2nd stimulus package announced
The Australian Government has announced a second stimulus package as we continue to fight COVID-19.
The $66 billion dollar coronavirus stimulus provides relief for small businesses, casuals and welfare recipients. This combined stimulus of $189 billion dollars will hopefully reduce some of the impact Coronavirus is having on our community.
Following the government’s first stimulus package less than 2 weeks ago, Treasurer Josh Frydenberg said “we now expect the economic shock to be deeper, wider and longer.” Below is a summary of the measures announced by the Treasury, but please reach out if you have a question.
Support for Businesses
Cash flow for employers
Eligible small and medium-sized businesses, and not-for-profits that employ people, can receive a minimum payment of $20,000. These payments will help businesses and not-for-profits with vital cash flow so they can keep operating, pay their rent, electricity and other bills and keep their staff.
This will likely benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible.
With this 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.
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.
Temporary relief for financially distressed businesses
The economic impacts of the Coronavirus could see many businesses temporarily face financial distress. These businesses need a safety net to make sure they can continue normal business once the crisis has passed. This measure is designed to help.
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, and providing temporary flexibility and targeted relief from provisions of the Corporations Act 2001 to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
It’s now easier to get finance
If you need to take out a short term loan to meet cashflow needs over the coming months, you may be able to get a loan (up to $250,000) with no repayments for 6 months. The Coronavirus SME Guarantee Scheme means 50% of any new unsecured short term loan for SMEs is guaranteed by the government. There’s a maximum total loan size of $250,000 per borrower, the loans are up to 3 years, with no repayments for 6 months. The government will encourage lenders to provide drawdown style facilities (like overdraft) where interest is only paid on what you use. This commences early April 2020 and be available for new loans until September 30 2020.
More info here
Increasing the instant asset write-off
If you were thinking of buying assets for your business, you can accelerate the depreciation of them to reduce your taxable income.
The Government has changed limits so this now applies to assets costing less than $150,000. The threshold is applied on a per-asset basis, so eligible businesses can immediately write-off multiple assets. It’s available to businesses with annual turnover under $500 million and applies to new or second-hand assets first used or installed for use between March 12 2020 to June 30 2020.
Backing business investment
The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
This measure means businesses with a turnover of less than $500 million can deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.
Supporting apprentices and trainees
The Government is trying to help small businesses keep their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Support from banks
Many banks are now offering hardship assistance packages and support measures for businesses. This assistance could include
- Deferred loan payments
- Waived fees and charges
- Help with debt consolidation
- Waived penalties for early withdrawal of a term deposit, or
- Deferring upcoming credit card payments and increased emergency limits.
It varies from bank to bank, so get in touch with yours to find out more.
Support for households and individuals
For those who meet the expanded eligibility criteria, they will receive a new time-limited Coronavirus supplement income support payment paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Payments to support pensioners, carers, veterans
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020.
Temporary early release of superannuation
The Government is allowing individuals affected by the Coronavirus to 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.
Temporarily reducing superannuation minimum drawdown rates
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 holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
More measures can be found here.
As always, if you have any questions or concerns, please do not hesitate to reach out to us.