This is a developing story, and will be regularly updated as news is released by the Government.
With the federal government enforcing lockdowns of “non-essential businesses”, it’s an alarming time for salon owners and workers alike.
While economists predict a huge number of small businesses to suffer irreversibly throughout a COVID-19 lockdown, the government has released details of a series of stimulus packages, while banks have vowed to assist small business owners.
Income support for individuals
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of
$550 per fortnight on top of their existing income support payment. This will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, and Special Benefit. The Government is also temporarily expanding access for the JobSeeker Payment by relaxing the partner income test.
$30 billion job-rescue plan
On Monday (March 30), Scott Morrison announced an unprecedented move, when he unveiled the job-rescue plan.The package will see the government pay wage subsidies of $1,500 every two weeks per employee, to help struggling businesses keep people in work. The payments will begin from May 1, and will be back0-dated to March 1, allowing salons to effectively re-employ staff while they wait out the pandemic.
Temporary relief for financially distressed businesses
There is a temporary increase to the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act.
The elements of the package are:
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive
- A temporary 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
- Temporary relief for directors from any personal liability for trading while insolvent
- Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the coronavirus health crisis.
The Australian Taxation Office (ATO) will tailor solutions for owners or directors of businesses that are currently struggling due to the coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
Backing Business Investment (BBI)
A time limited 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Increased and accelerated income support
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.
SME Guarantee Scheme
This will provide businesses with funding to meet immediate cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. Businesses with a turnover of up to $50 million will be eligible to receive these loans.
$66 billion stimulus package
An economic lifeline is being thrown to business owners, with the announcement of a second-stage stimulus package. Small businesses will receive cash payments of up to $100,000, with a minimum payment of $20,000 for eligible companies. The payments will be delivered by the ATO as a credit on activity statements in late April. The Government will also allow people to access up to $10,000 from their superannuation this financial year and in 2020-21.
The Australian Banking Association (ABA) has announced it would suspend principal and interest loan repayments for six months, for small business owners who have been negatively affected by COVID-19.
The Big Four (ANZ, Commonwealth Bank, Westpac and ANZ) have each outlined how they will be supporting those affected by Coronavirus and what are expected to be long-lasting effects.
“This is a multi-billion dollar shot in the arm for businesses that need it the most,” said Anna Bligh, CEO of ABA. “It will pour $8 billion back into small business’s pockets. Businesses are doing it tough, but rest assured, banks have got your back,” she said.
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