Business & Financial Support
Federal Financial Support Information
The Federal Government released a second stimulus support package to help with the effects of coronavirus on the economy. Some of the updates are:
- PAYG Withholding credits for businesses with employees has increased to $20,000 minimum – $100,000 maximum. The rebate is based upon 100% of PAYG Withholding for the period 1 January – 30 June 2020 to a maximum of $50,000. If you are entitled to the maximum $50,000 in PAYGW credits for the period 1 Jan 2020- 30 June 2020, you will receive an additional $50,000 in credits over the period 1 July 2020-31 October 2020. This is for businesses with an annual turnover of less than $50m.
- The threshold at which creditors can issue a statutory demand for payment of amounts outstanding will increase from $2000 – $20,000. This measure will be in place for 6 months. The period of time that the debtor has to respond will increase from 21 days to 6 months for a period of 6 months.
- Instant asset write off – increased from $30,000 to $150,000 from 12 March 2020 – 30 June 2020.
- Assets over $150,000 eligible for 50% instant write off and the balance deductible at normal rates in the same year – this second measure is from 12 March 2020 – 30 June 2021.
- 50% subsidy for apprentice or trainees wage (up to $21,000) for the period 1 January 2020 – 30 September 2020 for businesses with up to 20 full-time employees
Supporting the flow of credit
The Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. SME’s with a turnover of up to $50 million will be eligible to receive these loans. The Government will provide eligible lenders with a guarantee for loans with the following terms:
- Maximum total size of loans of $250,000 per borrower.
- The loans will be up to three years, with an initial six month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan
The Australian Government has established a website where businesses can find critical information regarding financial assistance, eligibility and timing for the new government support for Australian businesses. This includes information around increasing the instant asset write-off, boosting cash flow for employers and measures to support apprentices and trainees. For more information, click here.
NSW Government Financial stimulus package for small business
The NSW Government has announced a stimulus package that includes the following initiatives for small business:
- Payroll tax changes
- Tax-free threshold increase from $900,000 to $1 million
- Deferral of payroll tax for business with payrolls over $10 million for 6 months (up to $4 billion deferred).
- An additional 3-month deferral for businesses with payrolls of $10 million or less who received a 3-month waiver on payroll tax in the first package.For more information about payroll tax changes, visit Revenue NSW – click here for more information
- Waive of gaming tax for clubs, pubs and hotels, and lotteries tax for 6 months, conditional on these funds being used to retain staff. This improves liquidity and helps these businesses stay afloat – click here for more information.
- Defferal of all Annual Liquor License Fees for the 2020 – 2021 fee period – click here for more information.
- Deferral of duty on Keno for six month – click here for more information
- Deferral of the parking space levy for 6 months – click here for more information
- Deferral of rents for 6 months for commercial tenants with less than 20 employees in all Government-owned properties – click here for more information
- Relief of $220 million in Land Tax to the commercial sector under certain circumstances – click here for more information
- Network charges will be rebated for small business customers experiencing financial stress and who are mothballing as a result of COVID-19 – click here for more information
Small Business Support Grant
The NSW COVID-19 Small Business Support Grant of $10,000 will be available to eligible NSW small business owners.
The application form will be available on the Service NSW website by 17 April.
To be eligible, businesses will need to:
- have between 1-19 employees and a turnover of more than $75,000
- a payroll below the NSW Government 2019-20 payroll tax threshold of $900,000
- have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020
- be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020
- use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice
- provide appropriate documentation upon application.
For more information or to apply for this grant, click here.
Commercial Leasing Code of Conduct Regulation
The mandatory Commonwealth Code of Conduct is a set of good-faith leasing principles for commercial tenancies, including retail, office and industrial, during the COVD-19 pandemic. It states that rent reductions should be proportional to the tenant’s decline in turnover to ensure the financial burden is shared between tenants and landlords. That Code of Conduct has now been given effect in NSW by the introduction of the Retail and Other Commercial Leases (COVID-19) Regulation 2020.
The code applies to all commercial tenancies that:
- are suffering financial stress or hardship as a result of the COVID-19 pandemic
- are eligible for the JobKeeper program
- have an annual turnover of up to $50 million.
For more information, visit Relief for commercial tenants.
The NSW government is supporting commercial tenants by enacting the mandatory National Cabinet Code of Conduct as part of a new land tax relief package. This means:
- landlords must negotiate rent relief agreements with tenants who have been financially impacted by COVID-19
- there is a ban on the termination of leases for non-payment of rent
- there is a freeze on rent increases.
Small business owners can access mediation and advisory services at the NSW Small Business Commissioner website.
Duty of directors to prevent insolvent trading
Last week we updated members on pre-existing “safe harbour” laws which could have assisted members with setting up a defence to a possible future insolvent trading claim. Government has now introduced new “safe harbour” provisions, which will apply for 6 months from the commencement date (TBA) in respect of debts incurred in the “ordinary course of the company’s business”.
A company will be taken to incur a debt in the ordinary course of business if it is necessary to facilitate the continuation of the business during the relevant period. The Explanatory Memorandum suggests this could include:
- taking out loans; or
- continuing to pay employees.
For example, it would also likely cover debts incurred in respect of:
- a new cleaning regime;
- delivery of food or products; and
- engaging consultants.
The new “safe harbour” is an automatic process providing personal protection for directors from the commencement date.
Despite these new provisions, Henry William Lawyers (insolvency specialists and AHA members) recommends all businesses act early with necessary or desirable restructuring action. Whilst a new defence to insolvent trading may partially address directors’ personal statutory liability concerns, new debt accruing through a period of no trade still may have crippling long term effects if not addressed as soon as possible. Further, this new law will not reduce potential liabilities for directors under personal guarantees. Commercial leverage to negotiate with key third parties will also be at its strongest in the earlier days.
Helpline for Small Businesses Impacted by COVID-19
Morrison Government’s Business Hotline – 13 28 46 – www.business.gov.au
Operations at the www.business.gov.au 13 28 46 Contact Centre will increase from five days per week to seven days per week, and provide an additional two hours a day of support outside standard operating hours for the first month, answering calls from 7.00 am to 11.00pm AEST.
NSW Business Concierge – 13 77 88 – www.mybusiness.service.nsw.gov.au/concierge
The NSW Government provide a Business Concierge service to help you with regulation requirements, deal with Councils & agencies, and connect you to support and advice.
NSW Business Connect – 1300 134 359 – www.business-connect-register.industry.nsw.gov.au
If you need some advice and support on topics such as managing cashflow, changing your business model and delivering services online, marketing your business during in a challenging environment, reassessing your supply chain, or even accessing financial support, the NSW Government provides a free, mobile business advisory service called Business Connect.
5 steps businesses can take
In the midst of managing the business impacts of the crisis, here are 5 things you might want to think about.
- Make sure you are following health and safety guidance from the Department of Health.
- Communicate what health and safety measures you are taking in your business to your customers and partners.
- The Department of Health has launched a national campaign to inform all Australians about the Coronavirus. They have developed a range of resources for businesses to use, find out more here.
- The Australian, State and Territory Governments have announced a series of measures to support businesses and individuals during this difficult time. Find out more here.
- Look after your mental health and reach out if you need help.