As the impact of the COVID-19 outbreak continues to develop across Australia, both the Government and Australian lending institutions have implemented a number of initiatives and relief packages to support small businesses and commercial tenants through these times of economic uncertainty.
These packages are aimed at boosting cash flow for employers, helping businesses gain access to working capital and encouraging ongoing investment to in turn support a strong rebound for the Australian economy and the sectors within it.
Below, we have collated some of the key support initiatives implemented to assist Australian businesses, and will in time be sharing our own resources on the impact we are seeing throughout Australia’s commercial property markets.
Residential Market: To view updated information, insight and advice related to the residential property market, please visit our sister company, Momentum Wealth and their COVID-19 investor page here.
COVID-19: Support for businesses
Mandatory code of conduct for commercial leases
On Tuesday 7th April 2020, the National Cabinet agreed that states and territories would implement a mandatory Code of Conduct (the Code) for commercial tenancies. The code is designed to provide support for small and medium sized businesses with an annual turnover of up to $50 million who have been affected by the coronavirus.
Below is a summary of the key leasing principles outlined for landlords & tenants:
- Landlords must not terminate leases due to non-payment of rent.
- Tenants must stay committed to their lease terms (subject to amendments).
- Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferral of up to 100% based on the reduction in the tenant’s trade. For example, a 50% loss in turnover would result in a guaranteed 50% cashflow relief.
- Rental waivers must constitute no less than 50% of the total reduction in rent payable, and should constitute a greater proportion of the total reduction in rent payable in cases where failure to do so would compromise the tenant’s capacity to fulfil their ongoing obligations under the lease agreement. For example: for a 50% loss in turnover, a minimum of 25% must be rent free, and the remaining 25% could be through a deferral of rent, with this to be recouped over at least 24-months, regardless of when the lease expires.
- Any reduction in statutory charges must be passed onto the tenant.
- Landlords should where appropriate seek to waive recovery of any other outgoings payable by a tenant who is not able to trade.
- Landlords shall not charge fees, interest or other charges with respect to rent waivers and deferrals.
- Landlords must not draw on a tenant’s security for the non-payment of rent.
- The tenant should be provided with an opportunity to extend its lease for an equivalent period of the agreed relief.
- Landlords must freeze rent increases (except for retail leases based on turnover rents).
For more information:A link to a full copy of the Code can be found here
WA $1bn Economic and Health Relief Package
In late March, the State Government announced a $1 billion Economic and Health Relief Package to support WA households and businesses impacted by the coronavirus outbreak. The measures for small and medium-sized businesses include:
- Electricity bills will be reduced, with a one-off $2500 credit available for Synergy and Horizon Power customers that consume less than 50 megawatt hours per annum. The credit is available to current customers (as at March 31,2020) and will be allocated from May 1, 2020 to reduce current and future electricity bills.
- Payroll tax will be waived for a four-month period between March 1, 2020 and June 20, 2020 for businesses with Australia-wide annual wages of less than $7.5 million in 2019-20. This replaces the payroll tax deferral already announced.
- A range of licence fees will be waived for small and medium sized businesses in COVID-19 impacted industries for the next 12 months. This includes licences for building services, plumbers and electricians; tourism businesses operating in national and marine parks; boat registration and mooring fees for tourism operators and commercial fishers; commercial fisheries licences; taxi booking service authorisation fees; settlement agent licence fees; and other statutory planning fees. Liquor licence renewal fees for 2020 will be waived and refunds provided for businesses that have already paid.
- Businesses impacted by COVID-19 can also apply for an interest-free payment arrangement and for late payment penalties to be waived for payroll tax, transfer duty, landholder duty, vehicle licence duty or land tax.
- No small businesses facing financial difficulty due to COVID-19 will face power or water disconnections due to late payments. In addition, no interest will be charged on deferred bill payments. For electricity, this will apply to Synergy and Horizon Power customers who consume 50MWh or less.
For more information: Visit the State Government website (link above) for more information. A full media statement can be found here.
Jobkeeper Payment Program
On 30th March 2020, the Federal Government announced a new $130 billion plan to support retention of employees in businesses that have been substantially impacted by the coronavirus outbreak. Under the job keeper allowance, eligible businesses will receive a wage subsidy of up to $1500 per fortnight per employee.
- Employers with an annual turnover of less than $1 billion that have experienced a 30% fall in revenue since March 1 will be eligible for the wage subsidy.
- Companies with an annual turnover above $1 billion must experience a 50% fall in revenue to be eligible.
- Businesses subject to a major bank levy will be ineligible.
- Sole traders, the self-employed, partnerships and trusts will also be eligible.
How to apply: The ATO will oversee the payment and has already created a website for companies to register interest in the Job Keeper program: Job Keeper Payment Program
Boosting cash flow for Employers
The Federal Government has introduced a Boosting cash flow for Employers measure which will see eligible small to medium-sized businesses and not-for-profit charities who employ workers receive a payment of $20,000 up to $100,000. These tax-free payments will help businesses with their cash flow to assist with the payment of operational expenses such as rent, electricity, staff costs and other bills.
- SME’s with aggregate annual turnover under $50m and that employ workers are eligible.
- Under the scheme, employers will receive a payment equal to 100% of their salary and wages withheld, with the minimum payment being $10,000 (increased from $2000) and the maximum payment being $50,000 (increased from $25,000)
- An additional payment is being introduced equal to the total of all of the Boosting Cash Flow for Employers payments received, meaning eligible businesses will receive at least $20,000 up to a total of $100,000
How to access: The cash flow boost is automatically calculated by the ATO, and will arrive in two rounds (28th April 2020 and 28th July 2020). There are no forms required. For examples and further information, see the fact sheet here.
Apprentice Wage Assistance
To support eligible small businesses in the retention of apprentices and trainees, the Government has introduced a 50 per cent wage subsidy to assist with wages paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
How to access: Eligible businesses can register for the wage subsidy from early April 2020, with final payment claims to be lodged by 31 December 2020. For information on how to apply, contact an Australian Apprenticeship Support Network Provider
Increased and Accelerated Income Support
As of 27th April 2020, the Government is temporarily expanding eligibility for income support payments to include sole traders and the self-employed. Sole traders and the self-employed applicants will make a declaration that their business has been suspended or had turnover reduced significantly.
In addition, the Government is also establishing a new time-limited coronavirus supplement to be paid at a rate of $550 per fortnight, which will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months and will not be income tested.
How to access: For more information, including how to apply, visit the Government website.
Extension of Instant Asset Write-Off
To encourage investment by businesses, the Government has increased the instant asset write-off threshold from $30,000 to $150,000, with access extended to include businesses with aggregated annual turnover of less than $500 million (up from $50 million). The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets. This applies from 12 March 2020 until 30 June 2020 for new or second‑hand assets first used or installed ready for use in this timeframe.
How to access: Providing you make the purchase within the specified timeframe, you can claim the instant write-off from the ATO during tax time.
Early Access to Superannuation
Individuals affected by the coronavirus are able to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21 (tax-free). Eligible parties will be able to apply for early release of superannuation from mid-April 2020.
In order to be eligible, individuals must meet the following criteria:
- You are unemployed; or
- On or after 1 January 2020:
- you were made redundant; or
- your working hours were reduced by 20 per cent or more; or
- if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
How to access: Eligible individuals will be able to apply directly to the ATO through myGov. For examples and further information, see the fact sheet here.
Backing Business Investment (BBI)
In order to support business investment and economic growth in the short term, the Government has introduced a temporary 15 month investment incentive in the form of accelerated depreciation deductions. This applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021.
Under the incentive, businesses with an aggregated turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
For more details: See the Government website for more details on eligible assets
Australian Banking Association Small Business Relief Package
In late March, the Australian Banking Association announced a small business relief package from Australia’s banks which has now been extended to businesses with loan facilities of up to $10million (up from the $3 million small business threshold).
This will see Australian banks defer loan repayments for 98% of all businesses affected by COVID-19 for six months.
In addition, Australian banks are also offering loans ( including overdrafts) with no repayments for the first six months and at very low interest rates, supported by the Government through an SME Loan guarantee.
I am a commercial property landlord, can I get help from my bank?
Yes, commercial property landlords can get relief as long as they provide an undertaking to the bank that they will not terminate leases or evict current tenants for rent arrears as a result of COVID-19 for the period of interest capitalisation
For more information: visit the Australian Banking Association website
SME Guarantee Scheme
To help small and medium enterprise (SME) gain access to working capital, the Government will provide a guarantee of 50% for new unsecured loans issued by participating lenders. The Scheme will help to enhance lender’s willingness and ability to provide credit, resulting in SMEs being able to access additional funding to support them through the upcoming months. SMEs with a turnover of up to $50 million will be eligible to receive these loans.
The Government will provide eligible lenders with a guarantee for loans with the following terms:
- Maximum total loan amount of $250,000 per borrower.
- Loan term of up to 3 years, with an initial six-month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
How to access: Check with your lender whether they offer loans under the SME Guarantee Scheme. The individual lender will assess whether you qualify.
The ATO is providing relief for some tax obligations for businesses affected by the outbreak, on a case-by-case basis. Contact the ATO’s Emergency Support Infoline for businesses on 1800 806 218 for more information.
Western Australia State Government – $607 million stimulus package
In addition to Federal Government initiatives, the WA government has announced $607 million in stimulus on a State level to assist eligible businesses through the impact of the coronavirus outbreak, including:
- A freeze will be placed on household fees and charges, including electricity, water, motor vehicle charges, the emergency services levy and public transport fares.
- Payroll tax paying businesses with a payroll between $1 million and $4 million will receive a one-off grant of $17,500.
- Payroll tax threshold will be increased to $1 million from 1 July 2020.
- Small and medium sized businesses affected by COVID-19 can now apply to defer payment of their 2019-20 payroll tax until July 21, 2020.
The Small Business Development Corporation has created a COVID-19 assistance centre to provide guidance on available support options. To access the service contact 133 140 or email email@example.com
Further details: For more information on financial assistance, eligibility and timing for the new state government support for WA businesses, visit Coronavirus WA Government Response