Distinct Lack of COVID-19 Support for Sole Traders
Grants to keep small businesses operating amid COVID-19 restrictions have been welcomed, but concerns remain about how the $17.6 billion stimulus package might help Australia’s 1.5 million sole traders. So far there has been a distinct lack of support available to sole traders, as most stimulus measures are focused on businesses keeping employees on board.
The biggest support measure, grants between $2,000 and $25,000, will be paid automatically to businesses who employ people, with access to the grant including the requirement of sending employees’ tax withholdings to the tax office. However, more than three in five businesses in Australia don’t employ anyone other than the owner.
When asked about support measures for sole traders, Scott Morrison confirmed that the priority was assisting employers to keep staff on board. He also suggested that those measures would in-turn assist sole traders by improving cash flow in the economy. Considering consumer confidence and consumer spending are understandably plummeting, it could be suggested that this theory is unlikely to hold true for a lot of sole traders who rely on strong discretionary spending.
Sole Traders Locked Out of QLD’s COVID-19 Rental Grant
There was hope that individual support measures like the $1500/fortnight “Jobkeeper” subsidy and QLD’s new rental support grant would be enough for sole traders (with minimal overheads) to keep their heads above water. However, we’ve now seen sole traders essentially excluded from the rental grant, which is only eligible to those who have “lost their job and applied for Centrelink”. For sole traders, this means a choice between the $1500/fortnight “Jobkeeper” payment, or canning your business to access the “Jobseeker” payment and 4 weeks rent to a maximum of $2000.
“Borrow Now, Worry Later”
Unfortunately, we expect to see a lot of struggling sole traders having to dip into their superannuation and defer loans to stay afloat, putting them in a worse position down the track. In the Treasury’s fact sheet about support measures for businesses, under sole traders, it offers investment deductions, relief for “some” tax obligations, increased asset write off and assistance with access to credit. With business owners being strongly encouraged to borrow from various sources in order to get by, we’re expecting to see a lot of small businesses and sole traders coming out the other end of this leveraged to the hilt and barely able to make repayments.
As the goal posts continue to shift daily, and inconsistent messaging makes it harder for businesses to wade through the constant updates, we have endeavored to compile a list of simplified resources for business owners needing access to up to date information on which to base vital decisions.
If your business is struggling in these difficult and rapidly shifting circumstances, we are here to help. As we always have, we are offering free and confidential, no obligation consultations to assess your options. Call 1300 023 782 or email firstname.lastname@example.org to speak with an experienced and independent consultant today.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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