March 24, 2020
As the number of confirmed COVID-19 cases surges across the country, both Victorian and Commonwealth Government announced further economic stimulus packages to buffer the tremendous shock the coronavirus has caused to our economy.
Federal Government Package
The Federal Government introduced another $66.1 billion package that includes economic stimulus measures to support individuals and households, businesses, and flow of credit. Below are some details of how these measures may affect you and your business:
Boosting cash flow for employers
Following the cash flow enhancement measure released on 12 March 2020, the PM announced an increase to the PAYG Withholding concession from 50% to 100% and the maximum refund amount from $25,000 to $100,000 (payable in two instalments).
Eligible SMEs (businesses with annual turnover < $50 million and that have employees) are now entitled to up to $100,000 tax-free “cash back” (with a minimum of $20,000) paid in two instalments to assist with retaining staff and business operation.
Temporary relief for financially distressed businesses
To prevent more companies entering liquidation, for a six-month period, the Commonwealth Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company from $2,000 to $20,000.
The period taken to respond to a demand before the company is presumed to be insolvent is also being extended from 21 days to six months.
To encourage companies to continue to trade during the COVID-19 pandemic, the Government also temporarily relieves company directors from their duty to prevent insolvent trading (for six months), provided the debts are incurred in the ordinary course of the company’s business.
Coronavirus SME Guarantee
In order to provide support for immediate cash flow needs for SMEs, the Federal Government introduced a guarantee of 50% to SME lenders for new unsecured loans. These will enhance the lenders’ willingness and ability to provide credit, and assist SMEs with additional funding during the current economic environment.
Under this scheme, eligible SMEs can access a maximum of $250,000 loan per borrower, payable up to 3 years with an initial 6-month repayment holiday.
Quick and efficient access to credit for small businesses
For a six-month period, lenders providing credit to existing SME customers will be exempted from the “responsible lending obligations”. This will allow eligible SMEs to access credit quickly and efficiently.
Victoria declared a state of emergency on 16 March 2020. Following the statement, the Victorian government has announced the following tax measures to support businesses through the economic turbulence:
2019-20 payroll tax waived
Employers with annual taxable wages under $3 million will receive an exemption for their payroll tax obligations for the 2019-20 financial year. This $3 million threshold applies to each individual employer even if they are a member of a payroll tax group.
For any tax already paid during the 2019-20 year, the State Revenue Office (SRO) will contact eligible businesses to arrange reimbursement.
2020 liquor licence fees waived
All Victorian renewable liquor licence fees will be waived for 2020.
If the licence fee has already been paid, regardless whether paid to the SRO or the Victorian Commission for Gaming and Liquor Regulation, the SRO will reimburse this amount to the business.
2020 land tax deferred for eligible landowners
For 2020 year, landowners that have at least one non-residential property (including commercial property, industrial property and non-residential vacant land) will receive an extension for their land tax payment until after 1 Jan 2021 (but must be paid in full by 31 Mar 2021).
If an eligible landowner has already paid their 2020 land tax, they can request the SRO for a refund and defer payment to 1 Jan 2021.
As mentioned by the PM in his announcement, “these extraordinary times demand extraordinary measures”. We understand the spread of coronavirus has caused different level of distress on various parts of the society.
If you or your business is affected, or would like to know more about the government packages, please feel free to get in touch.
Our office is currently still open.
We are closely monitoring the government announcements and will provide further updates here on our website and LinkedIn, where necessary.