The Federal Government’s announcement of a $130 billion stimulus package on Monday marks the third and most aggressive response to COVID-19 thus far. The following offers a summary of these new measures, how they may benefit you and what more Honan can do to assist. 

 

What does the $130bn Stimulus Package Involve? 

 

  • Six-month moratorium on evictions from rental properties: preventing landlords from evicting tenants if they are unable to pay rent due to financial distress as a result of the COVID-19 pandemic. Banks are expected to help carry the load by deferring mortgage repayments to home-owners, investment property landlords, and small to medium businesses for up to six months. Tenants and landlords who haven’t been caused financial distress by the pandemic are still expected to honour their leases and rental agreements.

 

  • Australian businesses and workers: the JobKeeper payment is intended to cover the cost of employee wages. The Government will pay employers a wage subsidy of $1,500 per eligible employee per fortnight for up to six months. Businesses with a turnover of less than $1 billion where their turnover has/ is expected to be reduced by more than 30% as a result of COVID-19, compared to “a comparable period a year ago, of at least a month” are eligible.  Businesses that have an annual turnover of $1 billion or more, and which had/expect their turnover to be reduced by 50% or more, will also be eligible for the payments. Employers must apply to the Australian Tax Office to participate. Learn more about the JobKeeper payment here.

 

  • Small-medium enterprises and NFPs: this is a modification to the Boosting Cash Flow for Employers measure announced on March 12. Cash payments of up to $100,000 are available to eligible businesses and NFPs to pay bills, rent and staff. Employers will receive a payment equal to 100% of wages and salary withheld (with the min. increased to $10,000 and max. $50,000). A further payment will be introduced between July and October 2020. More information is available here.

 

  • Relief for financially distressed businesses: temporary increases have been allocated to the threshold at which creditors can issue a statutory demand and the acceptable company response time. There are also relief measures for eligible company directors trading while insolvent and temporary flexibility in the Corporations Act 2001. Read more here.

 

  • Increased instant asset write-off threshold: increased to $150,000 and now includes businesses with an aggregated annual turnover of less than $500 million until June 30, 2020. More information is available here.

 

  • Business investment: a limited 15-month investment incentive (to June 30, 2021) to encourage business investment and growth by accelerating depreciating deductions. Businesses with a turnover below $500 million are permitted to deduct half the cost of an eligible asset on installation. Learn more here.

 

  • Support for apprentices and trainees: eligible employers can apply for a wage subsidy of 50% of their trainee/apprentice’s wage for nine months effective 1 January-30 September, 2020. More information is available here.

Please consult with your financial advisor for advice and more detailed information.

 

Who does the $130bn Wage Stimulus Package impact? 

These new measures have a wider impact on the economy; reaching businesses in distress, small-medium enterprises and NFPs, employers, employees and tenants.

 

What are the benefits of this Federal Government scheme?

The measures announced on March 30, 2020 are primarily designed to support Australian businesses with cash flow challenges and the retention of employees. The Government is keen to help businesses in developing a safety net to ensure that when the COVID-19 crisis has passed, they are able to resume business as usual.

By investing in the growth of businesses and trades, the Federal Government is endeavouring to keep as many businesses and employees afloat as possible. This latest tranche of funding is equally about keeping connections between employer and employee alive, even through times when the employer may reduce standard hours of operation or temporarily close.

 

Where can you find out more?

Fact sheets are available via the Australian Treasury website.

Please consult with your financial advisor for advice and more detailed information.

 

How can Honan help?

As always, we’re here to serve you with the most comprehensive level of cover and service through these challenging times. Our remote-working team is mobilised to support you via phone, email or video conferencing at any time.

 

If you have Premium Funding:

We are in the process of securing a number of new offerings currently in development by premium funders such as IQumulate and Hunter including:

  1. Waiving of dishonour fees, cancellation fees and overdue interest charges
  2. Applying return premiums against future instalments or to reduce upcoming instalment values
  3. Spreading lending cost over insured period, only available for loans with less than 12 instalments at no additional cost.

Please contact your broker to discuss your eligibility for the above options.

 

Above all, stay well – we’re with you all the way.

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