Further Coronavirus Support Packages
written by Josh McMullen
In response to the escalating Coronavirus crisis, the Government yesterday announced a raft of further measures to assist businesses and individuals. These measures are all subject to the passage of legislation through Parliament.
Firstly, the Government last week announced a range of measures that it and the banks are putting in place to support businesses over the coming months.
Loan Repayment Relief
Banks will defer loan repayments for six months for small businesses who need assistance because of the impacts of the coronavirus.
SME Loan Guarantee Scheme
The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the Coronavirus. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.
Low Cost Loans from Smaller Lenders
$15 billion in stimulus investment will be made available to enable small banks and non-banks to supply low-cost loans to customers and small business. This will enable customers of smaller lenders to continue to access affordable credit.
For further details, and how to apply, you should contact your lender.
Secondly, the Government yesterday announced a range of new and enhanced measures in the second stage of its economic plan to cushion the economic impact of the Coronavirus and help build a bridge to recovery.
Cash flow assistance for businesses
The Government will boost last week’s cash payment to employers. It will now provide a tax-free payment up to $100,000 for eligible small and medium sized entities (SMEs), and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments seek to help businesses’ and NFPs’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Under the enhanced scheme from last week’s first stimulus package, employers will receive a payment equal to 100% of the tax withheld from salary and wages (up from 50%), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment will be increased from $2,000 to $10,000.
SMEs with aggregated annual turnover under $50m and that employ workers are eligible. NFPs entities, including charities, with aggregated annual turnover under $50m and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.
The cash flow payment for employers will be available from 28 April 2020.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received. The payments are tax-free, there will be no new forms and payments will flow automatically from the ATO.
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Temporary Relief for Financially Distressed Businesses
The Government is temporarily increasing the threshold to $20,000 (up from $2,000) at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive (21 days to 6 months). Temporary relief will also be provided for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will also 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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Early access to superannuation
The government is allowing eligible individuals affected by the Coronavirus access to up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
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Income support for individuals and payments to support households
A range of welfare measures are being introduced through the social security system to assist individuals and households.
Click here for further information on income support for individuals.
Click here for further information on payments to support households.
Support for retirees
There will be a reduction in the minimum superannuation drawdown requirements for retirees, providing them with greater discretion when it comes to crystallising losses in a falling market.
Changes to social security deeming rates (in line with recent interest rate reductions) will provide additional benefits to income support recipients.
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If you have any questions on these measures, please don’t hesitate to contact your PT Partners advisor.
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