The Australian Government has been implementing measures to support businesses and households amidst the current situation resulting from the pandemic COVID-19, which has so badly affected the country already.
On 12 March 2020, the Australian Government released its first , which basically offers certain incentives to encourage businesses to continue operations, and to keep money flowing in the economy as much as possible. The Government wants to ensure that businesses can bounce back, after the crisis caused by the Coronavirus is over. We sent out a newsletter last week, after the first tranche of stimulus measures.
On 22 March 2020, the government released a further Economic Stimulus Package in order to strengthen the safety net available to Australians, and to increase support for small and medium businesses.
The second stimulus package in support of businesses includes:
- Boosting Cash Flow for Employers, providing for a rebate of 100% on PAYG withheld on staff wages between January and October 2020. The government will provide a cash assistance of up to $100,000 (tax-free) to eligible small and medium sized businesses and not-for-profit organisations, including charities, that employ people with a minimum payment of $20,000, in order for them to continue with its operations, to pay rent and other bills and to retain their employees. The definitive legislation is not yet available to define ‘eligible’ at this stage, so stay tuned.
- Coronavirus SME Guarantee Scheme where the Government will guarantee 50% of new unsecured loans issued by eligible lenders to SMEs with a turnover of less than $50,000. This way, the lenders will be more willing and able to provide credit to SMEs. There are conditions for this: It can’t be a refinance; only banks who join the scheme will be eligible; no repayments for the first six months, and from a commercial perspective you would still have to prove to the bank that you’re good for the loan in the first place, even with the 50% guarantee.
- Temporary relief for directors from any personal liability for insolvent trading. The Corporations Act 2001 will also be amended to provide temporary relief for companies to deal with unforeseen events arising from the Coronavirus.
- Temporary increase in the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000 and the time a debtor has to respond from 21 days to 6 months.
- Payroll Tax Relief, where businesses get a two-month refund of payroll tax and may defer all payroll tax payments for the rest of 2020. On top of this, SMEs will also benefit from a three-month payroll tax holiday.
- Deferral of payments, loan extensions, breaking term deposit without penalty, merchant fee waivers and interest rate relief offered by most banks in Australia.
- Power bill relief, where SMEs that consumed less than 100,000kWh will get a $500 rebate off energy bills, which will be automatically applied in the electricity bills.
- Waiver of fees, charges, and levies to support tourism operators, including but not limited to license fees for liquor businesses, renewal fees for Inbound Tour Operators, etc.
- Six-month relief for businesses renting government premises and supply chain support for businesses having difficulties accessing supplies.
- Cash flow support for Australian airlines and airports while international and domestic air travels are disrupted.
- Webinars, financial counseling, and one-on-one support available for SMEs by contacting the Small Business Hotline on 1300654687 or by completing the online survey at business.qld.gov.au
On the other hand, Workers and Households are supported through the following incentives:
- Coronavirus supplement to be paid at a rate of $550 per fortnight for the next 6 months, to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. Apparently the demand is so high for registrations for Centrelink support that lines run out the door (so much for social distancing…), the phone lines are not answering, and we read in a recent article there are 5000 new staff required to help Centrelink administration over this period.
- $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving a Coronavirus supplement income support payment.
- Temporary reduction of superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019-20 and 2020-21.
- Early release of up to $10,000 of superannuation in 2019-20 and a further $10,000 in 2020-21 for people under financial distress.
- Reduction of social security deeming rates by a further 0.25% on top of the deeming rate changes made at the first package.
Note that there is no fine print of the legislation yet. These are merely based on government website announcements.
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