Coronavirus Stimulus II Package Announced

22 March 2020

BDO Australia has commented on the second $66 billion coronavirus stimulus package which was announced by the Morrison Government today.

Mark Molesworth, Tax Partner at BDO in Australia commented on two key measures – a cash boost for SMEs and access to cheap government guaranteed loans.

Small & Medium Business Cash Boost - payments for small and medium business have been boosted to $100,000 each, a $31.9billion enhancement package.

“Increasing the small business cash flow boost from $25,000 to $100,000 will provide much needed cash flow at a time when revenue is drying up fast. We urge the government to release details of how the payments will be made quickly, because there is currently confusion about whether the payment must be offset against the liability for tax owing on the relevant activity statement, or whether it will be received as a direct cash payment, irrespective of the debt position of the business.”

“The extension of this measure to charities is excellent news for organisations that support the most disadvantaged in society.”

“The measure also subtly encourages businesses to lodge their BASs on time. This is our recommendation to all businesses at this time. Negotiating debt deferrals is a much better option than not lodging and exposing directors to personal liability for unpaid taxes and a loss of tax deductions which is what can happen where BASs are lodged late.”

Guaranteed loan scheme - $40b facility Government guaranteed loans of up to $250,000 for 3 years for small businesses.

“These loans are to be made interest free for 6 months and with a maximum term of 3 years. We are concerned that period may not be long enough and we encourage the banks and government to be flexible.”

“Making the loans quasi-equity and requiring them to be repaid from future taxable income through the tax system (a little like HECS) would potentially be a more elegant design feature.”