The Federal Government rolled out their second round of stimulus on Sunday 22nd March, only hours before announcing further restrictions and lockdowns for businesses and workers. This second package is in addition to the first one and delivers an additional $66 billion to householders and businesses. This brings the total investment so far to $189 billion dollars or roughly 10% of GDP.
The resounding message from Government to business is to keep people in employment. The packages reflect this and focus on those businesses that provide employment to other Australians:1. Cashflow
The first stimulus package looked to offer a cash bonus of between $2,000 and $25,000 to those employing staff. It was a refund of 50% of the tax withheld on behalf of employees to maximum of $25,000 and a minimum of $2,000.
The new package has expanded on this and extended it to $20,000 as a minimum with a maximum of $100,000.
These will be paid over two or more payments. For clients that lodge quarterly activity statements only the first payment will be offered after lodgement of the Q3 BAS by April 28. If you receive the maximum first payment of $50,000 you will receive a further two payments of $25,000 each as part of the Q4 activity statement due for lodgement on 28 July, and the Q1 BAS in the new financial year which is due to be lodged by 28 October. The payments are broken up different if you lodge monthly.
This is a lifeline to help small businesses stay operational, maintain cashflow and keep people on the payroll. It is for businesses with an aggregated turnover of less than $50 million and has also been extended to not for profits.
2. Business loans
The Government is going to partner with the banks and other lenders by guaranteeing 50% of loans of up to $250,000 for 3 years to businesses with an annual turnover of less than $50 million.
These are unsecured loans and won’t require any repayments in the first 6 months. The purpose is to help small to medium businesses rebuild and recover on the other side of the CoVID-19 crisis.
3. Regulatory shield
The final part of this second stimulus package is more flexibility around the insolvency regulations. This is for businesses who have otherwise been successful and profitable but have been impacted by CoVID-19.
To protect these businesses through this time there have been temporary adjustments to the insolvency and bankruptcy laws to help them to continue to trade. These changes will apply for 6 months only.
- Firstly, the threshold at which a creditor can take action to initiate insolvency or bankruptcy is being raised from $2,000 to $20,000.
- Secondly, companies and individuals now have 6 months instead of 21 days to respond.
- For the next 6 months Directors will no longer be personally liable if a company is trading while insolvent.
These initiatives in conjunction with the initial stimulus package should provide some much-needed peace of mind for businesses. The Government has been clear that more will probably be needed, but we feel that this is a strong start in helping businesses and the Australian economy operational during this time.
COVID-19: How to motivate your team while working remotely?, published May 18, 2020
Expanding globally during COVID-19: Risky business or perfect timing?, published May 07, 2020
Cashflow is a lifeblood of your Business, especially now during a pandemic such as Coronavirus, published April 22, 2020
Finding opportunities in a crisis and how to recover on the other side of COVID-19?, published April 20, 2020
COVID-19: What does 'Standing Down my team' mean to my Business?, published April 16, 2020
JobKeeper Payment: Eligibility Rules have been released! Who is Eligible?, published April 15, 2020
Working from home during Coronavirus: What expenses are Tax Deductible?, published April 9, 2020
COVID-19: EMDG extra funding of $49.8 million to help Exporters, published April 7, 2020
Startups and Scaleups: R&D Tax Incentive FY2019 deadline extended due to Coronavirus, published April 6, 2020
What is the difference between JobSeeker and JobKeeper? Do you know what you're eligible for?, published April 2, 2020
JobKeeper Allowance: New Government financial measure as a response to COVID-19, published Mar 31, 2020
Should you do Business Planning during CoVID-19?, published 27 Mar, 2020
Financial relief for business experiencing difficulty due to CoVID-19 and State Government Support, published Mar 21, 2020
What are the benefits of Coronavirus Stimulus Package for Businesses?, published March 13, 2020
Have you noticed our #FridayExpertTips... here's one that relates to #StimulusPackage
"Anyone impacted by CoVID-19: ATO Relief is NOT AVAILABLE AUTOMATICALLY. You will need to apply for relief. Contact ATO Emergency Support Infoline 1800 806 218 or get in touch with us."
This information is accurate on the day it’s published and is subject to change as the situation around Coronavirus (COVID-19) evolves. Our conclusions may not be valid if there is any change in those facts, circumstances and assumptions. Accordingly, neither Azure Group Pty Ltd nor any member or employee of Azure Group, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused.