Fed Govt’s $130B wage subsidy set to support six million workers

The Federal Government has announced a historic wage subsidy package in response to COVID-19, with over six million workers set to receive a flat payment of $1500 per fortnight through their employer, before tax.

According to Prime Minister Scott Morrison, the $130 billion package will provide a lifeline to businesses “feeling the first blows of the economic impact from the coronavirus.”

“This is about keeping the connection between the employer and the employee, and keeping people in their jobs even though the business they work for may go into hibernation and close down for six months,” he said.

“When the economy comes back, these businesses will be able to start again, and their workforce will be ready to go because they will remain attached to the business through our JobKeeper payment.”

The payment will be paid to employers, for up to six months, for each eligible employee that was on their books on 1 March 2020 and is retained or continues to be engaged by that employer.

The program will commence 30 March, with businesses set to see payments from the first week of May as monthly arrears from the Australian Taxation Office.

“Eligible employers will be those with annual turnover of less than $1 billion who self-assess a reduction in revenue of 30 per cent or more, since 1 March 2020 over a minimum one-month period,” Mr. Morrison said.

“Employers with an annual turnover of $1 billion or more would be required to demonstrate a reduction in revenue of 50 per cent or more to be eligible. Businesses subject to the Major Bank Levy will not be eligible.”

According to Treasurer Josh Frydenberg, Australia is going through one of the hardest economic times in its history.

“Businesses will close and people will lose their jobs. That is why we have doubled the welfare safety net. Australians know that their government has their back,” he said.

“This will keep Australian workers connected with their employer and provide hope and more certainty during these difficult and challenging times.”

The government will provide further updates on business cashflow support in coming days.

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Fed Govt announces second stimulus package worth $66B

The Federal Government has released the second stage of its plan to cushion the economic impacts of COVID-19, with a total of $189 billion injected into the economy by all arms of government.

According to Prime Minister Scott Morrison, the Federal Government will provide up to $100,000 to eligible small and medium sized businesses and not-for-profits that employ people, with a minimum payment of $20,000.

“Under the enhanced scheme from the first package, 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,” he said.

Additionally, the minimum payment is being increased from $2,000 to $10,000, and will be available from 28 April.

By linking the payments to staff wage tax withholdings, Mr Morrison said businesses will be incentivised to hold on to more of their workers.

Furthermore, the Prime Minister highlighted that the payments are tax free, flowing automatically through the Australian Tax Office.

“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,” Mr Morrison said.

“We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible. We know Australia’s more than three million small and medium businesses are the engine room of our economy. When they hurt, we all hurt.”

The measure is expected to benefit an estimated 690,000 businesses that employ over 7.8 million people. Small and medium business entities with aggregated annual turnovers under $50 million are eligible.

An additional payment will also be made from 28 July, with eligible entities receiving a payment equal to the total of all of the Boosting Cash Flow for Employers payments received.

“This measure is expected to cost $31.9 billion over the forward estimates period, including the value of the measure announced in the first stimulus package,” Mr Morrison said.

For regulatory protection and financial support, the Federal Government will also establish the Coronavirus SME Guarantee Scheme, designed to grant small and medium enterprises (SMEs) access to working capital.

Under the scheme, the government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.

“The government’s support will enhance lenders’ willingness and ability to provide credit to SMEs, with the scheme able to support $40 billion of lending to SMEs,” Mr Morrison said.

“The scheme will complement the announcement the government has made to cut red-tape to allow SMEs to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans.”

According to Treasurer Josh Frydenberg, the $189 billion economic support package represents the equivalent of 9.7 per cent of Australia’s gross domestic product.

“The government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months,” Mr Frydenberg said.

“These extraordinary times demand extraordinary measures.”

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$17.6B stimulus package increases asset write-off threshold

The Federal Government has announced cash flow assistance for businesses and household stimulus payments to counteract the social and economic challenges posed by Covid-19.

The $17.6 billion stimulus package is designed to keep small businesses afloat and employees in work, and will focus on supporting the most affected sectors. The government has stated that the measures are temporary, targeted and scalable.

The package includes $700 million to significantly increase the current instant asset write-off from $30,000 to $150,000 for businesses with a turnover of less than $500 million — up from $50 million.

The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets, until 30th June.

Expanding the threshold means an additional 5300 businesses will be able to access instant asset write-offs for the first time.

Other areas of support include cash flow payments of up to $25,000 for employers, 50 per cent accelerated depreciation for investments and a 50 per cent wage subsidy for apprentices and trainees.

The Australian Tax Office will also consider relief for certain tax obligations to eligible businesses, including deferring tax payments up to four months.

According to Treasurer Josh Frydenberg, Australia is approaching the economic challenge from a position of strength, with IMF and the OECD both forecasting Australia to grow faster than comparable countries including the UK, Canada, Japan, Germany and France.

“Our plan keeps businesses operating, supports jobs and provides a stimulus to households. The government has worked hard over the last six and a half years to return the budget to balance so we have the flexibility to respond to the serious economic challenges posed by the Coronavirus,” he said.

Mr Frydenberg added that given Australia’s strong economic and fiscal position, international credit rating agency Standard and Poor’s indicated the temporary stimulus would be unlikely to strain Australia’s creditworthiness.

“By acting decisively this package will put Australia in the strongest possible position to deal with the economic challenges we face and to make sure our economy bounces back even stronger,” he said.

While Prime Minister Scott Morrison cautioned that Australia is not immune to the global Coronavirus challenge, he said his government has taken steps to prepare for “this looming international economic crisis.”

“We’ve balanced the budget and managed our economy so we can now use this to protect the health, wellbeing and livelihoods of Australians,” he said.

“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly.”

In a statement addressing members, the Waste Management and Resource Recovery Association Australia said as an essential service, the waste and resource recovery sector is resilient.

“It is vitally important that we pull together and work with each other to ensure, as far as practicable, the continuation of our essential services to the community,” the statement reads.

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