Written by Tom Wu
The Government has announced a wide range of funding for small business, with key measures aimed at supporting recovery from natural disasters and COVID-19. This is in addition to introducing compliance changes and industry-specific measures.
SME Recovery Loan Scheme
The Government will support the economic recovery of, and provide continued assistance to, firms that received JobKeeper or are eligible flood-affected businesses through the SME Recovery Loan Scheme.
The Government will provide participating lenders with a guarantee for 80% of secured or unsecured loans of up to $5 million for a term of up to 10 years and with interest rates capped at 7.5%, with some flexibility around variable rate loans. Loans can be used by the small and medium enterprises (SME) for a broad range of business purposes, including to support investment and refinancing existing loans. Lenders will be able to offer borrowers a repayment pause of up to two years.
To be eligible, SMEs, including self-employed individuals and non-profit organisations, must have a turnover of up to $250 million and have been either:
- recipients of the JobKeeper Payment between 4 January 2021 and 28 March 2021
- located or operating in a local government area that has been disaster declared as a result of the March 2021 New South Wales floods and were negatively economically impacted.
2021 Storms and Floods – tax treatment of qualifying grants and Disaster Recovery Funding Arrangements
An income tax exemption will be provided for qualifying grants made to primary producers and small businesses affected by the storms and floods in Australia that occurred between February and March 2021. Qualifying grants include small business recovery grants of up to $50,000 and primary producer recovery grants of up to $75,000. The grants will be made non-assessable non-exempt income for tax purposes.
The Government will further provide $275.9 million over three years from 2021-22 to the states and territories under the Disaster Recovery Funding Arrangements. Funding includes $94.6 million over two years from 2021-22 for grants to support primary producers and small businesses affected by these floods.
Supporting SME Participation in Commonwealth Procurement
The Government will provide $2.6 million over four years from 2021-22 to support and strengthen Australian business participation in Commonwealth procurement. Funding includes:
- scans of procurements to map any common 'pain points' for SMEs;
- increased communication of procurement opportunities to potential suppliers;
- targeted Government Procurement Learning Events for SMEs about how to access supply chains (including with government buyers) and work in major project environments;
- mandated use of Dynamic Sourcing for Panels to make best use of panel arrangements; and
- a pilot of direct engagement of SMEs by the Department of Industry, Science, Energy and Resources for contracts up to $200,000.
Increased powers for the Administrative Appeals Tribunal in relation to small business taxation decisions
The Administrative Appeals Tribunal (AAT) will have enhanced powers to pause or modify ATO debt recovery action in relation to disputed debts that are being reviewed by the Small Business Taxation Division (SBTD) of the AAT. This measure will provide an avenue for small businesses to ensure they are not required to start paying a disputed debt until the matter has been determined by the AAT.
Digital Economy Strategy
The Government's Digital Economy Strategy will include support for the following priorities for small and medium businesses.
- Enhancing Australia's Artificial Intelligence (AI) capability: $53.8 million will be provided over four years from 2021-22 to create a National AI Centre and four AI and Digital Capability Centres to drive and support SMEs to adopt and use transformative artificial intelligence technologies;
- SME digitalisation: $15.3 million will be provided over three years from 2021-22 to promote and accelerate the adoption of e-invoicing by businesses and across all levels of Government; and $12.7 million in 2021-22 to expand the Australian Small Business Advisory Service Digital Solutions program reach to up to 17,000 small businesses.
Aligning the excise refund scheme for brewers and distillers with the producer rebate for wine producers
The Government will increase the support available to brewers and distillers by aligning the excise refund scheme for alcohol manufacturers with the wine equalisation tax producer rebate. From 1 July 2021, under the revised scheme, eligible brewers and distillers will be able to receive a full remission (up from 60 per cent) of any excise they pay, up to a cap of $350,000 (increased from $100,000) per financial year.
The changes to the scheme will provide additional support to small distillers and brewers, which have been detrimentally affected by COVID-19, assist the growth of Australia's craft brewing and distilling industry and reduce inconsistencies in support arrangements for alcohol producers.
Additional small business measures
A range of additional measures for small businesses have been announced. These include:
- Incentivising Recycling Behaviours: The Government will provide $11.0 million over four years from 2021-22 to further stimulate and incentivise recycling behaviours among Australian businesses and communities. Funding includes $5.0 million over three years from 2021-22 to support small businesses to adopt the Australasian Recycling Label.
- Financial counselling: $8.5 million of funding will be provided in 2021-22 for the Rural Financial Counselling Service to improve delivery of financial counselling services to primary producers experiencing financial hardship, and extend support for a further six months for rural and regional small businesses affected by drought, COVID-19 or the 2019-20 bushfires
- Employment Contract Tool: $7.2 million of funding will be provided over three years from 2021-22 to invest in the improvement, maintenance and review of the Employment Contract Tool, which helps small business employers to make employment contracts that comply with workplace laws
- Mental health: The Government will provide $2.0 billion over four years from 2021-22 for the National Mental Health and Suicide Prevention Plan, including initiatives to be progressed with states and territories for a new national agreement on mental health and suicide prevention. Funding includes $0.9 million over five years from 2020-21 to continue the Ahead for Business digital hub, supporting small business owners to take proactive, preventive, and early steps to improve their mental health.
