Coronavirus relief measures: how can they help you
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The coronavirus epidemic raging across the world is presenting unprecedented challenges for Australia. To cushion the blow, the Government has introduced two relief packages totalling $83.7 billion and with more likely to follow as the situation unfolds. Here is an outline of the major fiscal and regulatory measures announced so far and how they might help you and your business to weather the storm ahead.
Support for individuals and households
Income Support Payments
Over the next six months, access to income support payments will be expanded and expedited in order to meet the anticipated job losses.
- A time-limited Coronavirus supplement at a rate of $550 per fortnight will be paid to eligible persons on top of their current entitlements, which include recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- Two separate $750 payments will be made to eligible social benefit recipients. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020. Those receiving the Coronavirus supplement will not receive the second payment.
To see whether you are eligible for the above transfers and how to apply, check the factsheets here.
Early Release of Superannuation
Individuals in financial distress due to the Coronavirus outbreak are granted access to up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. No tax will be levied on the amount released and it will not affect social benefits entitlements.
Relaxation of Personal Bankruptcy regulations
To prevent a spike in personal bankruptcies following measures have been introduced:
- The minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor increased from $5,000 to $20,000.
- The time a debtor must respond to a bankruptcy notice will be extended from 21 days to six months.
- In a voluntary bankruptcy initiated by a debtor’s petition, the period of protection during which unsecured creditors cannot take action to pursue the debt is increased from 21 days to six months.
Support for businesses
Already suffering from a horrific fire season and a weakening economy, many businesses are in desperate need for help. The following measures have been introduced to help small to medium businesses to stay afloat during these tough times.
Wage subsidy to support employment
- A tax-free payment will be made to businesses and not-for-profits that employ people and have a turnover less than $50 million. The amount of the payment is equal to 100 percent of the salary and wages withheld by an eligible business as per its business activity statements, from $20,000 up to a maximum of $100,000 in two quarterly instalments. Employers not required to withhold tax will also be eligible for the $20,000 minimum payment.
- The Government encourages the retainment of apprentice and trainees by reimbursing employers of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020, up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Relaxation of corporate insolvency regulations
The government has temporarily relaxed the regulatory framework around corporate insolvency by introducing the following measures:
- The threshold amount for which a creditor may issue a statutory demand against a debtor company is increased from $2,000 to $20,000.
- A company now has up to 6 months to respond to the statutory demand instead of 21 days.
- 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 measure means directors will not be held personally liable for insolvent trading, thereby encourages companies to borrow and continue trading through the Coronavirus health crisis with the aim of returning to viability when the crisis has passed.
Notwithstanding the relaxation of the insolvent trading framework, any debts incurred by the company will still be payable by the company, and egregious cases of dishonesty and fraud will still be subject to criminal penalties.
Boost the flow of credit
In order to enhance access to credit, the government has introduced the following further measures:
- Provide a guarantee of 50 per cent to lenders to support up to $40 billion of new short-term unsecured loans to businesses with an annual turnover of less than $50 million.
- Carve out a temporary exemption from responsible lending obligations for lenders providing credit to small businesses customers.
By boosting lenders’ willingness and ability to provide credit to cash-strapped small businesses, these measures seek to prevent a liquidity crunch and to support viable businesses to survive through the coronavirus crisis.
As the coronavirus outbreak and its economic impact unfolds, the team at Collins Wentworth is here to assist you through this unprecedented crisis. We are experienced in business financial matters. If you have concerns about the financial position of your business and wish to know more about how we can assist you, contact us today.
For details of the Government’s relief measures:
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