Under temporary changes to social security rules, sole traders are being encouraged to keep their business operating and should their earnings take a significant downturn, to access income support.
The measures announced to assist sole traders are as follows:
• The ATO will credit any PAYGI Instalments paid as a result of the September 2019 and December 2019 Quarterly BAS and potentially refund these amounts.
• Centrelink Benefits:
– If your income has reduced by 20% then you are eligible for Jobseeker Payments ($550 per fortnight) and the new supplement of $550 per fortnight.
– If eligible for Job Seeker access to additional payments 2 x $750 (April/July)
– Not applicable if accessing employee entitlements or income protection insurance.
– Asset testing has been waived.
– Income testing remains the same.
– Applies to employees if they have been stood down.
– Waiting periods have been reduced.
• How to Claim Centrelink Benefits:
– Users with myGov accounts now able to lodge intent to claim without a pre-existing CRN or having Centrelink accounts already linked to their myGov account.
– All claims will be back paid to Monday, if that is when they were stood down.
– Separation Certificates are no longer required.
– Jobseekers will be required to sign a declaration that they are stood down or experiencing loss of income.
• Access to Early Release Superannuation – $10k before 30 June 2020 and $10k after 1st July 2020
• Instant Asset write off up to $150k per asset – only until 30 June 2020
• Working Capital Unsecured loans up to $250k which are subject to reduced bank assessment requirements.
COVID-19 – Small Business Update
The Australian Government is supporting business to manage cashflow due to the COVID-19 crisis. The measures announced to assist small business are as follows:
Boosting Cash Flow for Employers
Boosting Cash Flow for Employers provides up to $50,000 back to small and medium business who employ staff. The payment is calculated on the PAYG lodged by the business during the March and June quarters. It will be delivered by the ATO as a credit once the March and June BAS’s have been lodged. In addition to this payment, businesses will receive a further payment of $20,000 – $100,000 based on the March and June quarters.
Enhancing the instant asset write-off
The instant asset write-off threshold is increasing from $30,000 to $150,000 for new or second-hand assets first used, or installed ready to use from 12th March 2020 until 30 June 2020. For purchases made prior to this date the $30,000 limit applies.
Backing business incentive
To support short-term business investment and economic growth, for assets purchased from 12th March 2020 until the 30th June 2021 you will be able to take advantage of accelerated depreciation. A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the cost of the asset.
Supporting apprentices and trainees
For businesses that employ less than 20 full-time employees and retain apprentices or trainees, you can apply for a wage subsidy of 50% of the apprentices wage for the 9 months from 1st January 2020 until the 30th September 2020 up to $21,000 per apprentice.
Unsecured Loans of $250k
Government in a 50/50 cooperation with the banks to provide new unsecured loans up to $250k to be used as working capital.
Government are guaranteeing repayment of 50% of the loan.
• 3 year loans
• Maximum amount of $250k
• Unsecured loan ie no assets required to support – it is a cashflow loan
• Still subject to the banks (or other lenders) credit assessment processes.
• Government prefers it be a drawdown facility ie used if needed
• Must be applied for by 30 September,
2020 Action Plan (Small Business + Sole Traders)
Extract from article by Kate Carnell (Australian Small Business and Family Enterprise Ombudsman)
1. Perform a Cashflow Budget
2. Talk to suppliers (Their intentions and their supply line)
3. Talk to your lenders about finance repayments – seek deferrals
4. Talk to your Landlord and discuss rental commitments
5. Discuss with the ATO any deferral of lodgements required or additional payment plans
6. Speak with your staff – can you keep them on and how to operate
7. Consider doing business differently
The information is changing rapidly as the government tries to assist the many Australian’s that have been affected by COVID-19. It is important to remember if you are sole trader, any payments/ credit will only be made by the ATO once all BAS’s have been lodged. If you need help with getting your bookwork up to date and lodging any outstanding BAS’s, please call or email.
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