Cash Flow Assistance for Business
The Australian Government, state and territory governments, the Reserve Bank and the Banking Association of Australia have announced a range of attractive measures to help small business in the wake of the economic impact of coronavirus.
The business investment measures have been designed to assist Australian businesses and economic growth in the short-term, and encourage a stronger economic recovery following the Coronavirus outbreak.
Increasing the instant asset write-off to $150,000
The Government has announced $700 million over four years to expand the Instant Asset Write-off Scheme from $30,000 to $150,000 with to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. For example, assets that may be able to be immediately written off are a tractors or other farm machinery and cars, utes and trucks for farming businesses.
Backing Business Investment Scheme (BBI)
The Government is introducing a time limited 15 month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions. Additional 50% immediate tax deduction for businesses with turnovers of less than $500 million
Businesses with turnovers of less than $500 million will also be able to claim an additional immediate tax deduction of 50% of the cost of assets purchased between 12 March 2020 and 30 June 2021. This is on top of the normal tax depreciation deduction the business would be entitled to (including the instant asset write-off explained above).
Boosting cash flow for businesses
On 22 March 2020, the Australian government announced a cash payment of between $20,000- $100,000 along with government guaranteed loans of up to $250,000. These announcements complement a range of earlier measures to encourage banks to continue lending to small businesses as well as deferring loan repayments for six months. The business investment measures have been designed to assist Australian businesses and economic growth in the short-term, and encourage a stronger economic recovery following the Coronavirus outbreak.
Businesses with turnovers of less than $50 million that employ staff between 1 January 2020 and 30 June 2020 will receive tax-free cash payments of 50% of their Business Activity Statement or Installment Activity Statement from 28 April 2020.
Supporting apprentices or trainee wages
Eligible employers can apply for a wage subsidy of 50% of their apprentice or trainee wage for up to nine months from 1 January 2020 to 30 September 2020.
Small Business Loans Deferred by Banks
Banks will defer small business loan repayments for six months, an additional emergency measure to assist borrowers through the coronavirus crisis, and are open to consider cases of mortgage hardship if they appear.
Reserve Bank safety net package
The Reserve Bank (RBA) announced yesterday a rate cut, quantitative easing and cheap credit are new measures designed to help businesses during the coronavirus crisis.
- Official interest rate cut to an all time low of 0.25%
- Quantitative easing - the RBA will buy government bonds, which essentially creates new money, lowers the borrowing cost for the government and frees up credit
- Cheap credit to banks to lend to businesses - the RBA has set up a three-year funding facility at least $90bn to be lent to authorised deposit-taking institutions (banks) at a fixed rate of 0.25%. The idea being that more money will be available to lend to to business, especially to small and medium-sized businesses.
More information on the Australian Government’s economic stimulus package here.
For further information on hoe to access finance for the instant tax write-off, please contact Ben Millar.