The second wave of Stimulus, what it means to you

This morning, the Australian Government has announced their second round of policies to further support Australian businesses and individuals as it is expected the Coronavirus will be impacting the economy in the next few months.

This is what we know so far:

For individuals

Coronavirus supplement

Payable to those who are eligible for the following income support payment:

o   Jobseeker payment

o   Youth Allowance Jobseeker

o   Parenting payment (Partnered and Single)

o   Farm Household Allowance

o   Special Benefit recipients

A payment of $550 per fortnight will be paid to those who are eligible

–        Expanded access to Jobseeker Payment and Youth Allowance Jobseeker to include those who are stood down or lose their employment, sole traders, self-employed, casual workers, or contract workers who meet the income tests as a result of the economic downturn due to Coronavirus.

–        No asset testing for Jobseeker Payment and Youth Allowance Jobseeker payment and Parenting payment.

–        The one week Ordinary Waiting Period has been waived.

More information can be found on this Fact Sheet.

Second payment of $750 to eligible recipients and concession card holders

This payment will be made from 13 July 2020. The amount will be tax exempt, and will not count as income for the purposes of Social Security Farm Household Allowance and Veteran payments. Note if you are eligible for the Coronavirus supplement, you will NOT receive the second payment.

Treasury Fact Sheet here, with a detailed list of the eligible payment recipients, or concession card holders who can receive the $750 payments.

Temporary early release of superannuation

Individuals can draw up to $20,000 over the 2020 & 2021 financial years ($10,000 each financial year) out of their superannuation accounts if they meet one or more of the requirements:

–        You are unemployed

–        You are eligible for Job seeker payment, Youth Allowance for jobseekers, parenting payment (Partnered and Single), special benefit or Farm Household Allowance

–        You are made redundant, or your work hours are reduced by 20% or more, or (sole traders) if your businesses was suspended or experiencing a reduction in turnover by 20% or more.

No tax is payable on the amount released, nor will it affect their Centerlink or Veterans Affairs payments.

Note you need to apply for it with the ATO for a determination before you are allowed to draw them out tax free. You can either apply via your mygov, or speak to us and we can help.

More information here.

Temporarily reducing super minimum drawdown rates for account-based pensions (and similar products) by 50% for the 2020 and 2021 financial years

This is aimed to reduce the retirees’ needs to sell their investments to fund their retirement when the market is negatively impacted by the Coronavirus.

Fact sheet here.

For businesses

Enhanced cashflow boost

With minimum payment for employers increased from $2,000 to $20,000, and maximum increased from $50,000 to $100,000. This applies to eligible small to medium-sized businesses and Not-for profits (NFPs) with aggregated turnover under $50 million who employ people (active eligible employers established prior to 12 March 2020).

These eligible businesses will receive a payment equal to 100% of their tax withheld on wages to employees (was 50% in the first round), with maximum payment increased to $50,000 for the first payment period (January to June 2020). As announced previously, the credits will be made available when these businesses lodge their March 2020 BAS, with excess credits refunded to the businesses.

The second additional payment will be paid to eligible entities around the July – October 2020 period, again eligible businesses will receive a minimum of $20,000 to $50,000 cashflow boost based on their employees’ tax withheld.

All up, businesses who are eligible for both rounds (first round from January to June 2020, second round July to October 2020) can receive up to $100,000 payment from the Government under this new policy.

Therefore it is now more important to ensure the BAS lodgements are up to date, to ensure a timely delivery of the refund to assist your business.

More details can be found here.

Temporary relief for financially distresses businesses

A package that includes the following:

–        Temporarily increasing the threshold at which creditors can issue a statutory demand on a company (up from $2,000 to $20,000) and the time companies have to respond to statutory demands they receive (from 21 days to 6 months)

–        Temporary relief for directors from any personal liability from insolvent trading for up to 6 months. However the debts incurred would still be expected to be paid back when economic conditions improve.

–        ATO will be willing to tailor solutions for those business owners, or directors who are struggling from the impact of Coronavirus, including temporary reduction of payment or deferrals, withholding enforcements actions including issuing of Director Penalty Notices and wind-ups.

Supporting the flow of credit

The government will provide guarantee of 50% to small and medium enterprises (SME) lenders to support short term unsecured loans, so businesses can use the funding to meet cashflow needs. The maximum loan size is $250,000 per borrower, maximum period of up to 3 years with the first 6 months repayment free (repayment holiday). As the loans are unsecured, borrowers do not need to provide any assets as security.  An exemption from responsible lending obligations for lenders providing credit to existing small business customers will be in place for 6 months to ensure a quick and efficient access of credit for small businesses.

Extended reading here.

Let’s ride through this pandemic together – if there is anything that we can help, be it BAS lodgements, tax return lodgements, tax debt matters or simply checking in to see how the new announcements would benefit you – just email or phone us.

We will continually monitor the news and will be keeping you up to date.

For now, from all of us at Aston Accountants, we wish all our clients to take good care of themselves and their families, and stay mentally healthy too.