What governments are doing to help business survive COVID-19 | May20 Newsletter
The COVID-19 pandemic has given governments throughout the world an agonising dilemma: how to prioritise between protecting the health and lives of their citizens and preserving their nation’s economy. In most cases world leaders have justifiably prioritised lives, but with disastrous results for business and employment.
However, the governments of both Australia and New Zealand have introduced exceptional measures to help as many businesses as possible to continue to function. IT professionals in particular will want some reassurance that planned projects need not necessarily be delayed, especially given the increased pressure placed on systems by a remote workforce.
Australia: life support for working capital and employment
The Australian government’s economic assistance for businesses is designed to provide continued access to working capital and preserve jobs:
Automatic cash boosts delivered via Business Activity Statement (BAS)
When employing businesses, with an annual turnover under $50 million, lodge their BAS in April and July 2020, they’ll receive tax-free payments from the Australian Taxation Office equivalent to 100% of the income tax they withheld from employee wages for the period. Every employer is guaranteed a minimum $20,000 boost, with total payments capped at $100,000 per business.
Small businesses with fewer than 20 employees who retain an apprentice, and larger businesses who re-engage an out-of-trade apprentice or trainee, can apply for a subsidy of 50% of the apprentice’s wages between 1st January and 30th September 2020.
New Zealand: Wage subsidies, loan guarantees and deferred tax
The New Zealand government is covering both cash boosts and employee retention in the form of wage subsidies, while introducing a business loan guarantee scheme similar to Australia’s:
The government is making $5.3 billion in wage subsidies available to businesses who can demonstrate a 30% decline in revenue caused by COVID-19. The subsidy lasts for 12 weeks and provides up to $585.80 per week for full-time employees and up to $350 for part-timers.
Leave support for essential workers
Some employees in essential service businesses may be unable to work because they are sick, or in mandated self-isolation, or belong to a group considered COVID-19 vulnerable but cannot work from home. In this case the government will pay the same wage subsidies detailed above, for four weeks’ leave for the affected employees while the nation is at Alert Level 4.
New tax measures in response to COVID-19 include an increase in the provisional tax threshold from $2,500 to $5,000, the reintroduction of depreciation tax deductions for commercial buildings, interest remission for late tax payments and a temporary lift in the low-cost asset write-off threshold to $5,000.
Significant government economic response on both sides of the Tasman
Data compiled by the International Monetary Fund shows that large amounts in comparison to GDP are being spent on coronavirus economic stimulus packages by both Australia (9.8%) and New Zealand (5.4%). Many businesses are likely to owe their continued operation – if not entirely, at least in part – to these measures.