COVID-19 support will roll back as states and territories reach vaccination targets.
The road map out of COVID-19 does more than provide greater freedoms at 70% and 80% full vaccination rates, it withdraws the steady stream of Commonwealth financial support to individuals and businesses impacted by COVID-19 lockdowns and border closures.
For individuals
The COVID-19 Disaster payment offered a lifeline to those who lost work because of lockdowns but as vaccination rates reach the 70% and 80% targets these payments will be phased out as follows:
At 70% full vaccination
In the first week, a state reaches 70% full adult vaccination, the automatic renewal that has been in place will end and individuals will need to reapply each week that a Commonwealth Hotspot remains in place to confirm their eligibility.
At 80% full vaccination
In the first week a state reaches 80% full adult vaccination, the COVID-19 Disaster Payment will phase out over a two-week period before ending completely.
The Pandemic Leave Disaster Payment, for those who cannot work because they need to self-isolate or care or quarantine, or care for someone with COVID-19, will remain in place until 30 June 2022.
Support for business
The NSW JobSaver, which provides payments of up to 40% of weekly payroll, is jointly funded by the state and Commonwealth governments. From 13 September, businesses receiving JobSaver have been required to reconfirm their eligibility for the payment each fortnight including a 30% decline in turnover test and headcount test.
At 70% full adult vaccination (10 October 2021), JobSaver will reduce from 40% of weekly payroll to 30%. Then, at 80% full vaccination, the Commonwealth will withdraw funding. The NSW Government announced that it will continue to fund their portion of JobSaver up until 30 November 2021 (15% of payroll).
It is unclear at this stage what the impact of the withdrawal of Commonwealth funding at 80% vaccination rates will mean to large tourism, hospitality, and recreation businesses.
The $1,500 fortnightly micro-business grant, will reduce to $750 per fortnight from 80% full vaccination and cease on 30 November 2021.
SME lending options
The expanded SME recovery loan scheme took effect on 1 October 2021. Under the scheme, the Government will guarantee 80% of loan amounts to businesses that have been adversely impacted by COVID-19.
The lending terms, repayment, and interest rates are set by the lenders but cannot be backed by residential property, that is, if the Government is underwriting the loan, lenders cannot ask business owners to use their home as security. However, Director’s guarantees are likely to be required.
Under the scheme, lenders can provide:
A repayment holiday of up to 24 months
Loans of up to $5m
Loan terms of up to 10 years, and
Secured and unsecured loans
The recovery loans can be used to refinance existing loans, purchase commercial property, purchase another business, or working capital. But, cannot be used to purchase residential property, financial products, lend to associated entities, or lease, rent, hire or hire purchase existing assets that are more than half way into their effective life.
The loan scheme is generally available to solvent businesses with a turnover of up to $250m, have an ABN, and a tax resident of Australia.
Should you require any assistance with understanding these changes, please reach out to your contact at ADX Accountants.
Disclaimer: All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.