Federal Government Assistance
COVID-19 Stimulus Measures for Small Business
On 22 March 2020, the Federal Government announced an update to the stimulus measures.
First Benefit – Payments to help with paying employees
Under the First Benefit, businesses with an annual turnover of less than $50 million, and which employ staff, will receive a credit equal to
100% of the tax they withhold from employees’ wages (“PAYGW”) up to a maximum of $50,000.
This will reduce the cost of retaining employees because it is only necessary to pay the employee the net wage (after deducting the PAYGW).
Whilst not explicitly stated in the Treasury fact sheet, it is presumed that this payment will be available for all employees, even if the
employee is the ‘owner’ of the business (except sole traders, who can’t legally employ themselves).
The employer must have been established prior to 12 March 2020, except for charities which can be established after this date.
Eligible employers that pay wages will receive a minimum payment of $10,000 even if their total withholding is less than $10,000. This
includes the situation where the employer pays employees but is not required to withhold because staff are below the threshold for
The benefit will be provided by way of a credit to the employer’s Integrated Client Account with the ATO. If this puts the employer in a
credit position, the excess will be refunded by the ATO within 14 days.
The first benefit will be paid from 28 April 2020 when the employer lodges their Activity Statements, as outlined below.
Quarterly PAYGW lodgements
For quarterly lodgers of PAYGW, the payment will be credited to their ATO Integrated Client Account when they lodge their BAS for the period
ending March 2020 and June 2020.
This means that the PAYGW will not need to be paid to the ATO on the March and June BAS.
Monthly PAYGW lodgements
Monthly lodgers will be eligible to receive the payment when they lodge their March, April, May and June 2020 Activity Statements.
The first payment will be equal to 300% of the PAYGW in the March 2020 Activity Statement (capped at $50,000). This is intended to
(approximately) equate to the PAYGW for January, February and March 2020. If this puts the Integrated Client Account in credit, any excess
will be refunded by the ATO.
The remaining payments will be equal to the PAYGW in the April, May and June 2020 activity statements. However, the aggregated total
payment received for March, April, May and June cannot exceed the $50,000 maximum.
In some cases, the 300% payment for the March activity statement may mean that the total ‘credit’ received by the employer may exceed the
PAYGW for the March to June quarters, as shown in the following example from the Treasury fact sheet:
Sarah owns and runs a building business in South Australia and employs 8 construction workers on
average full-time weekly earnings, who each earn $89,730 per year.
Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS). Under the
Government’s changes, Sarah will be eligible to receive the payment on lodgement of her BAS.
Sarah’s business receives:
- A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.
- A credit of $4,976 for the April period, before she reaches the $50,000 cap.
- No credit for the May period, as she has now reached the $50,000 cap
Second Benefit – Additional Payment
To qualify for the Additional Payment, the entity must continue to be active. The Additional Payments will be delivered as an automatic
credit to the Integrated Client Account with the ATO (and refundable if in credit). The minimum Additional Payment is $10,000 and the
maximum Additional Payment is $50,000.
Quarterly PAYGW lodgements
Quarterly lodgers will receive the Additional Payment as a credit to their ATO Integrated Client Account upon lodgement of their Activity
Statements for June 2020 and September 2020.
For quarterly lodgers, each Additional Payment will be equal to 50% of the amount paid under the First Benefit.
In the March 2020 BAS, Employer withheld $6,000 from its employees’ wages. In the June 2020 BAS, Employer
withheld $8,000 for its employees’ wages. The $14,000 in PAYGW for these quarters will have been credited to the Integrated Client Account
by the First Benefit.
The first Additional Payment will be equal to 50% of the First Benefit ($7,000) and applied against the September 2020 activity
The second Additional Payment will be equal to 50% of the First Benefit ($7,000) and applied against the December 2020 activity
Monthly PAYGW lodgements
Monthly lodgers will receive the Additional Payment as a credit to their Integrated Client Account when they lodge their June, July, August
and September Activity Statements.
For monthly lodgers, each Additional Payment will be equal to 25% of the amount paid under the First Benefit.
Example 4 (following on from Example 2)
In Example 2, Sarah received a total of $50,000 credited to her Integrated client account.
Sarah would receive the following Additional Payments:
- $12,500 for the June period, equal to 25 per cent of her First Benefit.
- $12,500 for the July period, equal to 25 per cent of her First Benefit.
- $12,500 for the August period, equal to 25 per cent of her First Benefit.
- $12,500 for the September period, equal to 25 per cent of her First Benefit.
Practical examples of combined payments
Example 5 – Quarterly lodger getting minimum payment
Tim owns and runs a small paper delivery business. Tim employs two casual employees who each earn $10,000 per year. In his quarterly
BAS, Tim reports withholding of $0 for his employees as they are under the tax-free threshold.
Tim’s business will receive:
- A credit of $10,000 for the March quarter.
- An additional credit of $5,000 for the June quarter.
- An additional credit of $5,000 for the September quarter.
Example 6 – Quarterly lodger getting more than minimum payment
Assume Tim has total withholding of $7,500 for each of the March quarter and June quarters ($15,000 total). Tim’s business will
- A credit of $10,000 for the March quarter, being the minimum payment.
A credit of $5,000 for the June quarter, being the total PAYGW for March and June, less the credit already received in March.
An additional credit of $7,500 in the June quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments.
An additional credit of $7,500 in the September quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments.
Example 7 – Monthly lodger below $50,000 cap
Company X has total monthly PAYGW of $7,500.
Company X will receive credits totalling $45,000 under the first benefit as follows:
- $22,500 for the March period.
- $7,500 for the April period.
- $7,500 for the May period
- $7,500 for the June period.
Company X will also receive $45,000 in credits as Additional Payments:
- $11,250 for the June period (giving a total of $18,750 for June).
- $11,250 for the July period.
- $11,250 for the August period
- $11,250 for the September period.
Example 8 – Monthly lodger above $50,000 cap
Company Y has total monthly PAYGW of $25,000.
Company Y will receive credits totalling $50,000 under the first benefit as follows:
- $50,000 for the March period (3 x $25k = $75k, which is above the $50k cap).
- $Nil for the April period.
- $Nil for the May period
- $Nil for the June period.
Company X will also receive $50,000 in credits as Additional Payments:
- $12,500 for the June period.
- $12,500 for the July period.
- $12,500 for the August period
- $12,500 for the September period.
Small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee will be eligible for support.
Eligible employers can apply for a subsidy of 50% of the apprentice or trainee’s wage paid during the 9 months from 1 January 2020 to 30
September 2020 up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
The apprentice or trainee must have been in training with a small business as at 1 March 2020. Where a small business is not able to retain
an apprentice, the subsidy will be available to a new employer.
Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for
Employers can register for the subsidy from early-April 2020. Final claims for payment must be lodged by 31 December 2020.
Instant asset write-off
The instant asset write-off for depreciating assets will increase from $30,000 to $150,000. This instant deduction will be available for
businesses with an aggregated turnover of less than $500 million (up from $50 million).
This immediate deduction will be available for new and second-hand assets first used or installed ready for use from 12 March 2020 to
30 June 2020.
Accelerated depreciation deductions
Businesses with aggregated turnover of less than $500 million will also be eligible to claim accelerated depreciation deductions. It seems
that this incentive will be relevant for those assets that are not eligible for the instant asset write-off.
The accelerated depreciation deduction operates as follows:
- A deduction equal to 50% of the cost of the asset for the year in which the asset is installed; and
- The existing depreciation rules applying to the balance of the asset’s cost.
This measure will only be available for new assets acquired from 12 March 2020 and first used or installed by 30 June 2021. This measure
does not apply to:
- Second-hand assets, or
- Capital works deductions (Division 43).
Creditor/insolvency relief for financially distressed businesses
The Government will temporarily change a number of measures designed to assist businesses.
The minimum threshold for creditors issuing a statutory demand on a company will increase from $2,000 to $20,000. The period of time
to respond to a statutory demand will be extended from 21 days to 6 months.
The minimum threshold for creditors to initiate bankruptcy proceedings against an individual will increase from $5,000 to $20,000.
The period of time to respond to a bankruptcy notice will be extended from 21 days to 6 months.
Directors are personally liable if a company trades while insolvent.
Directors will be temporarily relieved of their duty to prevent insolvent trading in respect of any debts incurred in the ordinary course of
the company’s business. This will apply for 6 months.
Egregious cases of dishonesty and fraud will still be subject to criminal penalties.
Income support payments
A number of extensions and modifications will apply to income support payments for the next 6 months.
A coronavirus supplement of $550 per fortnight will be made available to the following payment categories:
Jobseeker Payment (and all payments progressively transitioning to Jobseeker payment, including those currently receiving Partner Allowance,
Widow Assistance, Sickness Allowance and Wife Pension);
- Youth Allowance Jobseeker;
- Parenting Payment;
- Farm Household Allowance; and
- Special Benefits recipients.
Jobseeker Payment and Youth Allowance Jobseeker criteria will provide access to the following persons who meet the income tests as a result
of the economic downturn due to coronavirus:
- Permanent employees who are stood down or lose their employment;
- Sole traders (self-employed);
- Casual workers;
- Contract workers; and
- A person who is required to care for someone who is affected by the coronavirus.
In terms of eligibility:
- Asset testing will be waived for Jobseeker Payment, Youth Allowance Jobseeker and Parenting Payment;
- Income testing will continue to apply, consistent with current arrangements.
Waiting times also will be reduced:
- The one week ordinary waiting period already has been waived;
The liquid asset test waiting period and seasonal work preclusion period will be waived for recipients eligible for the coronavirus
- The newly arrived residents waiting period will be temporarily waived for recipients eligible for the coronavirus supplement;
- Income maintenance periods and compensation preclusion periods will continue to apply.
People will not be permitted, and will need to declare that they are not, accessing employer entitlements (such as annual leave and/or sick
leave) or Income Protection Insurance, at the same time as receiving Jobseeker Payment and Youth Allowance Jobseeker under these
From 20 March 2020, Sickness Allowance was closed to new entrants and was replaced by the JobSeeker Payment.
Payments to households
The Government is providing two separate $750 payments to eligible persons.
To be eligible for the first payment, the individual must be residing in Australia and be receiving one of the following payments, or hold
one of the following concession cards, at any time from 12 March 2020 to 13 April 2020, inclusive:
- Age Pension
- Disability Support Pension
- Parenting Payment
- Wife Pension
- Widow B Pension
- ABSTUDY (Living Allowance)
- Bereavement Allowance
- Newstart Allowance
- JobSeeker Payment
- Youth Allowance
- Partner Allowance
- Sickness Allowance
- Special Benefit
- Widow Allowance
- Family Tax Benefit, including Double Orphan Pension
- Carer Allowance
- Pensioner Concession Card (PCC) holders
- Commonwealth Seniors Health Card holders
Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er)
Pension; and Veteran Payment.
DVA PCC holders; DVA Education Scheme recipients; Disability Pensioners at the temporary special rate; DVA Income support pensioners at $0
- Veteran Gold Card holders
- Farm Household Allowance
To be eligible for the second payment, an individual must be residing in Australia and be receiving one of the payments or holding one of
the concession cards that were eligible for the first payment as at 10 July 2020.
However, this payment will not be made to individuals who are receiving an income support payment that is eligible to receive the
Coronavirus supplement. This means that individuals receiving the following benefits will not be eligible for the second payment (because
they are eligible to receive the coronavirus supplement):
- JobSeeker Payment (and payments progressively transitioning into JobSeeker Payment)
- Youth Allowance Jobseeker
- Parenting Payment (Partnered and Single)
- Farm Household Allowance
- Special Benefit
Early access to superannuation
Eligible individuals will be able to apply online via myGov to access up to $10,000 of their superannuation before 1 July 2020.
Eligible individuals also will be able to access up to a further $10,000 from 1 July 2020 for a period of approximately 3 months.
To apply for early release, an individual must satisfy at least one of the following conditions:
- They are unemployed;
They are eligible to receive one of the following benefits; Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Special Benefit
or Farm Household Allowance; or
On or after 1 January 2020:
- The individual was made redundant; or
- Working hours were reduced by 20% or more;
- For a sole trader – business was suspended or there was a reduction in turnover of 20% or more.
Taxation and other entitlements
People accessing their superannuation will not be required to pay tax on the amount received. The amount withdrawn also will not affect
their Centrelink or Veterans’ Affairs payments.
Reducing superannuation minimum drawdowns
The minimum superannuation drawdown requirements for account-based pensions will be reduced by 50% for the 2020 and 2021-income years.
Social security deeming rates
From 1 May 2020, the social security deeming rates have been reduced by 0.75%, taking the rates to:
- 0.25% for the lower deeming rate; and
- 2.25% for the upper deeming rate.
SME loan guarantee scheme
The Government will provide a guarantee to assist businesses with a turnover of up to $50 million to borrow money.
The Government will guarantee of 50% to lenders for new unsecured loans to be used for working capital. This is to provide an incentive to
The following terms will apply:
- Maximum total size of loans will be $250,000 per borrower;
- Loans will be up to 3 years, with an initial 6-month repayment holiday; and
- Loans will be in the form of unsecured finance.
Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take
into account the uncertainty of the current economic conditions.
Responsible lending obligations
The Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business
This exemption is for six months, and applies to any credit for business purposes, including new credit, credit limit increases and credit
variations and restructures.
Further details can be found at the Treasury website: https://treasury.gov.au/coronavirus