How the ATO and big banks plan to help virus-affected small biz
Owning a business is stressful enough without the gloom of COVID-19 and doom of a looming recession that is expected to follow.
Australia’s big banks have pledged to defer loan repayments by six months for all small businesses hit by the coronavirus outbreak.
Australian Banking Association chief executive Anna Bligh confirmed the goodwill gesture, intended to help the sector survive the unfolding economic downturn.
“There are many small businesses struggling with loan repayments, and this deferral will help them,” said Bligh on Friday (March 20) when announcing the initiative.
“While this is first and foremost a health crisis, this pandemic has begun to have serious impacts across the economy, with small businesses beginning to feel the devastating effects.”
Bligh said the number of calls to banks from its small business customers had increased “rapidly and exponentially” over recent weeks.
Survival of the fittest, small biz now in crisis-mode
Small businesses make up a significant segment of the music industry’s ecosystem.
Although each bank has its own way of classifying a small business, ASIC defines them as those with annual revenue of less than $50 million and less than 100 employees, or less than $25 million consolidated gross assets at the end of the financial year.
That includes everything from musicians and record stores to promoters and publicity firms.
Talking to TMN on the condition of anonymity, one accountant who works with music-based businesses said many of their clients will struggle to remain solvent.
“We’ve been fielding lots of anxious calls from clients, mostly from creative and hospitality industries, and have had to calculate quite a few redundancies,” they said on Friday.
The economic stimulus package announced by Prime Minister Scott Morrison last Thursday will provide some welcome support for many small businesses in the music industry.
The PM announced a second-stage economic stimulus package on Saturday worth $66 billion.
Unpacking how the ATO plans to help small businesses
About 700,000 businesses will automatically receive payments of between $20,000 and $100,000 if they currently employ staff and have a turnover of up to $50 million.
The cash boost will be delivered by reducing Pay As You Go (PAYG) contributions to nil from March until June, with funds credited automatically to businesses’ integrated client account.
Meredith Fannin, director at entertainment industry accounting and business advisory firm Darkwave Consulting, told TMN on Monday that the package is lacking for the sector.
“The stimulus package as it stands provides no industry-specific support for the live music and entertainment industry, the hospitality industry, or the tourism industry, the three largest impacted sectors of the COVID-19 shutdowns,” she said.
“The government is trying to support businesses to pay wages, yet there are thousands of businesses in these industries where income has disappeared overnight, making paying wages ongoing extremely difficult.
“The Federal Stimulus package does not address these issues and more targeted support is needed, some state governments have made announcements about support packages that will be available, there is a lack of detail currently on how these will be deployed.”
ATO says it stands ‘shoulder-to-shoulder’ with small biz
ATO commissioner of taxation Chris Jordan is encouraging businesses impacted by the coronavirus to get in touch to discuss relief options.
“We know that many businesses and communities are being heavily affected by the challenging economic conditions created by the outbreak of COVID-19,” he said.
“The ATO will work shoulder-to-shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure.
“Once you contact us, we’ll tailor a support plan for your needs and circumstances.
Employers will still need to meet their ongoing super guarantee obligations for all employees.
The Government says the package is “temporary, targeted and proportionate” and is designed to prop the economy up until the coronavirus crisis subsides.
Taxpayers with existing tax debts that have been impacted by COVID19 can apply for up to a six-month deferral by contacting the ATO’s Emergency Support Infoline on 1800 806 218.
But, the industry says ScoMo’s stimulus is simply not enough
Further restrictions will come in effect from midday Monday (March 23), with pubs, clubs, cinemas and nightclubs among the business to close or provide takeaway only.
“Time is simply running out,” says Live Performance Australia CEO, Evelyn Richardson.” Many companies are deciding whether they will need to wind up their businesses in the coming weeks.
“Prime Minister Scott Morrison and the Treasurer Josh Frydenberg must address the impact the coronavirus shutdown is having on our industry.”
Morrison has also pledged to significantly extend the instant asset write-off for companies with turnover of up to $500 million, and purchases of up to $150,000.