Amid further COVID-19 uncertainty, the Morrison Government has announced a 2nd $66 billion stimulus package. An economic lifeline as such in an attempt to keep Australians heads above water and save jobs. This latest package brings Australia’s total stimulus to date to $189 billion – 9.7 per cent of GDP.
The $66 Billion Government Stimulus Package Breakdown
For Businesses
Tax-Free Payments increased to a maximum of $100,000
Cost: $25.2 billion
Who is the payment for: Again, this payment is for small businesses with a turnover of less than $50 million that employ staff. These businesses will receive tax-free cash payments up to the value of $100,000, equivalent to 100% of tax withheld on employee wages. All eligible businesses will receive a minimum of $20,000 in an attempt to keep their staff employed and their business operational. It is estimated 690,000 businesses will access this payment. Together they employ 7.8 million Australians. It is also open to eligible not-for-profits.
How it will be paid: The payments will be allocated in a two-stage process. The first will be for eligible businesses withholding tax who will receive 100% of salary and wages withheld to a maximum of $50,000 when they lodge their 28 April and 28 July activity statements. Eligible businesses that pay wages and salaries will receive a minimum of $10,000. For the minimum payments, the first $10,00 will be paid after lodgment of the March BAS, the next $5,000 after the June quarter and the final $5,000 on the September quarter.
Temporary Insolvency Relief
For the next six months, Directors will now be relieved of their duty to prevent insolvent trading with respect to debts incurred in the ordinary course of the company’s business.
A Guarantee of Unsecured Loans
Cost: $20 billion for $40 billion worth of lending
Who is the payment for: The Government has also announced it will guarantee 50% of small business unsecured loans for six months starting on April 1st. It will apply to banks who join the scheme for loans up to $250,000 over three years. Repayments will not be required for the first 6 months.
Access to Superannuation
Employees who ave been made redundant, casual workers and sole traders who have had income or hours slashed by 20% or more, can access up to $20,000 of their superannuation. This includes sole traders and casual workers who have had their income slashed by 20% or more. Individuals can also access $10,000 tax-free from their superannuation in both the 2019/20 and 2020/21 financial year. The first payment can be accessed prior to July 1 2020, and the 2nd in the following three months from July 1 onwards. The Government has also temporarily reduced the minimum pension drawdown requirements by 50% for the same time period. Deeming rates have also been reduced a further 0.25%.
Income Support
A coronavirus supplement of $550 a fortnight has been introduced for those affected by the economic downturn. Payments will commence on 27th April, 2020. This is on top of the $550 weekly payment for those on JobSeeker, Youth Allowance JobSeeker, Parenting Payment, Farm Household Allowance and Special Benefit. For sole traders or casual workers who have had their hours and income slashed, you’ll be able to access the full supplement if you are earning less than $1,075 per fortnight.
For those sole traders and casual workers needing to apply for the JobSeeker payment, waiting periods have been waived along with asset testing, however, income testing will still apply. Crisis payments are also available for those needing to isolate at home and are not eligible for any leave entitlements. An additional $750 to eligible social security and concession card holders plus veteran income support recipients.
Applicants for all schemes are to apply via Services Australia.
These measures come on top of the stimulus provided in the Government’s first stimulus package which you can read about here. It is expected further stimulus packages will be announced in the near future.
If you would like to discuss how the stimulus package or are concerned about how the current events will affect your business, please give our team a call.
