The Federal Government has released a second stimulus package to support households and business through the uncertain period ahead. It is designed to support businesses in managing short-term cash flow challenges, provide support to individuals severely affected and to ensure the continued flow of credit in the Australian economy.
Summarised below are the measures for Australian businesses and households, including:
- Boosting Cash Flow for Employers
- Increasing the instant asset write off and investment incentive
- Loan guarantees, including quick and efficient access to credit for small business
- ATO support and temporary relief for financially distressed businesses
- Support available for households
- Wage subsidies for apprentices and trainees
We have included links to the Government fact sheets below, however please feel free to email us with any questions you may have.
We wish everyone the best of health and hope that you are coping throughout these unprecedented times.
The Government is providing:
- up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ people, with a minimum payment of $20,000;
- SMEs with aggregated annual turnover under $50 million and that employ workers are eligible;
- 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 first payment is being increased from $2,000 to $10,000;
- An additional payment is also being introduced in the July-October 2020 period where eligible employers will receive an additional payment equal to the total of all of the payments they have received making the minimum payment for eligible employers $20,000 and the maximum payment of up to $100,000 (over both payments); and
- The payment(s) will automatically be applied by the ATO in your businesses upcoming activity statements.
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000. They have also expanded access to include businesses with aggregated annual turnover from less than $50 million to less than $500 million. The scheme is until 30 June 2020 and is due to revert to $1,000 on 1 July 2020.
There is also a 15 month investment incentive (ending 30 June 2021), intended to support investment and economic growth by accelerating depreciation deductions. It gives businesses with turnover of less than $500 million the ability to deduct 50% of the cost of an eligible asset on installation, with existing deprecation rules applying to the balance of cost.
Under the Coronavirus SME Guarantee Scheme, the Government will provide:
Quick and efficient access to credit for small business
- Government will guarantee 50% of unsecured loans taken out by small businesses in the six months starting from 1 April 2020 with banks who join the scheme;
- Loans can be up to $250,000 over a three-year term;
- Loans won't have repayments on them for the first six months; and
- Won't apply to existing customers refinancing.
Additionally, the Government is providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This measure is targeted to help small businesses get access to credit quickly and efficiently.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups. It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations.
The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankruptcy proceedings against an individual as well as temporarily increasing the time companies and individuals have to respond to statutory demands they receive.
The Government has announced it will provide the following support for workers, retirees and households:
- Time-limited $550 per fortnight supplement for both existing and new recipients of the Job Seeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- An additional further $750 payment to social security and veteran income support recipients and eligible concession card holders.
- Individuals in financial stress can access up to $10,000 tax-free of their superannuation in 2019/20 and a further $10,000 in 2020/21.
- Temporary reduction in the superannuation minimum drawdown requirements by 50% for 2019/20 and 2020/21, providing retirees with more flexibility as to how they manage their superannuation assets.
- Deeming rates reduced by a further 0.25 percentage points to reflect the latest rate reductions by the Reserve Bank, making the lower deeming rate 0.25 per cent and the upper deeming rate 2.25 per cent.
This will apply to employers with less than 20 employees – employers can register to receive subsidies of 50% of an apprentice/trainee's wage for up to 9 months from 1 January 2020 to 30 September 2020. The maximum amount for each apprentice/trainee is $21,000. The apprentice or trainee must have been in-training with a small business as at 1 March 2020.