As a part of its announcements on Sunday 22nd March 2020, The Federal Government has communicated that directors would be exempt from personal liability for trading while insolvent for six months as part of its response to COVID-19.
This is welcome news for the small to medium business community with many organisations likely to face unprecedented disruption in coming months. This will give directors more confidence to trade through this crisis rather than place a business into administration, with the costs and job losses that entails.
Importantly, even though not personally liable for debts incurred, directors will still need to manage their general duties including to act in the best interest of the corporation and with due care and diligence, during these extremely trying times. These duties can change in nature during situations of insolvency, with the rights of creditors needing to be factored into board decision-making.
Separately the Government intends to grant the Treasurer powers to exempt companies from Corporations Act requirements during these times, including with respect to the holding of physical annual general meetings.
UPDATE ON SUPPORT FOR AUSTRALIANS
31 March 2020
RELAXING THE PARTNER INCOME TEST FOR JOBSEEKER PAYMENTS
The Morrison Government has temporarily relaxed the partner income test on the JobSeeker Payment.
From 30 March 2020, it will be temporarily increased over the next 6 months to $3,068 per fortnight.
This will ensure that an eligible person can receive the JobSeeker Payment and associated Coronavirus Supplement providing their partner earns less than $3,068 per fortnight, around $79,762 per annum.
The personal income test for individuals on JobSeeker Payment will still apply.
$1.1 BILLION IN PAYMENTS TO HIT BANK ACCOUNTS TODAY
Over $1.1 billion in Australian Government assistance for lower income Australians will hit bank accounts today.
The first round of the $750 Economic Support Payments will be paid automatically from today and progressively to eligible recipients over the coming weeks.
More than 6.8 million Australians will receive the first Economic Support Payment.
For more information on the payments you can read Minister Robert’s media release: Click to Read
ENSURING CONTINUED ACCESS TO MEDICINES DURING COVID-19
The Australian Government has approved a number of temporary changes to medicines regulation to ensure Australians can continue to access the Pharmaceutical Benefits Scheme (PBS) medicines they need, as the COVID-19 outbreak unfolds.
We are also closely monitoring the impact of the pandemic on the supply of medicines, especially those manufactured overseas, so we can take early action to address any potential supply interruptions.
New temporary measures will improve access to medicines, reduce the burden on GPs and support social distancing and self-isolation.
Continued dispensing arrangements for the ongoing supply PBS subsidised medicines without a prescription will be extended to 30 June 2020.
A home delivery service for PBS and Repatriation Pharmaceutical Benefits Scheme (RPBS) medicines is now in place.
Ongoing work with pharmacists, GPs and the States and Territories to allow medicine substitution by the pharmacist in the event of a shortage.
Restrictions on the quantity of medicines that can be purchased to prevent unnecessary medicine stockpiling.
These temporary changes will ensure Australians can access the medicines they need throughout the coronavirus outbreak.
The Federal Government has announced a second stage of measures to keep businesses in business and to keep workers in jobs as a result of the impacts of COVID-19.
This stage of measures is squarely focused on getting businesses and their workers through to the other side of this crisis.
The measures include:
A wage subsidy for small and medium businesses to save jobs and a guarantee on loans to small and medium businesses so they can keep in business.
Wage Subsidy - Support to Keep Australians in Jobs
Businesses to receive a cash payment of up to $100,000 for the period March 2020 to September 2020.
That payment will be worth 100% of the tax those small and medium businesses, with a turnover less than $50 million, are withholding from their employees salary and wages.
The payment will be tax free. It will now also be available to eligible charities or other not-for-profit entities.
How the Payment Works
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages – they report it each month or quarter anyway - will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $100,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.
In our first package the Federal Government announced the cash payment would be 50% of tax withheld worth up to $25,000 in payments or a minimum of $2,000.
This 2nd stage announcement builds on the cash flow boost from the first package worth $6.7 billion. This new measure is worth $25.2 billion so in total it’s worth $31.9 billion.
The Government expects it will benefit around 690,000 businesses employing around 7.8 million people and 30,000 not-for-profits.
A Guarantee on loans - Supporting Small Business to Get to the Other Side With Loans
The Federal Government has announced new Coronavirus SME Guarantee Scheme to support small and medium business with a turnover less than $50 million.
This measure compliments the $8 billion worth of measures the banks announced this week to defer repayments for 6 months for small and medium businesses battling the impacts of Coronavirus.
The Coronavirus SME Guarantee Scheme will be able to be accessed by eligible banks and non-bank lenders.
Under the Scheme, the Commonwealth will guarantee 50%, through the participating banks, of an eligible loan to small and medium enterprise customers that have been impacted by the Coronavirus.
The Scheme will have the capacity to support lending of $40 billion to small and medium businesses.
Loans will be used for working capital purposes and be unsecured and it will be for loans granted within 6 months starting 1 April 2020.
The Scheme will apply to new or existing customers of banks and non-bank lenders.
Lenders will not be charged a fee for accessing the Scheme.
It will be repayment free for 6 months.
The maximum loan will be $250,000 for a term up to 3 years.
It will not apply to re-financing of existing customers. Those already have existing loans that will benefit from the ABA announcement.
Through this measure, the Government is offering to guarantee $20 billion.
The Australian banking sector announced on 19 March 2020 significant measures – that many individual banks went further than – to support existing loans.
This announcement also follows the announcement by the Government on 19 March 2020, together with the Reserve Bank, to inject more than $100 billion into the Australia’s financial system.
Stage 1 - 13March 2020
The World Health Organization (WHO) has officially declared that there is a global Coronavirus pandemic. So too has the Australian Government recognised the Pandemic and the risks associated with this virus to the health of the Australian people and the economy in general, as such, in an attempt to curb the economic impact, the Federal Government has announced a $17.6 billion stimulus package.
The package contains the following measures;
Instant asset write-off threshold extended from $30,000 to $150,000, with turnover for eligible businesses extended from $50 million to $500 million until 30 June 2020.
A 15 month investment incentive for businesses with a turnover of less than $500 million to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules to apply.
A payment of up to $25,000 for eligible SMEs with a turnover of less than $50 million that employ staff.
A 50 per cent wage subsidy for eligible businesses that employ trainees or apprentices for up to nine months from 1 January 2020 to 30 September 2020.
A one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders.