Give your savings the boost they need with the Finder app.
Coronavirus takes a toll on Australian businesses
Find out how coronavirus is harming Aussie businesses and what relief measures are being taken to help.
Still reeling from the bushfires, Aussie businesses are now being hit by the global pandemic COVID-19, aka coronavirus. According to a recent study by Roy Morgan, roughly 1-in-6 Australian businesses have already been affected by the outbreak. This makes Australia one of the worst countries affected globally. But just how much harm is the pandemic doing? Find out which Aussie businesses are being affected by coronavirus, the harm caused and what government action is being taken to tackle the problem.
How the travel bans are affecting Aussie businesses
Many Aussie businesses have already lost revenue as a result of the travel bans, and it seems the worst is yet to come.
On 1 February 2020, travel bans were implemented for Chinese citizens and recent visitors of China. The resulting drop in trade has had a major impact on a number of companies reliant on Chinese tourism. These companies range from airports, tourist attractions, travel agencies and hotels to educational centres. For example, in the first 9 days of March, Sydney Airport (Australia's busiest airport) recorded a 25% drop in international traffic.
As the pandemic progresses, response action is becoming more stringent. Effective as of 16 March 2020, the Australian government has imposed a mandatory 14-day quarantine period on anyone travelling to Australia from an international destination. This applies to any and all individuals, regardless of citizenship or residency status. The new regulations also ban cruise ships from docking at any Australian port. With most people cancelling holidays and business trips as a result of these enforced quarantine measures, the effect this will have on businesses Australia-wide will likely be staggering.
Any and all companies relying on tourist trade are feeling the strain immensely. And unfortunately this is only likely to worsen as a result of the new government measures.
Import and export
China is Australia's biggest trading partner and a significant link in the supply chain for all consumer products. Because many Chinese factories have been forced to close for extended periods due to quarantine measures, supply has been limited for many businesses. For example, ecommerce platforms that rely on Chinese industry are seeing large delays in shipments, and are therefore short of stock. Even major Aussie retailers like Harvey Norman and JB Hi-Fi hold concerns that there will be delays in shipments from China of electronic parts and other goods.
Businesses relying on export to China are also taking a hit. The price of iron ore – a major export to China – has dropped 10% in the last month, with coal and other raw material exports also predicted to see a substantial decline. Ratings agency Moody's also predicted that car sales to China would fall by 2.5% in 2020.
Other Aussie businesses affected by coronavirus
Nightclubs, bars and restaurants are losing profit as cautious consumers avoid crowded areas and more people opt for self-isolation, and the threat of job loss within the customer service industry is being felt by many.
In addition, a large number of businesses industry-wide are suffering from loss of labour, as more workers take quarantined leave. Many offices are also shutting down to allow employees to work from home, rather than risk infection spreading within the company.
What measures is the government taking to help SMEs?
While the news may seem disheartening for many business owners, the government is taking action to help. Measures are being put in place on both a national scale, and – in the case of Queensland – additional statewide action is also being taken.
Nationwide relief measures
The government announced measures on Thursday 12 March 2020 to stimulate the economy in the face of the pandemic. For businesses, the instant asset write-off allowance is being increased from $30,000 to $150,000. This means that from now until 30 June, any business purchase up to $150,000 can be written off immediately.
The ATO has also implemented new measures to assist businesses in need. The options that are now available to help businesses impacted by coronavirus include:
- Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
- Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans*
What's happening in Queensland
On Tuesday 3 February the Queensland government announced a new payroll tax relief measure to aid SMEs in the midst of the coronavirus outbreak. Businesses across the state can defer their payroll tax payment for 6 months, backdated from 1 February. This has been put in place initially to protect the tourism sector in the popular Gold Coast, though it is not limited to such. The Queensland government is in fact implementing these measures statewide to any and all affected SMEs. This is due to concern that coronavirus will affect more businesses as time goes on.
"We've waived fees and charges, we've put in support systems to small businesses and all businesses so that they can get through this rough patch so that they can keep people in jobs, and we want the federal government to come to the party on this," said Treasurer Jackie Trad on the subject.
The Queensland government is also currently fighting to give businesses access to disaster relief funds. While disease outbreaks are not currently covered under disaster funding arrangements, the state is arguing that the disaster is "no different" to natural disasters including floods, bushfires and cyclones.
If coronavirus affects your business
If coronavirus is affecting your business, it's advisable to contact the ATO's Emergency Support Infoline on 1800 806 218.
Get more from Finder
Ask an Expert