The Government is providing support to help your business recover as we head towards post-COVID normal.
Recovery loan to support businesses
The Government’s SME Recovery Loan Scheme (the Scheme), is designed to help businesses recover, encourage growth and establish themselves for a longer-term future by making additional funding available.
The expanded Scheme took effect on 1 October 2021 and is available until 31 December 2021.
The scheme is open to small and medium sized businesses with up to $250 million turnover, including self-employed and non-profits, that have been adversely affected by the Covid-19 pandemic or the floods in eligible Local Government Areas in March 2021.
Participating lenders are offering guaranteed loans on the following terms:
- the Government guarantee will be 80% of the loan amount
- lenders are allowed to offer borrowers a repayment deferral of up to 24 months
- borrowers can access up to $5 million
- loans are for terms of up to 10 years
- the interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.
Loans issued under the Scheme can be used to refinance existing loans or for a broad range of businesses purposes (including to support investment) but cannot be used to:
- purchase residential property
- purchase financial products
- lend to an associated entity, or
- lease, rent, hire or hire purchase existing assets that are more than half-way into their effective life.
Further information is available on the Government website:
Our Bentleys Finance team is also here to support you.
Temporary full expensing
Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.
For the 2020–21 and 2021–22 income years, an eligible entity can claim in its tax return a deduction for the business portion of the cost of:
- eligible new assets first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2022
- eligible second-hand assets where both of the following apply
- The asset was first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2022
- The eligible entity’s aggregated turnover is less than $50 million
- improvements incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2022 to
- eligible assets
- existing assets that would be eligible assets except that they are held before 7.30pm AEDT on 6 October 2020
- eligible assets of small business entities using the simplified depreciation rules and the balance of their small business pool.
Certain conditions apply for assets to be eligible for temporary full expensing, including particular exclusions for deductions claimed by entities with a turnover of $50 million or more.
Loss carry back tax offset
Loss carry back rules are intended to interact with temporary full expensing, encouraging new investment which may result in tax losses. Where the choice to carry back tax losses results in a tax refund, this will increase business cash flow.
If you are a corporate tax entity, instead of carrying the tax loss forward and using it to offset your future income, you can consider if you are eligible for a refundable tax offset under the loss carry back rules.
Loss carry back rules provides a refundable tax offset that eligible corporate tax entities can claim:
- after the end of their 2020–21 and 2021–22 income years
- in their 2020–21 and 2021–22 company tax returns.
Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt owing to the ATO. The eligible entity does not need to amend the earlier income years to claim the offset.
Meeting your tax obligations
Making sure your tax obligations are up to date is an important step towards the recovery of your business, this includes lodging your income tax return and business activity statements.
If you find that you are having difficulties with meeting your tax obligations and payments, there may be options available to apply for a deferral of lodgement, enter into a payment plan, request remission of interest and penalties and vary your PAYG instalments.
We are committed to supporting businesses during this challenging time. For further information or assistance, please contact your Bentleys advisor.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.