Australian Government Coronavirus stimulus package
The Federal Government has just passed its new economic stimulus measures to help support those impacted by the Coronavirus.
The economic support package includes:
Supporting business investment;
Providing cash flow assistance to help small and medium sized business to stay in business and keep their employees in jobs;
Targeted support for the most severely affected sectors, regions and communities;
Household stimulus payments that will benefit the wider economy;
Support for households including casuals, sole-traders, retirees and those on income support;
Assistance for businesses to keep people in a job;
Regulatory protection and financial support for businesses to stay in business.
Support for workers and households
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
The Coronavirus supplement will be paid for the next 6 months, and eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.
Payments to support households
In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to social security, veteran income support recipients, and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.
The first payment will be made from 31 March 2020 to people who will have been on one of the eligible payments any time between 12 March 2020 and 13 April 2020. This second payment will be made automatically from 13 July 2020.
Early release of superannuation
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Temporarily reduce superannuation minimum drawdowns
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets.
Reducing social security deeming rates
On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.
As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.
Assistance to business to keep people in a job
Cash flow boost for employers
The Government is providing up to $100,000 to eligible small and medium sized businesses, and not‑for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
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. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.
By linking the payments to business to staff wage tax withholdings, businesses will be incentivised to hold on to more of their workers.
The payments are tax free. There will be no new forms and payments will flow automatically through the ATO.
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments received.
Regulatory protection and financial support for businesses to stay in business
Instant asset write off
The instant asset write-off threshold will be increased from $30,000 to $150,000, and expand access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
Accelerated depreciation deductions
To encourage business investment, assets not eligible for the immediate write-off will be eligible for an additional 50 per cent deduction of the cost in the year of purchase. This applies from 1 July 2020 through to 30 June 2021, for businesses with a turnover of less than $500 million.
Supporting apprentices and trainees
Eligible employers can apply for a wage subsidy of 50 per cent of an apprentice or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Targeted support for Coronavirus-affected regions and communities
The government will be providing $1 billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education. This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks. It will also include additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism. Further plans and measures to support recovery will be designed and delivered in partnership with the affected industries and communities.
Coronavirus SME guarantee scheme
The Government will establish the Coronavirus SME Guarantee Scheme which will support short-term unsecured loans to SME’s to get access to working capital to help them get them through the impact of the coronavirus.
The scheme will provide a government guarantee equal to 50 per cent of new loans issued by eligible lenders.
The scheme will complement the announcement the Government has made to cut red-tape to allow SME’s to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans.
Providing temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies must respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
The Government is also offering administrative relief for certain tax obligations, including deferring tax payments for up to four months. This is similar to the relief provided following the bushfires, for taxpayers affected by the coronavirus on a case-by-case basis.
These are challenging times, and we are here to support and help guide you through. Please don’t hesitate to contact our office if you have any questions.