We have summarised each of these key measures below.
Stimulus for financially distressed businesses
On 25 March 2020, the Coronavirus Economic Response Package Omnibus Bill 2020 (Cth) came into effect, providing much needed support for financially stressed businesses.
We recently published an update which sets out what those measures mean for businesses, which can be accessed here.
Moratorium on evictions
On 29 March 2020, the Government agreed to a temporary moratorium on evictions for a 6 month period for commercial and residential tenancies in financial distress, who are unable to meet their obligations under those tenancy arrangements due to COVID-19.
The full announcement can be accessed here.
These measures will be implemented by the states and territories.
The latest announcement on the measures being considered by the WA government can be accessed here.
Suspension of loan repayments for 6 months
On 30 March 2020, the Australian Banking Association (ABA) announced a third round of stimulus which followed the ABA’s previous announcement that banks would offer deferred loan repayments for six months to small businesses affected by COVID-19, summarised below.
- Australian banks will now extend the six-month deferral period of loans for more than 30,000 businesses across Australia to help them cope with the economic stress of COVID-19.
- These loan deferrals will now include businesses with loans of up to $10 million, up from $3 million.
- Australian banks have agreed not to enforce non-financial breaches of loan contracts (for example, changes in asset valuation).
- These measures will be delivered on an ‘opt-in’ basis. Companies will need to advise the bank that their business has been affected by COVID-19 and ‘opt-in’ to the relief.
- This package is now expected to extend to 98% of all businesses with a loan from an Australian bank and brings the total amount of loans captured up to $250 billion.
- Businesses with business loans above the $10 million threshold may still be eligible for relief. Those applications are to be considered on a case by case basis.
The full announcement can be accessed here.
Business Hibernation Plan
On the same day, the Government announced it was looking to provide further stimulus to small business and their employees, allowing the businesses to effectively ‘hibernate’ through the COVID-19 pandemic.
The new ‘JobKeeper’ payment will allow businesses impacted by COVID-19 to access a subsidy of $1,500 per eligible employee to continue paying their wage.
To be eligible as a business:
- with turnover of under $1 billion – turnover must be reduced by more than 30% from the comparable period in the prior year (at least a month); or
- with turnover of over $1 billion – turnover must be reduced by more than 50% from the comparable period in the prior year (at least a month); and
- the business is not subject to a Major Bank Levy.
To be eligible as an employee:
- must be currently employed by the eligible employer (including those stood down or re-hired);
- were employed by the employer at 1 March 2020;
- are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
- are at least 16 years of age;
- are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
- are not in receipt of a JobKeeper Payment from another employer.
The payment received by the employer must then be passed onto the employee as payment (before tax) for their employment.
To receive this payment, employers must register their interest at ato.gov.au from 30 March 2020.
The full announcement can be accessed here.
$1 billion relief package for small business
On 31 March 2020 the WA government announced $1 billion relief package which included assistance for small and medium sized businesses.
The assistance will include:
- reduction in electricity bills for around 95,000 small businesses.
- waiver of payroll tax for the four-month period from 1 March 2020 to 30 June 2020 for businesses with Australia-wide annual wages of under $7.5 million for the 2019/20 financial year.
- allocation of over $100 million for payment of a range of licence fees by the state government on behalf of small and medium businesses.
- where a business is affected by COVID-19, they may apply for interest-free payment arrangements and for a waiver of late payment penalties for payroll tax, transfer duty, landholder duty, vehicle licence duty or land tax.
- a promise that no business facing financial difficulty as a result of COVID-19 will face disconnection of power or water or interest payments due to late payment of fees.
The full announcement can be accessed here.
Lavan comment
If you would like to talk to us about the relevance of these announcements to your business, please call partner Lawrence Lee on (08) 9288 6936.
We are very happy to discuss the meaning of these measures and any concerns you may have about the impact of COVID-19 on your organisation.
Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.
