Both the PM and Treasurer announced these measures during a press release this morning, providing details on new initiatives as well as expanded variations on previous measures with the aim to keep Australians in jobs, and businesses in business. Below we have listed these initiatives based on the current information available.
Contents
Supporting Individuals and Households
Supporting Businesses
- Boosting Cash Flow for Employers – expanding on the initial measure introduced, employers can now access up to $100,000 if they are an eligible small or medium-sized business or a not-for-profit with turnover under $50 million. The new minimum payment is $20,000 (increased from $2,000). This measure has now been split into two payments as follows:
- 1st Payment for March to June 2020: 100% of PAYGW withheld on salary and wages will receive 100% of amount withheld, up to a maximum of $50,000. Employers that pay salary and wages will receive a minimum of $10,000 even if they are not required to withhold. Only available to active eligible employers established prior to 12 March 2020. Credits will be made available in the activity statements of the employing entity. Payments will vary depending on the lodgement basis:
- Monthly lodgers – will receive an automatic credit in their March 2020 BAS, equal to 300% of the PAYGW, up to $50,000. If 300% doesn’t equate to $50,000 then there will be an additional credit in the June BAS to cap you to $50,000 based on the total PAYGW for March, April, May & June 2020.
- Quarterly lodgers - will receive an automatic credit in their March and June 2020 BAS, equal to 100% of the PAYGW, up to $50,000.
- Additional Payment for July to October 2020: If the employing entity continues to be active, payments will vary depending on the lodgement basis:
- Monthly lodgers – will receive an automatic credit in the activity statement system equal to 25% of their June, July, August and September 2020 PAYG withheld, capped at $50,000.
- Quarterly lodgers – will receive an automatic credit in the activity statement system equal to 50% of their June and September 2020 PAYG withheld, capped at $50,000.
A reminder that employers who do not withhold over $20,000 will automatically receive $20,000 as a minimum repayment if their total withholding does not reach $50,000 over the eligible periods.
More information on the cash flow assistance for businesses is available here.
- Temporary Relief for Financially Distressed Businesses
- Temporary increased threshold and time to respond for statutory demands from creditors – the minimum threshold has been temporarily increased six months from $2,000 to $20,000 for creditors to issue a statutory demand.
- Temporary increase in the threshold for a creditor to initiate bankruptcy proceedings – the statutory time-frame has been increased for six months, changing the failure to respond bankruptcy notice from 21 days to six months.
- Temporary relief for directors from any personal liability for trading while insolvent – directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business. This will apply for six months. The debts incurred by the company during the period will still be payable by the company. Egregious cases of dishonesty and fraud will still be subject to criminal penalties.
- Temporary flexibility in the Corporations Act 2001 – the Treasurer will be given a temporary instrument-making power in the Corporations Act 2001 to temporarily amend provisions of the Act to provide relief from specific obligations or to modify obligations to enable compliance with legal requirements during the Coronavirus crisis. This will apply for six months. Any instrument made under the power will apply for up to six months from the date it was made.
Further information on the temporary relief for financially distressed businesses is available here.
Supporting the Flow of Credit
- Guarantee of 50% to SME Lenders – to support new short-term unsecured loans of up to $250,000 per borrower, with a term up to three years with a six month repayment holiday. No assets will need to be provided as security for the loan. The scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
- Quick and Efficient Access to Credit for Small Businesses – a six month exemption of specific “responsible lending obligations” for small businesses to any credit for any business purpose (including new credit, credit limit increases, credit variations and restructures).
- Supporting the Flow and Reducing the Cost of Credit (RBA) – RBA will put downward pressure on borrowing costs for household and businesses. Banks will have access to funding at a fixed interest rate of 0.25% - reinforcing the benefits of a low cash rate and in turn reducing interest rates for borrowers.
- Australian Prudential Regulation Authority – Temporary changes to the expectations regarding bank capital rations, supporting banks’ lending to customers.
We suggest you contact your bank to see how these measure apply to your personal loans and/or your business loans. With the RBA cutting the cash rate again by 0.25 basis points in the last week, the large banks in Australia have followed suit and continue to implement further changes with continued slashing of interest rates and repayments for certain loans put on hold. It is best to contact your bank during these times and understand how they can help both your personal and business circumstances.
Further information on the support for the flow of credit is available here.
As you can see, the measures introduced today are a substantial increase to the initial measures introduced and will encompass more Australians in the eligibility for accessing support. Note that some of these measures will still need to pass through the legislative system, however given the circumstances it is hard to think that they will not be supported by the opposition.
Our updates to you will continue as more information becomes available.
If you would like to discuss any of these measures and what they mean for you and your business, our team is available to assist you. Please don't hesitate to talk with us on (02) 4229 2211 or you can send your enquiry online.
*The above information was correct at the time of printing and subject to change*