The recent introduction of the Federal Government’s stage 1 and stage 2 shutdown regulations to slow the spread of coronavirus (COVID-19) have further impacted many businesses across the country.
To help those in financial distress, the Government fast tracked its eagerly awaited stimulus package – the Coronavirus Economic Response Package Omnibus 2020 – to obtain Royal Assent on March 24. It comprises two initiatives, Temporary relief for financially distressed businesses via changes to the Corporations Act 2001 and Bankruptcy Act 1966, and Boosting cash flow for employers, to help businesses with cash flow issues and staff retention.
Along with your and our advice and support, these initiatives will go a long way to helping our clients who are struggling to survive in these challenging times.
The Temporary relief for financially distressed businesses initiative includes:
- Creditor’s Statutory Demands: The statutory minimum debt has increased from $2,000 to $20,000 and the period to comply with a statutory demand has increased from 21 days to six months.
- Relief for Directors – Temporary Safe Harbour (s588GAAA): Directors are temporarily relieved of their duty to prevent insolvent trading in respect of debts incurred in the “ordinary course of the company’s business”. Note: where a debt is dishonestly or fraudulently incurred, criminal penalties will still apply.
- Bankruptcy: The statutory minimum debt has increased from $5,000 to $20,000 and the period to comply with a bankruptcy notice has increased from 21 days to six months.
- Debtor’s petition: A debtor who has presented a declaration of intention to file a debtor’s petition will now be protected from any enforcement action by a creditor for a period of six months.
Some key points to note:
- The changes are temporary and will end on September 25, 2020.
- Changes will only apply to: statutory demands that are served on or after March 25, 2020 and bankruptcy notices issued on or after March 25, 2020.
- If a creditor’s statutory demand or bankruptcy notice was issued and served before March 25, 2020, it will not be subject to the new law.
- The relief being provided to directors in relation to insolvent trading will only be available in relation to debts that are incurred during the six-month period from the commencement date.
The Boosting cash flow for employers initiative will see the Government providing up to $100,000 to eligible small and medium sized businesses with a minimum payment of $20,000. The tax-free payments provide cash flow support to businesses with a turnover of less than $50 million and not-for-profit organisations that employ staff.
This initiative also features changes to Payroll Tax and fees including:
- Payroll tax customers whose total grouped Australian wages for the 2019/20 financial year are no more than $10 million will have their annual tax liability reduced by 25% when they lodge their annual reconciliation, which is due on July 28.
- For those customers who lodge and pay monthly and whose total Australian wages will be no more than $10 million for the current financial year, no payment for the months of March, April or May 2020 will be required.
- When lodging your annual reconciliation, you will still need to provide wage details paid in these months and will receive the benefit of a 25% reduction in the amount of tax you would have had to pay for 2019-20.
- The tax-free threshold will increase from $900,000 to $1 million for the financial year commencing on July 1, 2020.
- $80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies.
In late March the Federal Government announced the JobKeeper Payment, which enables businesses significantly impacted by COVID-19 to access a subsidy from the Government to continue paying their employees. This assistance will help businesses to keep people in their jobs and restart once the crisis is over. It’s a temporary scheme open to businesses impacted by the coronavirus and is also available to the self-employed.
Key points of the JobKeeper payment:
- 1. $1,500 per fortnight will be paid per eligible employee (head count as per March 1, 2020)
- 2. Payments backdated to March 30, 2020; and the initiative runs for the next six months
- 3. Payments will be made by the ATO from the first week of May
- 4. Employers will be eligible for the subsidy if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
- their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month)
- 5. Employers will need to provide monthly updates to the ATO.
A snapshot of NSW Government’s $1.6 billion stimulus package for business support
- $450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20) – a saving of a quarter of their annual payroll tax bill in 2019-20
- $56 million to bring forward the next round of payroll tax cuts by raising the threshold limit to $1 million in 2020-21
- $80 million to waive a range of fees and charges for small businesses including bars, cafes, restaurants and tradies
COVID-19: NSW GOVERNMENT TENANCY CHANGES
The NSW Parliament passed the COVID-19 Legislation Amendment (Emergency Measures) Bill 2020 on March 24. The bill will allow the housing minister to ban evictions for renters and commercial tenants through regulation. It also empowers the minister to call for rent freezes.
The outline of the package is as follows:
- No rental evictions or foreclosures during the COVID-19 pandemic
- A nationwide rent freeze with no increase in rent for the duration of the crisis
- A mortgage holiday to suspend payments if you need to
- Urgently fund crisis housing
- An increase to Centrelink rent assistance payments
[ Page last updated: 27/03/2020 ] – © 2020 Jirsch Sutherland – www.jirschsutherland.com.au