Prime Minister Scott Morrison has announced the expansion of economic stimulus in response to the COVID-19 crisis, including the introduction of regulatory protection measures for businesses.
Disclaimer: This article is designed as a news piece and may not reflect current information. For a wrap-up of stimulus measures available to Australian businesses, click through to this page.
Broadcast live today, Prime Minister Scott Morrison and Treasurer Josh Frydenberg announced the Commonwealth Government’s second round of economic stimulus measures in response to the novel coronavirus, COVID-19.
The new package comes less than a fortnight since the first round of economic stimulus measures, totalling $17.6 billion, were announced by the Government, with the aim of expanding support to more businesses, employees and individuals impacted directly or indirectly by the pandemic.
“The next few months are going to be a difficult journey but we all have a role to play to adapt to the changes we’re facing, to cushion the impact of what is happening and to pull together so we can bounce back when we get to the other side,” said Morrison.
UPDATE: Since this article was published, the Government has announced new wage subsidies for employers as part of a $130 billion JobKeeper stimulus package. Read about the new wage subsidies here.
Originally announced as a tax-free payment of between $2000 and $25,000 for businesses with turnover up to $50 million, the Government’s plan to boost cash flow has been expanded in size and scope.
The initiative now covers not-for-profits, including charities, and small businesses with a turnover under $50 million, with eligible companies receiving between $10,000 and $100,000 from the 28th of April as a credit on their activity statements from the Australian Tax Office.
“By linking the payments to business to staff wage tax withholdings, businesses will be incentivised to hold on to more of their workers,” said Morrison.
Further, eligible businesses can expect an additional payment, equaling the total of all ‘Boosting Cash Flow for Employers’ payments made in 2019-20, to be made available from 28 July 2020.
This means if an eligible business received the minimum $10,000 payment, it can expect an additional $10,000 soon after.
“Cash flow is almost always the number one concern for small business owners in normal times, and right now a cash injection is the only thing that will keep many small and medium businesses alive,” said MYOB chief executive Greg Ellis in response to the announcement.
“We applaud the Government for taking these further steps today to help Australia’s small businesses to survive through this crisis.
“A cash injection of up to $100,000 for Australia’s small and medium businesses is the lifeline they need to keep trading, and most importantly to keep so many thousands of Australians employed.”
Dubbed the ‘Coronavirus SME Guarantee Scheme’, the Government has proposed to guarantee 50 percent of new loans issued by eligible lenders to small-to-medium enterprises (SMEs).
This initiative aims to further enhance lenders’ willingness and ability to provide credit, in concert with a previous announcement the Government made to make access to credit quicker for small businesses.
The nature of the proposal would see the Government guaranteeing up to $20 billion to support $40 billion in SME loans in total.
As an additional measure to provide support for businesses currently undergoing financial distress, the Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
What is a statutory demand? A statutory demand is a written demand made by a creditor to a debtor to pay a debt within a given period of time.
The package also includes temporary relief for directors from any personal liability for trading while insolvent.
The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
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The Government is temporarily expanding eligibility for income support payments and establishing a time-limited ‘Coronavirus Supplement’.
The supplement is to be paid at a rate of $550 per fortnight to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
The Coronavirus Supplement will be paid for the next six months, costing the Government an estimated $14.1 billion.
It’s partnered by an increase of up to 5,000 staff for Services Australia, with the aim of supporting the delivery of the new measures.
For people suffering financial stress as a result of COVID-19, the Government is allowing early access to superannuation.
Eligible individuals will gain access to up to $10,000 through an online application in myGov before 1 July 2020, with a further $10,000 available after that date.
Amounts released will be tax free, aimed at supporting those experiencing a loss of income as a result of the pandemic.
The full impact of COVID-19 on our economy is unknown and may continue to evolve for some time, but the scale of stimulus on offer from both Federal and State Governments can provide some relief to business owners.
As the Prime Minister said, business owners will be expected to comply with social distancing measures, and this will have repercussions for business-as-usual.
With the relief currently on offer to small businesses engineered on tax credits, provided directly by the ATO, employers should stay on top of their tax and payroll obligations in order to gain the maximum available entitlements.
For information and advice specific to your financial situation, MYOB recommends consulting with an accredited professional. Find an advisor near you on our Partner Search page.