Last week, the federal government announced a fiscal stimulus package aimed at supporting the Australian economy in the downturn caused by the global coronavirus outbreak.
Included in the stimulus package is $6.7 billion for small businesses, with tax-free cash payments between $2,000 and $25,000 available for SMEs with a turnover of less than $50 million.
However, the payments will be based off 50 per cent of the PAYG withheld for employees, up to a maximum $25,000. Businesses that do not withhold for their employees will receive a minimum $2,000.
According to ASBFEO Kate Carnell, these measures need to be extended to include sole traders to keep more small businesses alive.
“The COVID-19-driven downturn is already taking an unprecedented toll on the Australian small business community,” Ms Carnell said.
“Sole traders, which account for more than 60 per cent of Australian businesses, are currently ineligible for cash-flow assistance of up to $25,000 because it is only available to businesses that directly employ staff.
“Our view is that the government support should be extended to small businesses, including sole traders, who are facing dire circumstances amid this COVID-19 health crisis.”
The ASBFEO has suggested the government follow New Zealand’s model, with a wage subsidy scheme that includes sole traders and the self-employed, where eligible businesses can access $585 per week for 12 weeks for each full-time employee.
“Sole traders and independent contractors need income support right now without the administrative burden of asset testing,” Ms Carnell said.
“We also believe New Zealand’s COVID-19 leave and self-isolation support package providing all small business employees, including sole traders, who are unable to work or are caring for others with weekly payments of up to $585 for a period of up to eight weeks is worthy of government consideration.”
The ASBFEO has also called for a suite of other measures to support sole traders, including PAYG rebates.
“Sole traders should be eligible for immediate rebates of PAYG quarterly instalment payments paid during the 2019–2020 financial year and PAYG payments on income drawn from the business,” she said.
“Cash flow is absolutely vital for all small businesses, including sole traders, who should be given one-off access to their superannuation at this critical time.
“Low-interest loans should also be extended to those small businesses and sole traders impacted by a loss of trade due to COVID-19, similar to what has been offered to bushfire-affected small businesses.”
Ms Carnell also suggested a national small-business recovery program to get Australia “back in business”.
She believes the program should include fast-tracked regional infrastructure projects and mandated small-business supplier quotas “in all government procurement”.