he Australian Government is supporting businesses to maintain their cash flow challenges and retain employees. This assistance includes cash flow support and to provide relief for financially distressed businesses.

 

Boosting cash flow for employers

 

The Government is enhancing the Boosting Cash Flow for Employers measures originally announced 12 March 2020. They will be providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (MFPs) that employ people, with a minimum payment of $20,000. This is to assist their cash flow so they can keep operating, pay their rent, electricity and other bills plus retain staff.

 

An eligible small and medium-sized business; and an NFP (including charities) have an aggregated annual turnover under $50 million and employs workers.

 

Under this scheme, employers will receive a payment equal to 100% of their salary and wages withheld, with a minimum payment being $10,000 and a maximum payment being $50,000.

 

An additional payment is also being introduced in the July-October 2020 period. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments they have received. This means overall, the eligible entities will receive a minimum of $20,000 and maximum of $100,000.

 

Example 1:

 

Jessica owns a travel agency and employs 12 staff, each with average salary of $50,000 per year. Jessica reports withholding of $8,788 for her employee in each of his monthly Bas. Under the Government changes, Jessica will receive, as a credit through the BAS system, the following:

 

• A credit of $26,364 for the March period (due 28 April) – this is applied as 3 x $8,788

• A credit of $8,788 for the April period (due 28 May)

• A credit of $8,788 for the May period (due 28 Jun)

• A credit of $6,060 for the June period (due 28 Jul) – this brings Jessica to the $50,000 cap.  

Jessica will also receive an additional payment of $12,500 in the June period, which is 25% of her total Boosting Cash Flow for Employers payment.

• July period is due 28 August, there will be an additional payment of $12,500

• August period is due 28 September, there will be an additional payment of $12,500

• September period is due 28 October, there will be an additional payment of $12,500

 

This will bring Jessica’s Boosting Cash Flow payment to $100,000.

 

Example 2:

 

Tim has a small delivery business. He employs two casual staff who each earn $10,000 per annum. In his quarterly BAS, Time reports $0 withholding as his employees are under the tax-free threshold. Under the Government changes, Tim will receive:

 

• A credit of $10,000 for the March period – as he pays wages but is not required to withhold tax.

• There will be no other credits for April and May.

• An additional payment of $5,000 for the June quarter (equal to 50% of his Boosting Cash Flow for Employers payment)

• An additional payment of $5,000 for the September quarter.

 

This will bring Tim’s total Boosting Cash Flow payment to $20,000.

 

Supporting Apprentices and Trainees

 

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. They will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

 

To be eligible, they must employ fewer than 20 full-time employees who retain an apprentice or trainee.

 

Employers can register for the subsidy from early April 2020 with final claims being lodged by 31 December 2020.

 

Further information is available at:

 

• The Department of Education, Skills and Employment – www.dese.gov.au

• Australian Apprenticeships – www.australianapprenticeships.gov.au

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Temporary relief for financially distressed businesses

 

As the Government and health authorities implement measures to prevent the spread of the Coronavirus, the Government has provided safety nets to lessen the threat of actions that could unnecessarily push business into insolvency and force the winding up of their enterprise.

 

The Government has temporarily increased the threshold at which creditors can issue statutory demands on a company and the time companies have to respond to these demands they receive. This also provides relief to the directors from any personal liability for trading while insolvent and temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions for the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.

 

Increasing the instant asset write-off

 

The Government increased the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include business with aggregated annual turnover of less that $500 million (previously $50 million) until 30 June 2020.

 

Backing business investment

 

The Government is introducing a time limited 15-month investment incentive (to 30 June 2021) by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.