Following Prime Minister, Scott Morrison’s address yesterday and the broader and more prolonged impact of the Coronavirus (COVID 19) outbreak the Federal Government has significantly increased what’s now on offer in the way of support for individuals and businesses
From their first stimulus package which was announced on 12 March the Government’s consolidated package is now $189 billion and designed to help businesses and households through the period ahead.
The package provides timely support to workers, households and businesses through a difficult time. Building on the previous measures, this package will support those most severely affected. It is also designed to position the Australian economy to recover strongly once the health challenge has been overcome.
The Prime Minister announced additional business assistance yesterday, here is a summary of what’s available now.
- Coronavirus Supplement: $550 per fortnight payment for recipients of the JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit for the next six months.
- Early access to superannuation for struggling Australians.
- Temporary reduction of minimum super draw down rates.
- Extra $750 for some households, including those on social security and veteran income support and eligible concession card holders.
- Reduction of deeming rates by a further 0.25 percentage points.
- Small and medium businesses with turnover under $50 million, along with not-for-profit charities, will be eligible for a tax-free cash payment of up to $100,000.
- Support for airlines.
- Temporary relief for financially distressed businesses.
- Coronavirus SME Guarantee Scheme: Government to guarantee half a bank’s loan to a small or medium enterprise impacted by the virus.
Under its Coronavirus plan, 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.
That payment will go to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit 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.
Services Australia will also expand its staff to 5000 to help the delivery of the new measures.
And social security and veteran income support recipients and eligible concession card holders will also receive an extra $750 payment – on top of the $750 payment announced on March 12.
This new payment will be made automatically from July 13, and around 5 million Aussies will benefit, including pensioners.
The original payment will also occur automatically from March 31.
The government is also reducing social security deeming rates by a further 0.25 per cent on top of deeming rate changes made during the first package.
From May 1, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.
The change will benefit around 900,000 income support recipients, including age pensioners.
Individuals struggling as a result of the COVID-19 outbreak will also be able to access some of their super early.
Eligible Aussies will be able to access up to $10,000 in 2019-20, and a further $10,000 in 2020-21.
To take advantage of the offer, you will need to apply online through myGov before July 1.
You won’t need to pay tax on released super, and the money withdrawn will not affect Centrelink or Veterans’ Affairs payments.
The government is also temporarily reducing superannuation minimum draw down requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21.
It is designed to benefit retirees by providing them with more flexibility regarding how they manage their superannuation assets.
The government is providing up to $100,000 to eligible small and medium sized businesses and not‑for-profits – including charities – that employ people, with a minimum payment of $20,000.
The purpose of this payment is to boost cashflow and allow organisations to keep the lights on – and keep employees on the books.
Under the scheme, which builds upon the first stimulus package, 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 $2000 to $10,000. The payment will be available from April 28.
By linking payments to a business’s staff wage tax withholdings, the government is hoping businesses will be encouraged to hold on to more of their workers.
The payments are tax free, there will be no new forms to fill out, and payments will flow to small and medium sized businesses with an annual turnover of less than $50 million that employ staff through the ATO.
Businesses have been particularly targeted.
And from July 28, eligible businesses will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments received.
Another measure is the Coronavirus SME Guarantee Scheme, which will see the government guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
And the government is also 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.
TIMING OF ASSISTANCE
- Immediately – with deductions to be included in 2019-20 tax returns Increased instant asset write off.
- Immediately – Temporarily reduced minimum draw down rates for superannuation.
- Immediately – with deductions to be included in 2019-20 tax returns.
- Backing business investment – accelerated depreciation.
- As soon as practicable Support for Coronavirus-affected regions and communities.
- From 31 March 2020 – First round of $750 payments to support households.
- Applications from early – April – Assistance for existing apprentices and trainees.
- Applications from mid – April 2020 – Temporary early release of superannuation.
- From 27 April 2020 – Income support and a Coronavirus supplement.
- From 28 April 2020 – First phase of Boosting Cash Flow for Employers.
- From 1 May 2020 – Increased transfer payments from reduced deeming rates.
- From 13 July 2020 – Second round of $750 payments to support households.
- From 21 July 2020 – Second phase of Boosting Cash Flow for Employers.
For further information and details on the Govt’s package click here. Moving forward, we urge your to contact your accountant, financial planner, bank or mortgage broker so you can discuss what financial options are available to you to navigate this crisis. Email us if you would like to have a chat about your existing home lone, consolidating current debt, securing a small business loan or refinancing your current loans.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.