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FEDERAL GOVERNMENT'S 2ND STIMULAS PACKAGE Featured
23 March 2020 Posted by 

FEDERAL GOVERNMENT'S 2ND STIMULAS PACKAGE

$66B aimed at SMEs, casuals and NFP
FROM KPMG
YESTERDAY the Australian Federal Government delivered a second stimulus package estimated to be worth $66B.

This package was designed around the following three key areas – resulting in 10 new initiatives being announced, these focused on:
 
• Income support for households, casuals and retirees.
• Cash and loan support for small to medium sized business, including not-for-profits.
• Regulatory reform concerning insolvency to manage risk through this time.
 
This is an essential and well-timed move from the government.
 
This second stimulus package, unlike the first which was worth $17.6B is aimed directly at assisting your business to pause – if necessary – but keep paying staff and make it to the other side of this crisis.
 
Combined, these stimulus packages are equivalent to approximately 10 percent of the country’s gross domestic product. This second package is designed to be targeted, scale-able and timed at the moment – for a 6-month period. It will be delivered via existing systems within the Australian Taxation Office (ATO).
 
The inclusion of relaxed insolvency regulations for companies is also welcomed to ease the anxiety around bankruptcy and liability for directors in volatile times.
 
Key points for businesses
 
Eligibility and timing
• This assistance is aimed towards companies, including not-for-profits, with an annual turnover of up to $50m to ensure employers can keep paying wages if the coronavirus impacts the company – details regarding eligibility are to be confirmed.
• The cash injection will be linked to your company’s wages bill through the taxes an employer withholds during the year, but will be cut or cancelled if you terminate staff to encourage retention.
• The assistance will be paid via the current ATO system once the March BAS is lodged direct to your company’s bank account.
 
Cash benefits for your business
• There is an increase in the payment amount from the first stimulus. You can now receive a payment equal to 100 percent of your salary and wages withheld (up from 50 percent under the first stimulus), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000, even if you are not required to withhold tax. This payment will be made once the March 2020 BAS is lodged from April 28, 2020.
• A second payment will be made in the July to October 2020 period. This payment will be another tax-free, cash payment which is equal to the first payment under the first announcement and enhanced under this most recent announcement. This means that if your business is an eligible entity it will receive, in total, a minimum payment of $20,000 up to a maximum of $100,000 in total.
• The payments will be delivered by the ATO as a credit on your business activity statements.
Loan availability – Coronavirus SME Guarantee Scheme
• Federal Government will guarantee half the value of new bank loans to SMEs to unlock up to $40B in finance.
• Federal Government is offering to guarantee unsecured loans of up to $250,000 for a term of up to three years. Lenders will not be charged a fee for accessing the guarantee scheme.
• Loans will be repayment free for six months. The maximum that can be borrowed under the guarantee facility will be $250,000 on terms up to three years.
Relaxation of insolvency measures
• There will be more flexibility in respect of creditor-initiated insolvency and voluntary administration actions. Moving the outstanding amounts limits from $2000 to $20,000 and timing to respond to six months instead of 21 days.
• Relief for directors while trading insolvent will also be provided over the next 6 months.

Assistance to individuals
 
• A boost to welfare payments particularly a doubling the Jobseeker payment and access to superannuation funds.
Immediate actions suggested to take:
• Keep your accounts and cash flow forecasts up to date.
• Lodge your March 2020 BAS quickly.
• ensure that the ATO has your business bank account details to facilitate payment.
 
Federal Government’s main focus at the moment appears to be to around strengthening the safety net designed to help individuals and families impacted by the coronavirus, while also minimising the number of people who are sufficiently impacted to the level that they may need to access the safety net.
 
The government is hoping to achieve this by focusing on helping businesses such as yours survive as intact as possible and staying connected with your workforces and supply chain. The focus is on helping your business help itself.
 
This is a positive strategy that indicates that the Federal Government has not given up on the possibility that a large portion of the private, mid-market and family business sector can cross the metaphorical bridge in reasonable shape, ready to ramp up operations once the focus shifts to recovery.
 
This combination of private and public support mechanisms means good business decision-making is still very much needed. 
 
Contributed by KPMG. Information accurate at the date and time published.


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Publisher and editor, Michael Walls.
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