What the newest announcements mean for you and your business.
Amidst another huge week for Australian’s (and the world) we’ve got news updates left, right and centre with a lack of clarity around what exactly is happening for business and individuals around the country and on a state by state basis. Here’s the round up of exactly what the latest C-19 government stimulus package means.
- The initial cash payment for employers with a turnover of up to $50 million has been
increased from a minimum of $2000 to a $20,000 to a maximum of $50,000 increased to a maximum $100,000.
- This will be distributed as a credit on your BAS of up to 100% of the PAYG withheld
amount from wages. If your BAS payable is less than the total credit, the difference will be distributed as a cash payment into your bank account.
- It will be split between the Jan to March 2020 BAS, April to June 2020 BAS (Phase 1) and between July and October 2020 (Phase 2).
- To receive the second payment, the business will need to remain active.This is where is gets a little confusing so read carefully…·
The first phase (March-June) involves eligible employers receive a credit equal to 100%
of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.
- The second phase (July-Oct) means that you will then receive another series of credits, equal to the credits that were received under the first phase, EVEN IF you owe less on your BAS.
- So to be clear, the minimum is $20,000 and the maximum is $100,000, but this is IN TOTAL from March until October, not per $20,000 or $100,000 per quarter
For more examples, check the Treasury document here or contact us directly to understand how this will play out for your business.
ASSET WRITE OFF
This remains unchanged from the first stimulus announcement:
- $700m to expand the instant asset write off scheme. The threshold has increased from $30k to $150k. The turnover threshold to qualify for this has increased from $50m to $500m. The instant asset write-off scheme will operate from announcement until 1 July 2020.
- Introduction of a time-limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions
WAGE SUBSIDIES FOR APPRENTICES
This remains unchanged from the first stimulus announcement:
- $7000 each quarter in wage subsidies for employers of less than 20 people to save the jobs of 120,000 apprentices.
- Subsidies will be backdated to 1 January 2020 and will run until 1 September 2020.
ACCESS TO CAPITAL
For those needing cash and quickly, the government will guarantee 50% of new loans to SMEs up to $20 billion. They are short-term and unsecured. To be eligible, your turnover needs to be less than $50 million and here are the terms…
- Maximum total size of loans of $250,000 per borrower.
- The loans will be up to three years, with an initial six month repayment holiday.
- The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
- Loans will be subject to lenders’ credit assessment
A summary of each bank’s measures can be found here.
You will now be able to access jobseeker payment through Centrelink if your income has been reduced.
Temporary relief from Corporations Act requirements
The Treasurer has been given a temporary instrument-making power to amend the Corporations Act to provide relief or modifications to specific compliance obligations.
ASIC has announced measures for those companies with a 31 December financial year that need to hold their AGMs by 31 May 2020, providing a two month no action period and enabling hybrid virtual AGMs.
Early release of superannuation
From mid-April, individuals in financial distress will be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax free and will not affect Centrelink or Veterans’ Affairs payments.
To be eligible to access your superannuation you need to meet the following requirements:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020:
- you were made redundant; or
- your working hours were reduced by 20% or more; or
- if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20% or more.
For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April.
Temporary reduction in minimum superannuation draw down rates
Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.
Default minimum drawdown rates (%)
Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)
95 or more
The upper and lower social security deeming rates will be reduced further. As of 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate 0.25%.
Time limited fortnightly $550 ‘coronavirus supplement’
For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.
The payment will be made to those receiving:
- Jobseeker payment (and those transitioning to the jobseeker payment)
- Youth allowance jobseeker
- Parenting payment
- Farm household allowance
- Special benefits recipients
In addition, eligibility to income support payments will be expanded to:
- Permanent employees who are stood down or lose their job
- Casual workers
- Sole traders
- The self-employed
- Contract workers who meet the income test
The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.
Asset testing has also been reduced and will be waived for 6 months. Income testing will still apply.
The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.
Second $750 payment to households
The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia (see the full list here). The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.
- Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;
- Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.
The payments will be made automatically to those that meet the criteria.
Bankruptcy safety net
A temporary 6 month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from $5,000 to $20,000. In addition, the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.
Where someone declares their intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.