Second Government stimuli & help packages - COVID-19
Second Government stimuli & help packages - COVID-19
On Sunday 22 March 2020 the Federal Government announced a second economic stimulus package of $66 billion to support the Australian economy and households while dealing with the significant challenges posed by the spread of the coronavirus, COVID-19.
The Federal Government announced package has seven parts:
1. Cash flow assistance for businesses and not-for-profits up to $100k (minimum of $20k):
- On 12 March 2020, the government announced its first economic stimulus package which included a minimum payment of $2,000 and up to $25,000 for eligible businesses that employ staff between 1 January and 30 June 2020.
- The Government has now enhanced this measure and increased the tax-free payments for businesses with a turnover of less than $50 million.
- Not-for-profits (including charities) that employ people will now also be eligible to receive the tax free payments.
- Those eligible employer businesses will now receive 100% of the PAYG withheld from employee salary and wages (up from 50%).
- The minimum amount that employers will now receive has increased from $2,000 to $10,000 and the maximum amount they will receive has increased from $25,000 to $50,000.
- The wages subsidy for apprentices and trainees has also increased to 100% (was 50%) of the wages of those employees paid between 1 January 2020 to 30 September 2020.
- The assistance will be received as a credit in either their quarterly Business Activity Statements (BAS) or monthly Instalment Activity Statements (IAS) lodged from 21 April 2020 relating to the reporting period during the period 1 January 2020 to 30 June 2020. Even if employers do not have any PAYG withheld they can still receive the minimum payment of $10,000.
- For monthly lodgers, they will receive a payment equal to 300% of the tax withheld in the Activity Statement for March 2020 and revert to 100% for the Activity Statements lodged for the months of April, May and June 2020.
- The credits will be applied automatically by the ATO upon lodgement of the BAS’s and IAS’s.
- An additional payment is also being introduced for the July to October 2020 period where eligible businesses and not-for-profits will also receive an additional payment equal to the total of all PAYG assistance grant credits received in respect of the period for January 2020 to June 2020.
2. Temporary relief for directors of distressed businesses:
- The government will temporarily increase the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and the time companies have to respond to statutory demands will be extended from 21 days to 6 months.
- Temporary relief will also be provided for directors from any personal liability for trading while insolvent, for six months.
- The Corporations Act 2001 will also be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.
3. Job seeker supplement of $550 per fortnight:
- The Government will implement a new temporary Coronavirus supplement of $550 per fortnight, effectively doubling the current payment for job seekers.
- This Coronavirus supplement will be paid for the next 6 months to both existing and new recipients of the JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.
4. Further $750 payment for pensioners:
- In addition to the $750 stimulus payment for pensioners announced on 12 March 2020, the Government will provide a further $750 payment to social security and 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.
- This second $750 payment will be made automatically from 13 July 2020.
- The first $750 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.
5. Early access to superannuation (up to $20,000 over 2 years):
- Eligible individuals will be able to apply online through myGov to access tax-free up to $10,000 of their superannuation before 1 July 2020.
- They will also be able to access up to a further tax-free $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).
- The be eligible for early release you must either be:
- unemployed; or
- eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020, you were made redundant, had your working hours reduced by 20% or more, or if you are a sole trader you had your business suspended or your turnover reduced by 20% or more.
- Eligible individuals will be able to apply for early release of your superannuation from mid-April 2020.
6. Pension minimum drawdown rate reduced by 50%:
- The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years.
7. SME loan guarantee scheme:
- The Coronavirus SME Guarantee Scheme will provide support for SME businesses (Small & Medium Enterprises).
- Under the Scheme, the Government will provide a guarantee of 50% to lenders for new unsecured loans to be used by SME’s for working capital.
- This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs being able to access additional funding to help support them through the upcoming months.
- SMEs with a turnover of up to $50 million will be eligible to receive these loans.
Treasury has released a range of fact sheets with further details on the eligibility requirements for the above measures (subject to the enactment of legislation), including the following:
- Cash flow assistance for businesses
- Providing temporary relief for financially distressed businesses
- Delivering support for business investment
- Income support for individuals
- Payments to support households
- Early access to superannuation
- Providing support for retirees
- Supporting the flow of credit
To implement the stimulus plan, a package of Bills will be introduced into Parliament in the final Autumn sitting week in March 2020 for Parliament’s urgent consideration and passage.
The Federal Government has also announced that further assistance packages are being devised.