As businesses around the country face drastic reductions in trade and the likelihood of a forced shutdown, the government has substantially beefed up the suite of grants and tax breaks it announced just two weeks ago.
In a move with potentially far-reaching consequences, it also plans to change the rules on liquidation when Parliament meets on Monday so businesses can stay afloat longer even as debts mount.
Small and medium businesses can access grants of up to $100,000 between now and September.
Treasurer Josh Frydenberg said since the government announced its first stimulus package on March 12, it now expected the economic shock to be "deeper, wider and longer".
Tax breaks announced on March 12 will now be doubled, and the offer has been extended to 30,000 charities and not-for-profits.
Known as the "boosting cash flow" scheme, it is an incentive for businesses with cash flow of up to $50 million a year to keep their staff.
The amount each business gets is calculated according to how much they pay their staff - and paid automatically each time they fill in a monthly (or quarterly) business activity statement.
Each month businesses withhold a certain amount of money from each staff member that is ultimately paid to the tax department. The government will now pay them a cash grant equal to the entire tax bill, up to a cap of $50,000. Those not required to withhold tax will get a minimum payment of $10,000.
On top of that, firms that stay in business beyond June will get another pile of money each month, with the government doubling whatever they have received to date. If they have accessed the full $50,000, businesses will receive $50,000 more over four months to September.
The decision to pay the money differently after mid-year presumably reflects a reality that by that date staff numbers for many businesses will have dwindled, so working out the grants based on how much they are paying staff will no longer be effective.
Agriculture, Drought and Emergency Management Minister David Littleproud said agriculture, fisheries and forestry would get a boost from the extra support which was designed to cushion the economic impact and help build a bridge to recovery.
"The government will provide up to $100,000 to eligible small and medium sized businesses, so they can stay open, pay their bills and keep staff," Mr Littleproud said.
"These measures will flow into regional and rural communities from Wagin in the WA Wheat Belt, to Warwick in my home state of Queensland, and everywhere in between.
"It's about shoring up confidence, keeping the cash flowing and letting communities know - especially farm communities - that we have their backs.
"The ag sector is the foundation stone of our food security and it's critical the Federal Government is with them as it recovers from drought, bushfires and now the coronavirus.
"We ask the banks to work with us in supporting our farmers by passing on this week's interest rate cuts in full."
In another measure that reflects the expectation that businesses will struggle to stay afloat, the government is changing the rules for businesses going bust. Whereas people owned money by a business can now take action to initiate insolvency or bankruptcy when they're owed $2000, the threshold will be lifted to $20,000. Company directors will no longer be personally liable for trading while insolvent.
The government is also guaranteeing up to 50 per cent of loan amounts to businesses, to ensure banks are still willing to lend as activity sinks to a near stand-still. From early April, businesses will be able to apply for unsecured loans of up to $250,000 each, with no repayments for the first six months.
In the first tranche of stimulus on March 12, the government announced that it will pay half of apprentice wages for nine months.
- With The Canberra Times
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