a tax free payment to cover the costs of employee wages and salaries
- for businesses and NFPs with a turnover under $50 million - that were active eligible employers as at 12 March 2020
- 100% of the PAYG withholding applied as a credit to the ATO Integrated Client Account (ICA)
- a minimum of $10K and a maximum of $50K
- for quarterly BAS - this means all of the PAYG is credited on BAS lodgement
- for monthly IAS - this means 300% of the March PAYG credited on BAS lodgement
- the minimum payment will be applied to the first lodgement
- there will be an additional payment equal to the total of all payments received to date in the July - October period
- the additional payment makes the total package at least $20K and up to $100K
Read more about cashflow assistance for businesses
PAYG Cashflow Boost Calculator
Making it easier to get finance
If you are looking to take out a short term loan to meet cashflow needs over the coming months
- 50% of any new unsecured short term loan for SMEs is guaranteed by the government
- maximum total loan size of $250K per borrower
- loans of up to 3 years, with an initial 6 month repayment holiday
- government will encourage lenders to provide draw down style facilities (like overdraft) where interest is only paid on what you use
- commences early April 2020 and be available for new loans until Sep 30 2020
Read more about Coronavirus SME Guarantee Scheme
Temporary relief for financially distressed businesses
If you are trading insolvent, or get issued with a statutory demand letter by a creditor
- increase to the minimum amount for which creditors can issues a statutory demand
- increase to the time given to you to reply to a statutory demand
- increase to the threshold for a creditor to initiate bankruptcy proceedings, the time to respond, and the period of protection
- relief for directors from personal liability when trading insolvent
Read more about the temporary relief measures
Supporting apprentices and trainees
If you employ an apprentice or trainee you may be eligible for a wage subsidy of 50% of their wage paid from Jan 1 2020 to Sep 30 2020
- up to a maximum of $21,000 per apprentice or trainee ($7,000 per quarter)
- less than 20 employees in the business
- must have been in training as at Mar 1 2020
- eligibility assessment to be done by an Australian Apprenticeship Support Network (AASN) provider
- register from April 2020, final claims for payment lodged by Dec 31 2020
Read more about the apprentices subsidy
Enhancing the instant asset write-off
If you were planning on buying assets for the business, you can accelerate the depreciation of them to reduce your taxable income
- applies to assets costing less than $150,000
- the threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets
- available to businesses with annual turnover under $500 million
- applies from Mar 12 2020 to Jun 30 2020
- for new or second-hand assets first used or installed for use between those dates
Read more about enhancing the instant asset write-off
Backing business investment
Deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost
- eligible businesses - business with aggregated turnover below $500 million
- eligible assets - those that can be depreciated under Division 40 of the Tax Assessment Act (ie - plan, equipment and specified intangible assets such as patents)
- assets must be acquired from Mar 12 2020, and first used or installed by 30 June 2021
Read more about backing business investment
WA Stimulus Package
If you currently pay payroll tax, you get a once-off grant of $17,500 and the payroll threshold to pay payroll tax has been lifted to $1 million
- payroll tax threshold being raised to $1 million, starting from July 1, 2020
- businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500 - automatically paid by cheque from July 2020
- payroll tax will be waived for four months for businesses with annual wages under $7.5 million
- one-off $2,500 credit on electricity bills for small businesses consuming under 50MWh per year
- WA Government will waive rental payments for small businesses and not-for-profit groups in State Government-owned buildings for six months
- a range of business licence fees have been waived, including liquor licence renewal fees for 2020, which will be waived and refunds given to businesses that have already paid
- businesses can apply for interest free payment arrangements and for late payment penalties to be waved for a range of taxes and duties
Read more about the WA stimulus package
The banks have come to the party with hardship assistance packages and support measures for businesses
Assistance could include -
- deferring loan payments
- waiving fees and charges
- helping with debt consolidation
- waiving penalties for early withdrawal of a term deposit, or
- deferring upcoming credit card payments and increasing emergency limits
It varies bank to bank, so I've linked the common banks COVID measures below -
The Australian Banking Association has great information about the bank financial difficulty measures
ATO hardship relief
The ATO provides support for businesses (including sole traders) experiencing financial difficulty and have an Emergency Support number you can call to ask for assistance 1800 806 218
Relief measures include -
- remitting interest and penalties incurred after Jan 23 2020
- offering low interest payment plans
- deferring payments or varying instalments including income tax, activity statements, PAYG, FBT and excise payments by up to 6 months
These measures aren't automatically applied but you can always ask. Something we're seeing for example is the downward adjustment of PAYG-I instalments to take into account poor sales forecasts and reduced profits come year end. Chat with your tax accountant
Managing your people
Fairwork have some good information around workplace laws, work from home, having employees or family members sick from CoronaVirus, and other resources
It's a good time to communicate openly with your employees and discuss your business strategy should they be required to self-isolate
Things to consider include -
- your policies around working from home, and how it will work if employees are required to stay home to look after kids and other dependants (should schools close)
- whether you can offer flexible working hours
- reduced hours for staff if business slows
- how it would fit in with the industry awards
- your policy around managing employees who refuse to come to work due to the possibility of infection
- your work, health and safety policies and duty of care to your people
- how you will maintain business continuity as people get sick
Managing Your Cashflow
Start thinking about strategies you can put in place to help manage your cashflow -
- review your fixed overheads like your rent - some landlords are offering rent relief (it's worth asking)
- call up your debtors to confirm when you can expect payment on invoices and be proactive in managing your cashflow
- think about offering payment arrangements to slow payers with an amount up front now
- talk to your suppliers to see if you can enter into payment arrangements, improve payment terms, or get a discount for early payment
- sell or lease equipment you aren't using
- reduce costs for those expenses that you spend in the good times (business lunches, training courses) - review expenses that won't put you at risk or impact productivity - the 'nice to haves'
Take the time now to prepare a cashflow forecast for the next few months. It's worth understanding your daily and weekly planned cash position to make informed decisions!
A little free help from us #CashflowFridays
Seeing how challenging business is right now, we are going to do our bit to help. We are setting aside time on Fridays for free consults for existing customers who want to get a clear picture of their financials
If this sounds like something you want, we'd love to catch up for a conversation to go over your numbers, look at cashflow and help you plan forward
