The Commonwealth Government has today released the second stage of its economic plan worth $66.1 billion, to cushion the economic impact of the coronavirus (COVID-19) and help build a bridge to recovery.
The second cash injection brings the Government’s economic support package to a total of $189 billion, equivalent to 9.7 per cent of GDP. In a live press conference at Parliament House this morning the Prime Minister, Scott Morrison MP reassured Australian’s that it was dedicated to providing sustainable and scale measures that would help Australian businesses keep going and bounce back when the crisis has passed.
“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back.”
The stimulus package is “geared towards building a bridge, keeping more people in work…and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible,” the Prime Minister said.
A comment directly from Jayson Westbury, AFTA CEO:
“Members, agency owners, travel company owners and managers, travel agents, travel consultants, homebased travel advisors and everyone across the travel industry ecosystem, AFTA knows these are dark days and that you are all facing immense and complex issues. Please take the time to read over these measures and see how you can get access to support and help. We will do all we can to decipher this and send more detail as we are able, but I stress, take a look and try and find your way through. AFTA will continue to work with government to identify the acute and specific challenges that we face as people look to cancel or take a credit forward for bookings and how you as the person in the middle can deal with this. We know this is a big problem and we are taking this up directly with the government. I hope that we will be able to find a solution that works for everyone.”
This latest economic support package includes;
- Support for households including casuals, sole-traders, retirees and those on income support,
- Assistance for businesses to keep people in a job, and
- Regulatory protection and financial support for businesses to stay in business
Read the official media release here.
SUMMARY OF THE ECONOMIC RESPONSE AS IT APPLIES TO AFTA/ATAS MEMBERS:
1. 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 that employ people, with a minimum payment of $20,000. Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
An additional payment is also being introduced in the July — October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
NOTE: AFTA is working through this in more detail. We believe that many AFTA members will be able to access this and get the benefits from it. We will get the detail; this should be simple to access.
2. Temporary relief for financially distressed businesses
The ATO will tailor solutions for owners or directors of business and the Government is temporarily:
- Increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankrupt proceedings against an individual;
- Increasing the time companies and individuals have to respond to statutory demands they received;
- Relief for directors from any personal liability for trading while insolvent; and
- Flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act
3. Support for immediate cash flow needs for SMEs
The Government to guarantee 50% of any new business loans, up to $250,000, required to help businesses get through this unprecedented period. The business loan is unsecured and no repayment required for 6 months).
NOTE: AFTA will be seeking clarification from BANKS to make this easy for travel agencies and to ensure this can happen quickly. If not, we will go back to the Government and ask for more help.
4. Quick and efficient access to credit for small business
The Government is cutting red tape by providing a temporary exemption from responsible lending
obligations for lenders providing credit to existing small business customers. This reform will help
small businesses get access to credit quickly and efficiently.
NOTE: AFTA believes this is again good news for travel agency owners. We will be testing this quickly to establish how it will work and report what we can as soon as we can.
5. 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.
NOTE: Some members may find this measure of benefit – it is a circumstance by circumstance assessment.
6. Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on
amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
NOTE: AFTA believes this is a strong measure for sole traders who will be facing the dramatic downturn in sales and if it is available to them, this would be a way to get access to funds quickly.
7. Supporting apprentices and trainees
The Government is supporting small businesses 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.
For those travel agencies who have trainees, this is a strong measure, however we acknowledge this is not widely used by travel agencies in Australia.
NOTE: 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).
8. Sole traders may be eligible for Newstart
This means that sole traders can apply for government income assistance immediately if your business has no sales or limited sales. Each individual will need to make their own specific enquiries to establish your personal circumstances and the applicability of this measure.
AFTA will provide more details when this becomes available.
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