Law Society guidance on COVID – 19
economic stimulus packages
The Commonwealth Government has made a number of recent announcements of economic stimulus measures to support individuals and businesses at a time of economic upheaval caused by the coronavirus.
While we anticipate that there may be further announcements, both in terms of restrictions on normal economic behaviour, and possibly further stimulus measures, the main features of the stimulus package that may be of interest to law firms include:
- $31.9 billion to provide up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. The payment will be available from 28 April 2020. The payments are tax-free, there will be no new forms and payments will flow automatically through to the ATO.
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible. An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.
- The Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
- The Reserve Bank of Australia has also announced a $90 billion term funding facility for Authorised Deposit-taking Institutions, that will reduce the cost of lending, with particular incentives to lend to small and medium enterprises.
- The Government is also temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
We anticipate that these measures will pass Parliament this week. This might provide further detail on when the initiatives will commence and the practicalities of how to access the assistance.
From today, the Federal Government's business hotline will give more support to small and medium businesses impacted by the COVID-19 pandemic and will increase from five days per week to seven days per week and provide additional hours of support outside standard operating hours for the first month, answering calls from 7am to 11pm. Hotline number is 13 28 46 or business.gov.au.
The Law Society will monitor developments and provide further updates as appropriate.