On 22 March 2020, the Federal Government announced further economic stimulus measures for individuals, businesses and the banking sector, to support Australia through the unprecedented impact of COVID-19.
This economic plan will provide significant benefits to small and medium-sized businesses and households in addition to the stimulus package announced on 12 March.
The key announcements relate to:
- Additional payment to small businesses (up from $2k-$25k, to $20k-$100k)
- SME loan guarantees
- Temporary relief under ASIC and Corporations law requirements
- Early release of Super benefits
- Reduction in minimum pension payments
- Increased access to welfare
More details below:
Government Support for Businesses
Boosting Cashflow for Employers – Extension of PAYGW Support
The government will provide up to $100,000 in cash payments to a business (up from previously announced $25,000).
Eligible employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%), with the maximum payment being increased from $25,000 to $50,000. The minimum payment has increased from $2,000 to $10,000.
An additional payment will also be made in July-October 2020 period, where eligible businesses will receive additional payments equal to the total of all payments they have received from March to June.
In total, eligible businesses will receive between $20,000, and up to a total of $100,000.
This will apply to small and medium-sized businesses (SME) and not-for-profits (NFP) with aggregated annual turnover of under
$50 million and that employ workers.
An eligible employer is one established prior to 12 March 2020.
The payment will be provided as an automatic credit in the activity statement system from 28 April 2020.
For monthly PAYG withholding, the credit will represent three times the withholding amount lodged in the March BAS.
The payments are tax-free.
Coronavirus SME Guarantee Scheme
The Government will establish the Coronavirus SME Guarantee Scheme which will support SMEs to get access to working capital to help them get through the impact of the coronavirus.
Under the Scheme, the Government will guarantee 50% of new loans issued by eligible lenders to SMEs.
The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support
$40 billion of lending to SMEs.
The Scheme will complement the announcement the Government has made to cut red-tape to allow SMEs 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 have to 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.
Support for Workers and Households
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.
Temporary Reduction of Superannuation Minimum Drawdown Rates
The Government will temporarily reduce superannuation minimum drawdown requirements for account based pensions by 50% 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% and the upper deeming rate will be 2.25%. The change will benefit around 900,000 income support recipients, including Age Pensioners.
Payments to Social Security Recipients
In addition to the $750 stimulus payment 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 payment will be made automatically from 13 July 2020 to around 5 million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners.
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.
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 six months.
Eligible income support recipients will receive the full amount of the $550 Coronavirus Supplement on top of their payment each fortnight.
An increase of up to 5,000 staff for Services Australia will assist to support the delivery of new Government measures.
If you require any further information regarding your entitlements under the stimulus package, please don’t hesitate to contact our office on (08) 6212 7200.
More detailed information on the Federal Government’s economic response to COVID-19 can be found on the treasury website (here).