A brief overview of Australia’s economic response to COVID-19

By Peter Bembrick, HLB Australia

The Australian Federal Government’s response to COVID-19 has been swift and sweeping. Since 12 March 2020, it has released three tranches of economic measures to support businesses, households and individuals who will experience financial hardship as a result of the pandemic.

The  Federal Government initially committed AUD299 billion in stimulus to support the Australian economy and people during the economic downturn arising from COVID-19.  The 2020-21 Federal Budget brings the Government’s overall support to AUD507 billion including AUD257 billion in direct economic support.

Below is a summary of some of the key economic measures that have been announced by the Australian Federal Government.

Support for employers and employees

JobKeeper Payment Program

The JobKeeper Payment provides a wage subsidy to businesses impacted by COVID-19. The Government will provide eligible employers with AUD1,000 per fortnight per employee (previously AUD1,500 for the period 30 March to 27 September 2020, and AUD1,200 for the period 28 September 2020 to 3 January 2021) to help them retain workers through this period. Key points related to this measure include:

  • Employers will be eligible if, at the time of applying, they estimate that their turnover has fallen (or will likely fall) by at least 30% as a result of the current restrictions / COVID-19 impact relative to a comparable period in the prior year.
  • Businesses whose “aggregated turnover” for income tax purposes is likely to exceed AUD1 billion must instead show a 50% reduction in turnover. For testing whether the 50% rate applies the turnover of certain related entities, including foreign residents, is taken into account.
  • Registered charities will be eligible if they estimate their turnover has fallen (or will likely fall) by at least 15% or more relative to a comparable period a year earlier.
  • Turnover is defined to be “GST turnover” as reported on Business Activity Statements. It includes all Australian taxable supplies and GST free supplies but not input taxed supplies.
  • Consistent with the GST law turnover includes only Australian-based sales, so a decline in overseas operations will not be counted in the turnover test.
  • The JobKeeper Payment covers part time, full time, stood down employees and long-term casual workers (that is, those who have been with their employer on a regular and systematic basis for at least 12 months).
  • There is a “one-in-all-in” rule where participation must be offered to all eligible employees, but the employee is not required to accept the offer.
  • Originally, payments were only be available for a period of 6 months from 30 March 2020.
  • However, the JobKeeper Payment Program has been extended for an additional 6 months ending 28 March 2021.
  • Employers will need to report to the ATO on a monthly basis regarding the number of eligible employees.
  • To be eligible however, employees cannot be getting other benefits such as JobSeeker payments.

JobMaker Hiring Credit scheme

The JobMaker Hiring Credit scheme is an incentive for businesses to employ additional young job seekers aged 16–35 years.

The JobMaker Hiring Credit is:

  • AUD200 per week for each eligible employee aged 16 to 29.
  • AUD100 per week for each eligible employee aged 30 to 35.

Eligible employers:

  • can access the JobMaker Hiring Credit for each eligible additional employee they hire between 7 October 2020 and 6 October 2021
  • Will be able to register with the Australian Taxation Office from 6 December 2020.
  • Can claim payments in arrears from 1 February 2021.
  • Can claim payments for eligible additional employees for up to 12 months from their employment start date.
  • Cannot claim JobKeeper and the JobMaker Hiring Credit at the same time

Temporary full expensing

Businesses with an aggregated turnover of less than AUD5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets.

Key points include:

  • Certain assets are excluded such as assets allocated to a software development pool, certain primary production assets, buildings and other capital works / improvements, and assets that are not located in Australia.
  • The temporary full expensing measure operates on an opt-in basis. Eligible businesses may choose to claim a deduction using other depreciation rules (e.g. the instant asset write-off measure).
  • The eligible new assets must be first held, and first used or installed ready for use for a taxable purpose, between 7.30pm AEDT on 6 October 2020 and 30 June 2022.
  • For businesses with an aggregated turnover of less than AUD50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets.
  • Corporate tax entities that do not meet the AUD5 billion aggregated turnover test can access temporary full expensing if they satisfy an alternative income test.

Loss carry back

The Government will allow companies with turnover up to AUD5 billion to offset losses against previous profits on which tax has been paid, to generate a refund.

Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.

Instant asset write-off

From 12 March 2020, the instant asset write-off threshold was increased to AUD150,000 (up from AUD30,000) and access was expanded to include businesses with a turnover of less than AUD500 million (up from AUD50 million).

The threshold applies on a per asset basis, so eligible businesses can instantly write-off multiple assets each costing less than AUD150,000 that are purchased by 31 December 2020.

Boosting cashflow for employers

From March to September 2020, eligible SMEs were eligible to receive a tax-free cash flow boost of between AUD20,000 and AUD100,000 through credits in the activity statement system when they lodge all relevant activity statements. Key points related to measure include:

  • The business must have an aggregated annual turnover of less than AUD50 million and employ workers
  • To be calculated based on the PAYG withholding as recorded in the affected business’ quarterly activity statement

Supporting apprentices and trainees

Employers were able to access the wage subsidy after an eligibility assessment was undertaken by an Australian Apprenticeship Support Network provider. Details include:

  • Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020
  • Employers were reimbursed up to a maximum of AUD21,000 per eligible apprentice or trainee (i.e. AUD7,000 per quarter)
  • Eligible small businesses are those employing fewer than 20 full-time employees who retain an apprentice or trainee (with the apprentice or trainee being in training with a small business as at 1 March 2020).

The Government is extending and expanding the Supporting Apprentices and Trainees wage subsidy as follows:

  • From 1 July 2020, the subsidy will be available to support small and medium businesses with fewer than 200 employees, including those using a Group Training Organisation, who retain an Australian Apprentice engaged as at 1 July 2020.
  • Eligible employees can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 July 2020 to 31 March 2021, up to a cap of AUD7,000 per quarter.
  • Employers of any size including Group Training Organisations that re-engage an eligible out of trade apprentice or trainee will also be eligible for the subsidy.

SME Guarantee Scheme

The Government assisted guarantee 50% of new bank loans issued by eligible lenders by 30 September 2020 to SMEs. Unsecured loans of up to AUD250,000 with a three-year term and no repayments for the first six months.

SME Recovery Loan Scheme

The Government’s SME Recovery Loan Scheme is designed to support the economic recovery, and to provide continued assistance, to firms currently on JobKeeper. The Government will work with lenders to ensure that eligible firms will have access to finance to maintain and grow their businesses when JobKeeper ends.

The scheme is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021.

Phase 2 of the existing SME Guarantee Scheme will remain open to eligible borrowers until 30 June 2021, and SMEs with Phase 1 or Phase 2 loans will be able to apply for loans in SME Recovery Loan Scheme.

Participating lenders are offering guaranteed loans on the following terms under Phase 2:

  • Borrowers can access up to AUD5 million in total, in addition to the Phase 1 and Phase 2 loan limits.
  • The Government guarantee will be 80% of the loan amount.
  • Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
  • Loans can be used for a broad range of business purposes, including to support investment. Loans may be used to refinance any pre-existing debt of an eligible borrower, including those from the SME Guarantee Scheme.
  • Loans are for terms of up to 10 years, with an optional repayment holiday period.
  • Loans can be either unsecured or secured (excluding residential property).
  • The interest rate on loans will be determined by lenders, but will be capped at around 7.5 per cent, with some flexibility for interest rates on variable rate loans to increase if market interest rates rise over time.

Insolvency and Director relief

On 22 March 2020, the Government announced temporary relief for financially distressed companies, to provide the opportunity for as many businesses as possible to survive.

On 7 September 2020, the Government announced a further extension of this relief to 31 December 2020. The relief includes changes to insolvency laws to provide:

  • A temporary increase in the threshold at which creditors can issue a statutory demand on a company from AUD2,000 to AUD20,000, and a temporary increase in the time companies have to respond to statutory demands they receive from 21 days to 6 months.
  • Temporary relief for directors from any personal liability for trading while insolvent, with respect to any debts incurred in the ordinary course of the company’s business.

As part of the JobMaker Plan the Government has announced that it is implementing permanent insolvency reforms to help small businesses survive the economic impact of the COVID-19 pandemic.

Bank loan deferral

Australian banks will defer loan repayments for 98% of all affected businesses. Those with a loan of up to AUD10 million will be able to defer repayments for up to six months. The measures are available on an opt-in basis and apply to current customers with existing facilities 90 days prior to applying.

Protection from foreign investment

To address concerns that distressed Australian assets could be vulnerable during the pandemic, the Government has mandated that the Foreign Investment Review Board scrutinise every single purchase application, regardless of its value.

The previous threshold limits for foreign private investment in Australia ranged from AUD50 million to AUD1.1 billion, for land and non-land proposals.

Support for individuals and households

Lower personal income taxes

The Government is delivering an additional AUD17.8 billion in personal income tax relief to support the economic recovery, including an additional AUD12.5 billion over the next 12 months.

In 2020‑21, low- and middle-income earners will receive tax relief of up to AUD2,745 for singles, and up to AUD5,490 for dual income families, compared with 2017-18 settings.

The majority of the benefit for 2020‑21 will go to those on incomes below AUD90,000.

JobSeeker supplement

The JobSeeker supplement provides additional financial support of up to AUD950 per fortnight for those seeking employment. The JobSeeker payments are calculated on a tiered system and may differ depending an applicant’s age, marital status, and whether they have dependents.

Applicants will need to demonstrate they:

  • Are between the ages of 22 and the Age Pension;
  • Meet the income test limits;
  • Meet the residency rules; and
  • Meet rules for one of the following situations:
    • Are unemployed and are looking for work, or
    • Are sick / injured and unable to carry out their usual employment / study for a short time.

Early access to superannuation

Australians affected financially by the virus were granted early access to their compulsory superannuation.

  • Withdraw tax-free up to AUD10,000 of superannuation before 1 July 2020 and another AUD10,000 withdrawal from 1 July 2020 to 30 September 2020.
  • An additional measure is allowing individuals affected by COVID-19 to access up to AUD10,000 of their superannuation in 2019–20 and a further AUD10,000 in 2020–21. Individuals will not need to pay tax on amounts released and will not need to include it in their income tax return.

On 23 July 2020, the Government announced the extension of the application period for the 2020–21 year to 31 December 2020.

Other measures

These additional measures are designed to assist around 6.5 million lower-income Australians, including pensioners and social, security and veteran income support recipients:

  • A one-off AUD750 payment (with one payment per recipient).
  • Reduction of the minimum drawdown for account-based pensions by 50% for the 2019-20 and 2020-21 financial years.
  • ‘Coronavirus supplement’ to welfare recipients of additional AUD550 per fortnight for the next six months and increased eligibility for benefits.
  • Additional AUD750 to social security and veteran income support recipients and eligible concession card holders.
  • Reduction of the social security deeming rates by a further 0.25 percentage points.

Support for industry

The Federal and State Governments have allocated funding for specific sectors directly impacted by the virus in the form of waivers, tax relief, rent relief, cash grants and loans.

Below are links to updates for Australia’s states:

We recommend speaking to an HLB Mann Judd Adviser about what state-based initiative are available to local businesses.

COVID-19 policy initiatives by Australia’s regulatory bodies

ATO administrative relief

  • Additional fringe benefits tax exemptions and concessions for employers providing benefits that they do not usually provide to employees
  • GST deferral allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to any GST refunds
  • PAYG tax instalment variation concessions
  • Income tax deferral
  • Remission of penalties
  • R&D lodgement deferral

ASIC administrative relief

  • As of 9 April 2020 relief takes the form of a one-month extension for unlisted entities with balance dates from 31 December 2019 to 31 March 2020 to lodge financial reports under Chapters 2M and 7 of the Corporations Act 2001.
  • ASIC will not take any action against an entity with a 31 December 2019 year end that fails to hold its AGM by 31 May 2020 as long as the AGM is held by 31 July 2020.

Will further support be needed?

As one of the few countries in the world with a triple-A credit rating, Australia is in a better position than some other countries in this unprecedented and uncertain time. However, it is too soon to speculate on the economic outcome of these measures, whether and what further support will be provided and the burden it will place on our society for the years to come.

Accounting implications

 ASX Class Waiver – Extended reporting & lodgement deadlines

As announced by ASIC in MR20-276, entities have been granted an additional one month to submit their financial reports. The one-month extension covers reporting dates up to and including 7 January 2021, and applies to entities reporting to ASIC under Chapter 2M and Chapter 7 of the Corporations Act. ASIC will also continue to adopt a ‘no action’ position where public companies hold their Annual General Meetings within seven months of reporting date. This means that public companies also have additional time to distribute financial reports to members prior to the AGM

For ASX-listed entities, the one-month extension is effected by an ASX Class Waiver that permits late lodgements. Such a Class Waiver was issued by the ASX on 29 December 2020. It sets out the specific conditions that listed entities must comply with to take advantage of the ASIC relief. In summary:

  • The Appendix 4E (for full-years) and Appendix 4D (for half-years) must be lodged within the usual ASX deadlines (this is not relevant for mining exploration and oil and gas exploration entities).
  • Unaudited or unreviewed financial information must initially be lodged with the ASX where audited or reviewed financial information is not yet available and the ASIC relief is relied on. For entities that are not mining exploration and oil and gas exploration entities, this information would be given as part of the Appendix 4E or Appendix 4D. For mining exploration and oil and gas exploration entities, the information would be provided to the ASX within three months of balance date for full-years, and within 75 days of balance date for half-years.
  • The entity must inform the market that the ASIC lodgement extension is being applied. The timing of the announcement must be either prior to, or at the same time as, the lodgement of the relevant Appendix 4E or 4D (or the unaudited or unreviewed accounts, in the case of mining exploration and oil and gas exploration entities).
  • The entity must immediately inform the market if there is a material difference between its unaudited (or unreviewed) accounts, and its audited (or reviewed) accounts.

Joint guidance issued regarding the impacts of COVID-19 on financial report disclosures

The Australian Institute of Company Directors (AICD), Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia have joined forces to issue guidance (available via the link below) on the disclosure and reporting of COVID-19 impacts on entities.


The guidance is designed to assist both listed and unlisted entities (including not-for-profit entities, charities and small to medium entities) in describing the impact of COVID-19 in their annual reports.

Directors and preparers of financial reports may find the guide helpful in navigating the key considerations that are important when assessing how best to disclose the effects of the pandemic when preparing financial reports. A checklist of steps to be taken by directors in approaching annual reporting is provided on page 7 with each consideration explained in more detail in the relevant section of the guide.  Case studies are also provided in Appendix B of the guide.

Covid-19 rent concessions: Practical relief for lessees

IFRS 16 Leases has been amended to simplify lessee accounting for Covid-19-related rent concessions.

Due to current Covid-19 conditions, many lessees are being offered rent concessions by lessors. These could be in the form of, for example, rent deferrals, rent holidays or rent reductions. Under the usual requirements of the new leases standard, AASB 16, such rent concessions may meet the definition of a lease modification, unless they were envisaged as part of the original terms of the lease arrangement. Accounting for lease modifications can be complex and time-consuming, especially for those lessees with numerous leases with varying lease terms.   In response to the above, the International Accounting Standards Board (IASB) has amended IFRS 16 Leases (the international equivalent of AASB 16) to simplify the accounting of rent concessions directly linked to Covid-19 that meet certain requirements.

Lease modification accounting under IFRS 16

Without the relief offered by the IASB, lessees would be required to assess whether any rent concessions they receive meet the definition of a ‘lease modification’ under IFRS 16. A lease modification arises when there is a change in the scope of, or consideration for, a lease that was not part of the original terms and conditions of the lease.

Generally speaking, rent reductions and rent holidays would be lease modifications under the new leases standard. This means, under the usual requirements of IFRS 16, the original lease would have to be remeasured by:

  • Appropriately revising the discount rate;
  • Calculating the net present value of the revised future lease payments using the updated discount rate; and
  • Making a corresponding adjustment (decrease) to the right-of-use (ROU) asset for the decrease in the lease liability. Where the adjustment is greater than the carrying amount of the ROU asset, the excess would be recognised as a gain in profit or loss.

The above remeasurement would entail a substantial amount of work for lessees. Furthermore, the assessment of whether changes are in fact lease modifications could be complicated by force majeure clauses. Judgement may be necessary to determine whether such clauses (whether imposed by law or agreement) are triggered by Covid-19.

The relief offered

The amendment to IFRS 16 essentially eliminates the need, if a lessee so chooses, to determine whether Covid-19-related rent concessions are lease modifications or not. Instead, the lessee accounts for the rent concession as if the change was not a lease modification in accordance with the requirements of IFRS 16 paragraph 38. This means the change in lease payments is treated as a variable lease payment in profit or loss in the period in which the event or condition that triggers those payments occurs.

To be eligible to apply the optional practical expedient, all of the following conditions need to be met:

  • The revised consideration for the lease is substantially the same as, or less than, the original consideration;
  • The reduction in lease payments relates to payments originally due on or before 30 June 2021; and
  • There are no other substantive changes to the terms of the lease.

With respect to the second dot point above, this implies that the practical expedient applies to those payments that are reduced or deferred on or before 30 June 2021 even if subsequent rental increases extend beyond 30 June 2021.

Lessees that elect to apply the practical expedient must apply it consistently to all leases with similar characteristics and in similar circumstances, as required by paragraph 2 of IFRS 16.

No similar relief is provided for lessors. Lessors are required to continue to assess if the rent concessions are lease modifications and account for them accordingly.


The following disclosures are required when the practical expedient is used:

  • The fact that the practical expedient has been applied to all eligible rent concessions, or if only some of them, the nature of the contracts to which it has been applied; and
  • The amount recognised in profit or loss for the change in lease payments arising from the rent concessions, as a result of applying the practical expedient.

Effective date and transition

The international amendment is applicable for reporting periods beginning on or after 1 June 2020 with earlier application permitted, including for financial statements not yet authorised for issue at the date the amendment was issued. Note that the Australian-equivalent amendment has not yet been issued at the date of this Technical Alert, but it is expected to be issued shortly.

Retrospective application is required but only by adjusting the opening balance of retained earnings in the financial statements in which the relief is first applied, rather than by restating prior period numbers.

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