Fresh $66bn Package Reveals Bigger Cash Payments, Access to Super
The Government has announced its SECOND economic response to the Coronavirus which is in addition to their previous concession.
The second stimulus package will now build on the initial tax-free cash payments to small and medium businesses, rising to up to $100,000, with a minimum payment of $20,000, up from the previously announced $25,000 and $2,000 limits.
Some of the most important measures in the Government’s 22 March 2020 assistance package include:
- Support for individuals and households
- Assistance to business for keeping workers employed in their jobs
- Assistance to business to help them stay in business
1. Support for individuals and households
- New six-month income support COVID-19 supplement that will be paid at a rate of $550 a fortnight to both existing and new recipients of various benefit payments, such as Job Seeker Payment, Youth Allowance Payment, Parenting Payment, Farm Household Allowance and Special Benefit.
- In addition to the $750 stimulus payment announced on 12 March 2020 (that is payable from 31 March 2020), an additional $750 payment will also be made to pensioners from 13 July 2020 provided the pensioner does not qualify for the new COVID-19 supplement.
- Ability for individuals in financial stress because of COVID-19 to access up to $20,000 of their superannuation early. Individuals will be able to apply to access $10,000 of their superannuation before 1 July 2020 and up to another $10,000 within three months of 1 July 2020.
- Temporary 50% reduction in superannuation minimum drawdown rates for 2019-20 and 2020-21 to provide more flexibility for retirees as to how they want to manage their superannuation assets.
2. Assistance to business for keeping workers employed in their jobs – “Boosting Cash Flow for Employers Payments”
The measures are designed to boost cash flow for employers by providing up to $100,000, with a minimum payment of $20,000, to eligible small and medium sized businesses and not-for-profits that employ people.
Eligible Businesses are businesses or not-for-profit entities with an aggregated turnover under $50 million, based on the prior year’s annual turnover.
The payments will be tax free and will be provided as a credit in the Activity Statement Account.
Where the credit to the activity statement account creates a refund, the ATO will deliver the refund within 14 days.
The first payment available from 28 April 2020 will be a minimum of $10,000 and maximum of the lesser of 100% of the total PAYG withholding liability for the March 2020 quarter or $50,000.
For monthly withholding remitters, the benefit will be calculated as a minimum of $10,000 and a maximum of the lesser of three times the March 2020 PAYG withholding liability or $50,000.
The second and third payments are to be paid in relation to the quarters ending 30 June 2020 and 30 September 2020 and will be available to employers who continue to be active.
Quarterly PAYG withholding payers will receive a credit in the activity statement account equal to 50% of their total Boosting Cash Flow for Employers Payments ( ie. the credit they received upon lodgement of the March 2020 BAS) up to a total of $50,000.
Monthly PAYG withholding remitters will receive the additional payments by an automatic credit in the activity statements, each equal to 25% of the total Boosting Cash Flow for Employers Payments (ie. the credit they received upon lodgement of the March 2020 BAS) up to a total of $50,000.
The second and third payments will only be available to be claimed in limited Activity Statement lodgements so prompt lodgement will be essential.
3. Support for businesses to stay in business
- Establishment of Coronavirus SME Guarantee Scheme whereby the Government will guarantee 50 percent of new loans issued by eligible lenders to SMEs.
- Relief for financially distressed businesses by temporarily increasing the threshold at which:
– creditors can issue a statutory demand on a company;
– the time companies have to respond to statutory demands they receive; and
– temporary relief for directors from any personal liability for trading whilst insolvent.
- The Government is providing up to $715 million in support for Australian airlines and airports.
The new measures announced in the second stimulus package are in addition to the measures announced on 12 March 2020, which included:
- Increased instant asset write off
- Accelerated depreciation deductions
- Support for apprentices and trainees
- Targeted support for COVID-19 affected regions and communities.
Sole trader support
- A new $550 fortnightly coronavirus supplement payment for permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers.
- The supplement will also be paid to both existing and new recipients of the Jobseeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Access to superannuation
- Employees who have been made redundant, or those who have their working hours reduced by 20 per cent or more, or sole traders whose businesses have been suspended or see a reduction in turnover by 20 per cent or more will also now be allowed to access up to $20,000 of their superannuation.
- Apply online through myGov to access up to $10,000 before 1 July 2020, and up to a further $10,000 from 1 July 2020 for approximately three months.
Outside of business, the ATO will also work with individuals experiencing financial hardship, and their tax agents, and will apply appropriate tax relief measures for serious and exceptional circumstances, such as where people cannot pay for food or accommodation.
If you have any concerns or would like more information on any of the above measures above, please speak to your MNH Advisory Services team member.
Links & Resources
https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
