UPDATE ON ECONOMIC RESPONSE TO COVID-19
Please see PDF’s below.
Overview Economic Response to the Coronavirus 24 March 2020.pdf
Fact sheet Income Support for Individuals.pdf
Fact Sheet Delivering support for business investment.pdf
Fact sheet Assistance for severely affected regions and sectors.pdf
Fact sheet Payments to support households 25 March 2020.pdf
Fact sheet Cash flow assistance for businesses 0.pdf
Fact sheet Early Access to Super 1.pdf
Fact sheet Providing temporary relief for financially distressed businesses.pdf
Fact sheet Providing support for retirees to manage market volatility.pdf
Fact sheet Supporting the flow of credit 1.pdf
As you may be aware, the Government has announced a second set of stimulus measures to support the Australian economy through the Coronavirus pandemic. The additional support is designed to boost the first round of stimulus measures which were announced on the 12th March 2020.
The Government is still proposing to introduce the relevant legislation towards the end of March which will clarify and provide further details as to the eligibility criteria for the various support mechanisms announced.
Highlights of the second set of stimulus measures announced include:
Cash flow assistance for business
The Government will increase the cash flow assistance measures for businesses, including not for profits and charities. Those businesses (including not for profits and charities) with turnover of under $50 million that employ staff may now be eligible for up to $100,000 (increased from $25,000) in tax-free payments, with a minimum payment of $20,000 (up from $2,000).
The way in which this will operate has now changed with ‘initial payments’ and ‘additional payments’. The initial payments will now be 100% (increased from 50%) of PAYG withholding from salary and wages (up to $50,000). This will be based on the PAYG withholding for the March quarter (or the month of March if you are a monthly withholder) up to 30 June 2020. The payment will be credited by the ATO upon lodgement of your relevant Activity Statements from 28 April 2020.
The additional payment will be equal to the ‘initial payment’ (up to $50,000) and the payment will be credited over the Activity Statements for June to September. Even if a business is not required to withhold tax but pays salary and wages, the business may still be eligible for a minimum
total credit of $20,000.
Temporary relief for financially distressed businesses
The Government has proposed to introduce a number of temporary measures to act as a safety net to reduce the threat of actions that could unnecessarily push companies into insolvency and force the winding up of their business.
This would include a temporary increase in the threshold at which creditors can issue a statutory demand on a company and an increase in the time that companies have in which to respond to statutory demands that they receive and the temporary relief for directors from any personal liability for trading while insolvent.
Government loan subsidy
The Government has announced a number of measures to support the flow of credit in the Australian economy, in particular for Small and Medium Enterprises.
This includes the Government providing a guarantee of 50% to lenders for new unsecured loans provided to Small and Medium Enterprises with turnover up to $50 million to be used for working capital. This will apply to new loans from early April to 30 September 2020.
Loans will be up to three years, with an initial six-month loan repayment holiday and with a limit of $250,000 per borrower.
Further support for individuals and families
Over the next six months, the Government will temporarily expand the eligibility for income support payments and establish a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
The initial stimulus measures announced on the 12th March 2020 included a one-off payment of $750 to social security, veteran and other recipients of Government support. The Government has further announced that it will now provide two separate payments of $750 to social security, veteran and other income support recipients and eligible concession card holders. Of which, the first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020.
The Government is further allowing certain individuals affected by the Coronavirus to access up to $10,000 of their superannuation in the current financial year (i.e. prior 1 July 2020) and a further $10,000 next financial year (i.e. from 1 July 2020) which is expected to be available
for approximately three months.
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions (ABP’S) and similar products by 50 per cent for 2019-20 and 2020-21 financial years.
The Government is also reducing the social security deeming rates.
As always, we will do our upmost to keep you well informed at this extremely turbulent time.
We have attached for your easy reference the latest Treasury Fact Sheets which provide some further information as well as some examples.
Please do not hesitate to contact us with any queries.