Fires and floods prompt Coalition policy to provide assistance to small businesses after disasters
The Coalition has revealed a policy to provide support to small businesses after natural disasters which it claims will stop viable and profitable businesses going bankrupt and keep local people employed.
Under its plan for Small Business Emergency Assistance, which was released on Friday, the coalition will, if elected, provide concessional loans for consequentially affected small business of up to $100,000.
The existing Commonwealth disaster relief assistance includes concessional loans for businesses to repair or replace buildings and equipment and to replace up to one month of stock.
However, these loans do not provide support for businesses that have not experienced any physical damage from a natural disaster but have still suffered a significant loss of income due to the disaster's impact on other businesses, households and the community.
Under the plan, any business which suffers a loss of income as a consequence of a natural disaster will be eligible for a loan of up to $100,000 and will be able to pay back the loan over a period of up to seven years at an interest rate of 4%.
The Coalition says it will also provide a GST and Pay As You Go holiday to small businesses in disaster-affected areas.
Under current arrangements, small businesses are required to submit a quarterly report Business Activity Statement by set dates each year.
Instead, these businesses will have the option of a three-month extension for filing their BAS, and will not be required to remit their GST and PAYG payments until that time.
While the Australian Taxation Office has previously announced a one month deferral for monthly activity statements for disaster-affected businesses, this only benefits larger businesses with an annual turnover over $20 million.
Finally the coalition will waive for a period of six months any penalty interest for disaster-affected small businesses failing to estimate their PAYG obligation accurately.
Current tax rules impose penalty interest on businesses that do not estimate their PAYG liabilities with an accuracy of greater than 85% and the Coalition says disaster-affected small businesses face real uncertainty in accurately estimating their ongoing PAYG tax obligations.
Bruce Billson, the shadow minister for small business, told SmartCompany the policy set out practical steps to assist disaster-affected businesses to get back on their feet.
"Anyone with an understanding of small business would know in the disasters we have seen you don't have to be at ground zero to have your business substantially damaged by that event; you can lose your customer base and have your supply chain affected while being located in a different place," he says.
"We have seen a response from the states to disasters, but it has been a bit spotty and this policy shows how important small business' recovery is to a community's recovery."
Billson says he is unable to put a cost on the Small Business Emergency Assistance policy.
"It's difficult to cost but let's bear in mind all disaster responses are difficult to cost and they are funded through contingency funding arrangements, this would also be funded through those arrangements and it would extend the eligibility but would not change the source of the funding," he says.
Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany he supported the Coalition's policy.
"The plan for disasters is very good and a real indication the Coalition understands the problem, when your suppliers are affected or your workers can't get to work," he says.
"The GST and PAYG holiday is absolutely a good idea and it is not just a holiday from paying it, it is a holiday from filling out the forms."
Strong says the policy could have gone further and provided grants to small business but he is happy with the start made by the Coalition.
"We would always like more, but that is a bit mean spirited to say," he says.
"The reality is it wouldn't cost too much money to go the extra steps and give grants to businesses."