Government Financial Support - COVID-19
As a response to the COVID-19 pandemic, the Australian Government is releasing a number initiatives to support business, families and individuals. Boards and executive teams should be aware of the rapidly changing environment and update their risk management controls daily.
The following lists a number of current economic initiatives that should be considered in your response management.
The Government has announced a $130 billion JobKeeper payment to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus.
Around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer.
The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over.
Supporting Individuals and Households
The Australian Government is providing financial assistance to Australians to support them through the Coronavirus. This assistance includes income support payments, payments to support households and temporary early releases of superannuation.
JobKeeper payment for households
Income support for individuals
Payments to support households
Temporary early release of superannuation
Temporarily reducing superannuation minimum drawdown rates
Reducing social security deeming rates
Boosting cash flow for employers
The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000.
These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Temporary relief for financially distressed businesses
The economic impacts of the Coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress.
It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations.
One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.
Increasing the instant asset write-off
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion.
This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.
Backing business investment
The Government is introducing 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.
This measure will support business investment and is estimated to lower taxes paid by Australian businesses by $6.7 billion over the next two years. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.
Supporting apprentices and trainees
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020.
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.
This measure will support up to 70,000 small businesses, employing around 117,000 apprentices.
Support for Coronavirus-affected regions and communities
The Government will set aside $1 billion to support regions most significantly affected by the Coronavirus outbreak.
These funds will be available to assist during the outbreak and the recovery. In addition, the Government is assisting our airline industry by providing relief from a number of taxes and Government charges estimated to total up to $715 million.
Coronavirus SME Guarantee Scheme - supporting the flow of credit
The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme will support up to $40 billion of lending to SMEs (including sole traders and not-for-profits).
Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
The Scheme will enhance lenders’ willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus.
The Scheme will be available for new loans made by participating lenders until 30 September 2020.
Government is developing a range of schemes to keep businesses operating and people employed during the COVID-19 pandemic.
Boards and executive leadership teams to have an established incident management team in place monitoring changes daily.
Executive teams should monitor their risk assessments daily and include updated government assistance options where they may apply.
Single Source of Truth
Keep risk assessments, the analysis and control measures in a single repository. This single source of truth shows the impact on the organisation and who, and what is being done when.
VUCAP has online tools that are freely available and can be tailored to your specific organisation. This free service is our response to COVID-19
Data and Information Source
Gather information sources that feed into your risk and impact assessments. Review these sources daily looking for trends that help scenario plan
See the VUCAP collated resources that are being used for VUCAP planning and recommendations.
Information on how the Australian Government’s economic response could support you can be found in the following fact sheets.
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