Update on the Financial Support from the Federal Government – 23 March 2020

Cash flow assistance for business

On 12 March the Government announced a measure to provide up to $25,000 to business with a minimum of $2,000 for eligible businesses.  Businesses with an aggregated turnover of less than $50 million and that employ workers are eligible.

Not-for-profit entities will now also be eligible.

With the new enhanced scheme employers will receive a payment equal to 100% of their salary and wages withheld (PAYG) which is up from the previously announced 50%.  Further the maximum payment has been increased from $25,000 to $50,000.

Further the minimum payment as been increased from $2,000 to $10,000.

In addition, the government will in the July to October period make a further payment of equal to the amount received up to June be the eligible entities.  So, if you received the minimum $10,000 for example you will receive an additional $10,000 or if you received the full $50,000 then you will receive another $50,000.

Note these payments are TAX FREE

The payments will be made through an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.

Talk to Balanix to determine whether it will benefit you to lodge before the due date.

Note these benefits will only apply where your eligibility was determined as at 12 March 2020 with the exception of Not-For-Profits who will be eligible regardless of when they were registered, subject to meeting other eligibility requirements.  If unsure please contact Balanix for clarification.  This is particularly relevant if you are a new charity established to response to issues arising from the Coronavirus.

Apprentices and Trainees remains unchanged from the 12 March announcement.

Income Support for Individuals

The government has temporarily expanded the eligibility to income support payments and at the same time established a time limited supplement of $550 per fortnight.  These payments will apply for the next six months.

For the period of the Coronavirus supplement there is to be an extended access to the income support payments list.

  • Expanded access – The Jobseeker Payment and Youth Allowance Jobseeker will provide payment access for permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contractor workers who meet the income tests as a result of the economic downturn due to the Coronavirus.
  • Reduced means testing – Asset testing will be waived for the period of the Coronavirus supplement for Jobseeker Payment, youth Allowance Jobseeker and Parenting Payment.
  • Reduced Waiting Time – the one-week Ordinary waiting time will be waived.  There are a number of further reductions please contact Balanix for further details.

People will need to declare that they are not, accessing employer entitlements (eg annual leave, sick leave) or Income Protection Insurance at the same time as receiving Jobseeker Payment and Youth Allowance Jobseeker under these arrangements.

From 20 March 2020, Sickness Allowance was closed to new entrants and was replaced by the Jobseeker Payment.

There are further details please contact Balanix for those details.

Please note that what Balanix has concentrated on here is what is available particularly for the self- employed and sole traders.  The Government has done a great job in this regard compared to for example the UK Government which has provided no help to date.

Temporary relief for financially distressed businesses

  • Increase in threshold at which creditors can issue a demand on a company and the time companies have to respond;
  • A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings;
  • Temporary relief for directors from any personal liability while insolvent; and
  • Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events.

Further the ATO will tailored solutions currently struggling due to the Coronavirus  including temporary reduction of payments or deferrals or withholding enforcement action including Director Penalties and wind-ups.

Please talk to Balanix if any of these situations potentially affect you.

There is more detail but in terms of small business Balanix preference is to provide more detail information where it applies to the majority of our clients. 

However, if you have any uncertainty don’t hesitate to contact us directly.

Supporting the flow of credit

Under the Coronavirus SME Guarantee Scheme will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital. This includes business with turnover up to $50 million.

The loan can be up to $250,000 per borrower and will be up to three years with an initial six month repayment holiday and further then loan will be in the form of unsecured finance.

An important part of this is that lenders will be encouraged to lend on the basis that lenders provide the facilities such that SME only have to draw down if needed.  As such SME will only pay interest on the amount drawn down.  It is about giving SME flexibility without incurring unnecessary cost.

This scheme will commence in April 2020 and be available until 30 September 2020.

More detail will follow in the coming days.

Balanix is with you and will do everything in our power to help keep you in business. Call us today 07 3264 4783.