Larger businesses may be able to retrench to offset profit losses due to the COVID-19 lockdown but many SMEs have little room (financially) to move. Thankfully, the Government appears to have assistance designed specifically with the needs of small to medium businesses in mind.
“In the absence of further support from the Government, otherwise viable SMEs may be forced to close down permanently… we don’t want that to happen,” Minister for Small Business, Stuart Nash, says. “As well as tax measures, which should provide some cashflow relief, we are going to provide tailored support services to help businesses weather the storm, at no charge to the business.”
While wage subsidies already in place are intended to ensure businesses are able to retain staff, SMEs can expect more help with non-wage fixed costs such as interest, rent and insurance.
“Using established services including the Regional Business Partner Network and helplines, we can get specialist, tailored advice where it is needed, fast,” Mr Nash adds. “This could range from human resources advice to business continuity planning to financial management – because every one of these small businesses will have a different need.”
Mr Nash’s comments follow the announcement by Minister of Finance, Grant Robertson, of new, wider-ranging measures intended to reduce the number of businesses forced to close and workers losing their jobs.
“We need our businesses to stay solvent to help with the economic recovery as we emerge from this health crisis,” Mr Robertson says. “We have approved a tax loss carry-back scheme that will allow a large number of businesses to access their previous tax payments as cash refunds. Essentially this means a forecast loss in the current financial year can be offset against the tax paid on a profit from last year.”
Tax loss continuity rules will also change which, the Minister expects, will make it easier for businesses to raise new capital without losing the benefit of their existing tax losses.
The new measures include:
$3.1 billion tax loss carry-back scheme (estimated cost over the next two years)
$60 million estimated annual savings to business each year from changes to the tax loss continuity rules
$25 million in the next 12 months for further business consultancy support
Greater flexibility for affected businesses to meet their tax obligations
Measures to support commercial tenants and landlords