This article is up to date as at 13 April 2020.
The Federal Government has introduced a range of stimulus measures available to assist Australian businesses in response to the devastating effects COVID-19 (Coronavirus) has brought to the community and economy.
Economic Response to Coronavirus:
On 12 March 2020 the Australian Federal Government announced it’s first economic response to Coronavirus with the initial stimulus package comprising of $17.6 billion. A second economic stimulus package followed on 22 March 2020 announcing a total $189 billion being injected into the economy.
Visit Economic Response to the Coronavirus for up-to-date information on financial assistance, eligibility and timing for support to Australian Businesses.
A summary of the economic response is outlined below:
A wage subsidy program introduced to support businesses significantly impacted by the Coronavirus to continue paying their employees. Eligible businesses (including sole traders) will receive $1,500 per fortnight per eligible employee for a maximum of 26 weeks.
Businesses will need to prove revenue has declined or will likely decline by 30% for businesses with an aggregated turnover under $1 billion or a decline or likely decline of 50% or more for businesses with an aggregated turnover of $1 billion or more.
For more eligibility requirements visit: Treasury – JobKeeper
Boosting Cash Flow for Employers
The government is supporting small, medium and not for profit businesses to continue operating, employing staff, paying their rent, utilities and other bills and retain employees through two sets of cash flow boosts. Eligible businesses will receive tax-free cash flow boosts of between $20,000 and $100,000 through credits in the activity statement system.
Basic eligibility includes businesses with an aggregated annual turnover of less than $50 million that made eligible withholding payments and held an ABN on 12 March 2020 which continues to be active.
For more details on eligible businesses and payments visit: Treasury – Businesses / Cash Flow
Temporary relief for financially distressed businesses
To assist viable businesses that now face the threat of financial distress and insolvency, the Government has introduced measures that temporarily affect statutory demands, bankruptcy proceedings, personal liability for trading while insolvent and relief and flexibility from provisions of the Corporations Act 2001 (Cth).
The temporary higher threshold at which creditors can issue a statutory demand on a company has increased from $2,000 to $20,000. The statutory timeframe companies have to respond to statutory demands will also be extended temporarily from 21 days to six months.
The threshold for a creditor to initiate bankruptcy proceedings against a debtor regulated by the Bankruptcy Act 1966 (Cth), will temporary increase from $5,000 to $20,000 for a period of six months. To allow the debtor more time before being forced into bankruptcy, the timeframe a debtor has to respond to a bankruptcy notice will be extended from 21 days to six months.
The period of protections where unsecured creditors cannot take further action against a debtor to recover debts when a debtor has declared an intention to enter voluntary bankruptcy has also been temporarily extended from 21 days to six months.
Trading While Insolvent:
Directors will be temporarily relieved from personal liability for trading while insolvent for debts incurred in the ordinary course of the company’s business for a period of six months. Debts incurred by the company will still be payable by the company and criminal penalties will apply where egregious cases of dishonesty and fraud occur.
Complying with the Corporations Act 2001 (Cth):
Individual requests can be made to ASIC for companies that require relief and flexibility from some provisions of the Corporations Act 2001 (Cth) where they cannot comply due to unforeseen events that arise as a result of the Coronavirus. Companies are still accountable and could be subject to potential legal action from shareholders and creditors.
For further information on the temporary relief available to businesses visit: Treasury – Businesses / Financial Distress
Increasing the instant asset write-off:
Increasing the instant asset write-off threshold from $30,000 to $150,000 is another measure that the Federal Government has implemented to back businesses in making investments to support economic growth. Access to this package has also been expanded to include all businesses with an aggregated annual turnover of less than $500 million until 30 June 2020.
The threshold includes eligible purchases of new or second-hand assets first used or installed ready for use within specific time periods and applies on a per asset basis.
For more threshold eligibility visit: Treasury – Businesses / Asset Write Off
Backing business investment:
This incentive has been introduced as a time limited (15 month) investment to support business investment and economic growth by accelerating depreciation deductions. The incentive provides businesses purchasing certain new depreciable assets with an aggregated turnover below $500 million a deduction of 50% of the cost of an eligible asset on installation (with existing depreciation rules applying to the balance of the asset’s cost).
For more information on eligible assets and timing visit: Treasury – Business / Business Investment
Supporting apprentices and trainees
Small businesses employing fewer than 20 employees can apply for a wage subsidy to support the business’ retainment of apprentices and trainees. Eligible employers can apply for a subsidy of 50% of the eligible apprentice’s or trainee’s wage paid during 9 months from 1 January 2020 to 30 September 2020. A maximum of $21,000 will be reimbursed to employers for each eligible apprentice or trainee ($7,000 per quarter).
For more information on timing to register for the subsidy visit: Treasury – Business / Apprentices
Support for Coronavirus affected regions and communities
The Government has announced an initial $1 billion to be set aside for use in supporting communities and industries such as tourism, agriculture and education that have been disproportionately affected by the economic impacts of the Coronavirus.
Further support available to Coronavirus-affected regions, communities and industries is available at: Treasury – Business / Affected Regions
For more information please contact us. Our team of solicitors can assist you if you are having trouble accessing any of the above resources and support you with up-to-date information that may affect your business during COVID-19.