More CoVID 19 stimulus measures for businesses
Less than 2 weeks after announcing a very generous stimulus package to both individuals and businesses the government has rolled out a second package that will operate in addition to the first package. The additional spend is equal to $66 billion across both households and businesses. This brings the total investment so far to $189 billion dollars or roughly 10% of GDP.
The packages for businesses reflect the governments efforts to keep people in employment. With businesses needing to temporarily close or scale back their operations there is going to be pressure on these businesses to cut costs such as wages. These stimulus initiatives are designed to try and prevent this.
Here are the new business offerings:
In the first stimulus we saw a cash bonus of between $2,000 and $25,000 to those employing staff. It was a going to be administered as a refund of 50% of the tax withheld on behalf of employees to maximum of $25,000. It also had a minimum of $2,000 for those business that are employing people but may not have withheld any tax (particularly if the staff working are under the tax free threshold). The new package has expanded on this and extended it to $20,000 as a minimum with a maximum of $100,000. The first of two payments will be at the Q3 BAS after April 28 and the second likely to hit after the Q1 BAS in the new financial year. This applies to those businesses with an aggregated turnover of less than $50 million and in the second stimulus has been opened up to not for profit organisations also.
2. Business loans
In conjunction with the banks the government will open up unsecured loans of up to $250,000 for 3 years for those businesses with a turnover of less than $50 million. The intention is to help them through this tough period (no repayments will need to be made in the first 6 months). It is hoped that this initiative will give the business the ability to bounce back and rebuild their business on the other side of the CoVID 19 pandemic.
3. Regulatory shield
The Australian Government has introduced temporary measures to assist financially distressed businesses during the coronavirus pandemic.
Some of the elements of the package are:
- An increase in the current minimum threshold for creditors issuing a statutory demand from $2,000 to $20,000 for the next six months;
- The time for the response to a creditors statutory demand has been increased from 21 days to six months; and
- Temporary relief for directors from any personal liability for trading while insolvent.
We feel that these are generous initiatives for business and if nothing else will provide some peace of mind as businesses scramble to understand the implications of their business for today and into the near future.
Remember to look after yourself. If you need help with cash flow planning we are here to help.