Business Finance

How Australia is helping to support businesses, employees and individuals struggling during the pandemic

The ongoing COVID-19 pandemic has devastated businesses across the country, many of which have seen a decrease in revenue and business activity. Some were temporarily closed for the safety of its employees and customers, while others were forced to close from public safety orders from the government. The manufacturing, wholesale, retail, and recreational & personal industries, which include the tourism and hospitality sector, were the most affected. In response, the Australian government has implemented a number of support measures to help finance these struggling businesses, which include the JobKeeper payment, tax and rent relief, medical financing, and equipment finance support, to name a few.

JobKeeper Payment

Under the JobKeeper payment scheme, businesses affected by COVID-19 will be able to apply for a temporary subsidy from the government to be able to continue paying their employees. This subsidy consists of a fortnightly payment of $1,500 for eligible employees for a maximum of six months from 30 March to 27 September, 2020. The payment is also available to people who are self-employed. Businesses with receive JobKeeper payments from the Australian Taxation Office (ATO) and are to make these payments to their employees. Workers with more than one employer must inform the ATO and all their employers of their primary employer in order to receive the JobKeeper payment.

Income Support Supplements

Australia has created some additional income support supplements to help families and businesses during the pandemic, including the coronavirus support supplement and the additional economic support payment. From 27 April, the government will give a $550 coronavirus supplement payment on a fortnightly basis, which has been granted to Australian citizens and permanent residents receiving any of the following income support payments: the JobKeeper payment, parenting payment, partner or widow allowance, sickness allowance, youth allowance, AUstudy, ABstudy living allowance, farm household allowance, and special benefits. The economic support supplement is an extra payment from the government in response to COVID-19. Like JobKeeper, the coronavirus and economic support supplements are temporary.

Instant Asset Write-Off Package

On 12 March 2020, Australia announced it will introduce the Instant Asset Write-Off package for business owners. The asset write-off package allows businesses to claim an immediate deduction for purchases of eligible assets costing less than $150k each. This deduction applies on a per asset basis, so businesses can write off multiple assets under $150k. The $150k instant asset write-off was initially valid until 30 June, but on 9 June, the government announced that it will extend the relief package until 31 December, 2020. As of 1 July, the instant asset write-off is available to businesses with an annual aggregated turnover of less than $500 million.

Medical Finance Support

As a direct result of the COVID-19 crisis, Australia has created various measures to aid businesses and public sector workers, including medical practice financial support for health care and front-line workers, and by providing financial support to hospitals and clinics for medical equipment and supplies. Medical equipment supplies include sterilisation instruments, respiratory care equipment, diagnostic equipment, medical devices, and personal protective equipment (PPEs).

Equipment Finance Support

During the start of COVID-19, Australia found that its government was a bit slow to respond to the pandemic in the first few months of 2020. As the pandemic worsened in March 2020, the government announced that it would set up testing clinics across the country, but this was completed only two months later – several weeks after the height of the crisis. As a result, many clinics were overwhelmed with testing supply shortages, and hospitals found that they had a shortage of important PPEs like face masks, visors, respirators, and hospital gowns. The government has worked closely with the Department of Health and Science to boost production of essential medical equipment and supplies like surgical gloves and hand sanitisers. In addition, federal and state governments have spent billions of dollars on medical and equipment financing, including purchasing hospital machines and beds, and on health workforce training.

Tax Relief

The Australian Taxation Office (ATO) has offered relief options for businesses directly impacted by COVID-19. For instance, the ATO has allowed businesses to defer tax payments and granted them quicker access to eligible GST refunds. Also, the ATO has created measures to help affected businesses pay off taxes by remitting any interest and penalties incurred after 23 January 2020.

Tax Hike Freezes

The Australian government has made some tax hike freezes in response to COVID-19, including halts to tax hikes for truck fuel – also known as the ‘Road user charge’. Originally, the government was looking to increase the road user charge by 2.5 percent on 1 July, and by the same amount a year later. Fortunately for trucking businesses and companies with trucking fleet, the government announced it will freeze this hike for now.

Rent Relief

In addition to tax relief options for business owners, the Australian government has announced several measures to help businesses afford rent, by deferring and reducing rent payments. This includes asking landlords to withhold evictions for tenants in financial distress for up to six months from the start of the crisis in January, and advising landlords to lower the rent for commercial and residential tenants. In addition, the Australian government announced that it will waive rents for small and medium enterprises (SMEs), as well as for tenants working in the not-for-profit sector.

Household Support Payments

Another income support supplement that all Australian citizens and residents will automatically receive from the government are two economic support payments of $750 – the first payment was sent to eligible households in the country between 12 March and 13 April and the last will be sent on the 13 July, 2020.

Early Access to Superannuation

Some Australian citizens and permanent residents can apply for early access to their superannuation if they are unemployed as a result of COVID-19, including if they were made redundant, had their working hours or business turnover rates reduced by at least 20 percent, are sole proprietors, or had their business suspended. In addition, those eligible to receive the Job seeker payment, parenting payment, youth allowance, farm household allowance, or special benefits can apply for early retirement savings.