On 22 March 2020 the Federal Government Second stimulus package was released in response to coronavirus, with new measures to provide support payments to lower income Australians and individuals and businesses most affected. This includes:
1.) CORONAVIRUS SUPPLEMENT;
There will be an expansion to the eligibility of income support payments and the establishment of a new, time-limited coronavirus supplement. The amount will be equal to $550 per fortnight, payable to existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit, Youth Allowance, Austudy and Abstudy.
2.) SECOND $750 PAYMENT TO CERTAIN CONCESSIONAL RECIPIENTS;
Social security, veteran and other income support recipients and eligible concession card holders will be eligible to receive two separate $750 payments (an increase from that announced in the first stimulus package). The payments are to be made from 31 March 2020 (first payment) and from 13 July 2020 (second payment). The second payment will not be made to those eligible for the coronavirus supplement.
3.) EARLY ACCESS TO SUPERANNUATION;
Certain individuals affected by the coronavirus can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. The criteria for accessing super earlier is that you must satisfy one of the following conditions.
- You are unemployed.
- You are eligible to receive a Jobseeker payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), special benefit or Farm Household Allowance.
- You were made redundant on or after 1 January 2020.
- Your working hours were reduced by 20 per cent or more on or after 1 January 2020.
- If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more on or after 1 January 2020.
Individuals eligible for early release can apply directly to the ATO through the myGov website, where they will need to certify that the above eligibility criteria are satisfied.
4.) TEMPORARY REDUCTION MINIMUM SUPERANNUATION PENSION DRAWDOWN RATES;
There will be a temporary reduction of 50% in superannuation minimum drawdown requirements for account-based pensions and similar products for 2019-20 and 2020-21. The reduction applies for the 2019-20 and 2020-21 income years. For example the 4% rate for under 65’s becomes 2%.
5.) REDUCTION IN DEEMING RATES (AGE PENSION);
There will also be a reduction to both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.
6.) CASH PAYMENT TO EMPLOYERS OF BETWEEN $20,000 TO $100,000;
Small and medium businesses with turnover under $50 million, along with not-for-profit charities, that employ people will be eligible for a tax-free cash payment of up to $100,000. Under the enhanced scheme, 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 delivered by the ATO as an automatic credit in the activity statement system (March BAS) from 28 April 2020.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
An eligible employer is one established prior to 12 March 2020. Turnover thresholds will generally be based on prior year turnover. The minimum will be equal to $10,000 even if they are not required to withhold tax. To qualify for the additional payment, the entity must continue to be active.
For more information and scenarios please refer to the Australian Government Fact Sheet.
7.) TEMPORARY RELIEF REGARDING INSOLVENCY FOR BUSINESSES;
The Federal Government will provide a safety net to lessen the threat of actions that could unnecessarily push business entities into insolvency and force the winding up of the business (click here for more details).
8.) CORONAVIRUS SME LOAN GUARANTEE SCHEME;
This scheme includes measures to ensure businesses can continue to access small business loans during this period of uncertainty. The government will look to provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital. SMEs with a turnover of up to $50 million will be eligible to receive these loans. The loan must have a maximum total size of $250,000 per borrower, be up to three years (with an initial six-month repayment holiday) and in the form of unsecured finance. The Scheme will commence early April 2020 and available for new loans made by participating lenders (Banks) until 30 September 2020.
We will continue to keep you up to date with more information as we receive it. If you have any questions regarding the Stimulus package please contact our office.