Coronavirus Support Package - Business

On the 22nd March 2020 the Australian Federal Government announced its Economic Response to the Coronavirus (the Coronavirus Support Package).

Note that as legislation has yet to be finalised in relation to the Support Package, we are unable to comment as to its final form, and what further requirements (if any) will need to be satisfied in order to qualify.

Of the measures announced, the following are the most relevant to those in business:-

LAST UPDATED MARCH 2020

Boosting Cash Flow for Employers

On the 12th March 2020 the Australian Federal Government announced the Boosting Cash Flow for Employers measure, as of the 22nd March 2020 it announced that it would be expanding this measure as follows:-

Not-for-Profit-Entities (including charities) with an Aggregated Turnover of less than $50 million are now included;
Employers will now receive a tax-free payment of 100% of the PAYG Withholding relating to employee wages upon lodging the March to June 2020 Activity Statements;
This payment is to be capped at $50,000 (up from $25,000) with eligible employers being entitled to a minimum payment of $10,000 (up from $2,000);
An additional payment will also be made in July to October 2020 equal to the total of all Boosting Cash Flow for Employers received in relation to the March to June 2020 Activity Statements.

This means that eligible employers will be entitled to a total payments under the Boosting Cash Flow for Employers measures of between $20,000 and $100,000.

Eligibility requirements for the Boosting Cash Flow for Employers payments:-

Businesses and Not-for-Profit-Entities with an Aggregated Turnover (including Associated Entities) of less than $50 million.Aggregated Turnover will generally be based on the Aggregated Turnover for the previous financial year;
The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities (that are registered with the Australian Charities and Not-for-Profits Commission) will be eligible regardless of when they are registered (subject to meeting other eligibility requirements).

Supporting Apprentices and Trainees

On the 12th March 2020 the Government announced its Supporting Apprentices and Trainees measure, as of the 22nd March 2020 it has provided further details on how this measure is to operate:-

Eligible employers will be able to apply for a wage subsidy of 50% of an apprentice’s/trainee’s wage for up to nine (9) months from 1 January 2020 to 30 September 2020;
The subsidy is capped at $21,000 per eligible apprentice or trainee (ie. $7,000 per quarter);
Where a small business is not able to retain the apprentice, the subsidy will be available to the new employer;
The apprentice or trainee must have been in training with the small business as at 1 March 2020;
It is anticipated that applications for the subsidy can be made from early April.

Coronavirus SME Guarantee Scheme

On the 22nd March 2020 the Government announces the Coronavirus SME Guarantee Scheme. Under the scheme:-

The Government will provide a guarantee of 50% to Small to Medium Enterprise (SME) Lenders for new Unsecured Loans to be used for working capital;
SMEs with a turnover of up to $50 million will be eligible to receive these loans;
A maximum total loan size of $250,000 per borrower applies;
The loans will be for up to thee (3) years with an initial repayments holiday of six (6) months;
The loans will be in the form of unsecured finance.

Note that the loans will be subject to the lenders credit assessment process. The Government is implementing the above scheme with the expectation that the lenders will ‘…look through the cycle to sensibly take into account the uncertainty of the current economic conditions…’.

The Government intends to encourage lenders to provide the finance by way of a facility that the borrower draws down on only when needed (ie. interest is only incurred on the amount that was drawn).

Quick and Efficient Access to Credit for Small Business

On the 22nd March 2020 the Government announced that it is seeking to provide an exemption from responsible lending obligations to lenders providing credit to existing small business customers. This exemption is intended to be for six (6) months.

The responsible lending obligations already do not apply for lending that is predominately for a business purpose, however the temporary exemption may reduce the time needed for the lender to be satisfied that the loan is predominately for a business purpose.

Temporary Relief for Financially Distressed Businesses

On the 22nd March 2020 the Government announced temporary measures to assist businesses in financial distress as a result of the Coronavirus, these include:-

An increase in the thresholds at which creditors can issue a statutory demand on a company and the time they have to respond to statutory demands;
An increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition;
Relief for directors from any personal liability for trading while insolvent; and
Providing flexibility in the Corporations Act to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the crisis.

Payroll Tax Waiver

The Victorian State Government has announced that eligible businesses will have their Payroll tax Liability waived for the 2019/20 financial year where the Annual Taxable Wages for the business are up to $3 million.

The eligible businesses will still need to lodge their payroll tax returns (to prove that the Annual Taxable Wages are $3 million or less).

Any Payroll Tax for the 2019/20 financial year already paid will be returned to the business. The State Government has advised that they intend to begin making reimbursements from 27 March 2020.

These businesses can also defer paying payroll tax for the first quarter of the 2020/21 financial year.

Note that other State Governments have announced similar measures.

Land Tax Deferral

The Victorian State Government has announced that eligible landholders with at least one non-residential property and total Taxable Landholdings below $1 million, will be able to defer their 2020 Land Tax payment until after 31 December 2020.

The Land Tax payment can be deferred until after 1 January 2021 but will need to be paid in full by 31 March 2021.

It is possible to request a return of the 2020 Land Tax already paid. However, the liability will still need to be paid in full by 31 March 2021.

This measure does not apply to landholders with only residential properties. However, if the landholder has at least one non-residential property, the deferral applies to all Land Tax (including the Land Tax on the residential property).