Stimulus package: A guide for businesses

Small to medium business stimulus

The Government is providing up to $100,000 to eligible small to medium sized businesses that employ people, with a minimum payment of $20,000 (‘Boosting Cash Flow for Employers Payment’) and a further payment being introduced in the July – October 2020 period equal to the initial Boosting Cash Flow for Employers Payment. 

Employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000 and the minimum payment is being increased from $2,000 to $10,000. 

Eligible employers can apply for a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee. 

The business has to be active to receive any of these benefits.

“Eligible businesses are those that employ workers and have an aggregated annual turnover under $50 million, as well as not-for-profits and charities.

The enhanced scheme will be delivered in two phases: Firstly, with employers set to receive a first payment equal to 100 per cent of their salary and wages withheld, up to a maximum of $50,000, when businesses lodge their activity statements for the 28 April and 28 July quarterly due dates.

Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

Secondly, an additional payment equal to the first payment will be made after businesses lodge their BAS by the 28 July and 28 October quarterly due dates.

For example, a business that receives $50,000 for the period up to June will subsequently receive another $50,000 for the period up to September upon lodgement of their BAS.

Monthly BAS lodgers will receive the first payment for the March 2020, April 2020, May 2020 and June 2020 lodgements, with a 300 per cent calculation in the March activity statement to provide the same treatment as quarterly lodgers.

The second payment for monthly BAS lodgers will be released once they lodge their June 2020, July 2020, August 2020 and September 2020 lodgements.

All entities are required to be active to receive the payment, with the measure set to benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs.

The expanded scheme is estimated to cost $31.9 billion over the forward estimates period.”

See full MyBusiness article here.

Statutory demands and bankruptcy changes

The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankrupt proceedings against individuals. It has also increased the time companies and individuals have to respond to statutory demands they receive.  

There is temporary relief for directors from any personal liability for trading while insolvent. 

The ATO’s response and tax benefits

The Australian Tax Office will temporarily reduce payments or deferrals and withhold enforcement actions, like director penalty notices and wind-ups. 

The instant asset write-off threshold is increased from $30,000 to $150,000 and the Government is expanding access to include businesses with an annual turnover of less than $500 million (originally $50 million) until 30 June 2020. 

The Government is accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

The Government has also provided temporary relief from provisions in the Corporations Act, 2001 to address unforeseen events that occur as a result of the coronavirus health crisis.  

$1 billion is being set aside to support regions most significantly affected by the Coronavirus outbreak to assist during the outbreak and the recovery. 

Supporting the flow of credit 

Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to small to medium sized businesses.  

There is a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers.  

The Reserve Bank of Australia (RBA) announced a term funding facility for the banking system. Banks will have access to at least $90 billion in funding at a fixed interest rate of 0.25 per cent. The cash rate will be reduced to 0.25 per cent. To encourage lending to businesses, the facility offers additional low-cost funding to banks if they expand their business lending, with particular incentives applying to new loans to SMEs. 

The Australian Prudential Regulatory Authority has announced temporary changes to its expectations regarding bank capital ratios. The changes will support banks’ lending to customers, particularly if they wish to take advantage of the new facility being offered by the RBA. 

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