New Federal COVID-19 stimulus package will provide relief for ECEC operators, casuals and sole traders
The Prime Minister Scott Morrison has confirmed a second stimulus package to fight the economic consequences of COVID-19 in which additional support is provided to small and medium sized businesses, including selected not-for-profits, including early childhood education and care (ECEC) services.
In addition, the package also contains support for casuals and sole traders, both of which are also directly applicable to the ECEC sector.
A total of $66 billion has been allocated to fund the package which Treasurer Josh Frydenburg described as a way to “cushion the blow to households, support businesses and enhance in an unprecedented way Australia’s safety net.”
The key highlights of the package from an ECEC operator perspective are as follows:
Small and medium sized businesses to receive additional cash payments – Small to medium sized businesses (those businesses with less than $50 million annual turnover or 199 employees) will receive a cash payment back from the ATO equal to 100 per cent of the salary and wages withheld (PAYG) reported in their three month ended March 2020, and three month ended June 2020 BAS payment submissions.
There will be two payments per business, one received after April 28 and another after July 28. The payments will be between $10,000 and $50,000 depending on the size of the business and the total receipts, ie: the two payments combined will not exceed $20,000 to $100,000 per business. The payments are designed to support cashflow and will be automatically paid by the ATO with no additional paperwork required.
Small and medium sized not for profits to receive cash payments – Small to medium sized not-for-profit organisations that have annual turnover of less than $50 million will be able to access the same funding streams as business with the same conditions outlined above. It is expected that 30,000 such organisations, many of which will be ECEC operators, will be eligible for these payments.
New unsecured loan facility to be made available to small and medium sized operators – The Government has agreed to guarantee 3 year loans of up to $250,000 to small and medium sized businesses that are under severe financial pressure as a result of COVID-19. Any operator with a turnover of less than $50 million is eligible to apply. There will be no interest paid for the first 6 months and the loans are unsecured.
Insolvency and bankruptcy rules relaxed – The package also contains measures to temporarily relax insolvency and bankruptcy laws, in particular an increase of the threshold at which creditors can take action to initiate insolvency from $2,000 to $20,000 and gives companies and individuals six months instead of the usual 21 days to respond. Personal liability of directors has also been suspended for the next six months.
The key highlights of the package from an ECEC employee perspective are as follows:
Capped early access to superannuation allowed for sole traders and casuals – Sole traders and casuals that have seen their hours worked or income fall by 20 per cent or more as a result of COVID-19 will be able to access $10,000 of their superannuation this financial year and $10,000 next financial year. The withdrawals will be completely tax free with applications made on line to the ATO through a declaration.
Jobseeker allowance to be doubled with sole traders and casuals eligible – Jobseeker allowance, formerly known as Newstart, will be doubled through a temporary COVID19 supplement equal to $550 a fortnight to be paid for the next 6 months. Asset tests and waiting periods will be waived. Sole traders and casuals who meet the income test will be eligible for the new allowance.
To read the full statement from the Treasurer’s office please click here.