On Sunday, 22 March 2020, Prime Minister Scott Morrison and Treasurer Josh Frydenberg announced a further raft of stimulus.
In this article, we will break down the key aspects of the package and explain how you may benefit from them. We note that these are complex issues and, as such, we recommend that you contact us to discuss how we can assist you in accessing these various stimuli.
Boosting cash flow for employers
- SMEs with aggregated annual turnovers of under $50m will now receive two payments equal to 100 per cent of their PAYG withheld on salary and wages with each maximum payment increased from $25,000 (under the first package) to $50,000, for a total maximum payment of $100,000. The first payment (capped at $50,000) will be made after 28th April and the second payment (also capped at $50,000) after 28 July 2020. Per the factsheet, these credits will automatically apply, however, we suggest that you lodge your activity statements as soon as practicable, where this results in a refund, we can contact the ATO and request that this be refunded to you as soon as possible.
- Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $20,000, up from $2000 in the first package. The payment will be available from 28 April 2020 and, as stated in the previous stimulus update, will be paid as a credit to the business upon lodgement of their activity statements. Notwithstanding the stated availability date of the payment being announced as 28 April 2020, we recommend that clients prepare and electronically lodge their relevant BAS/IAS as soon as possible from 01 April 2020. In the event that the lodgement places your business in a “credit” situation with the ATO, we can attempt to obtain a credit for you for that refunded amount, as soon as the credit appears in your ATO account. Whilst it’s a complete unknown whether such an application will see you obtain your credit any earlier than 28 April 2020, we consider it worth a try under the circumstances.
- The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
Supporting the flow of credit
- The Coronavirus SME Guarantee Scheme will provide support to small businesses. Under this Scheme, the Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital.
- The loans will be unsecured but used only for working capital purposes and will apply to loans granted within six months from April 1, 2020. New and existing bank customers will be able to apply for loans up to $250,000 over three years.
- Starting in early April, this will apply to eligible loans for businesses with annual turnovers of up to $50 million and will include an upfront six month freeze on repayments.
Temporary relief for financially distressed businesses
- Temporary increase to the threshold at which a creditor can take action to initiate insolvency or bankruptcy (from $2,000 to $20,000)
- Giving companies and individuals six months instead of 21 days to respond to a statutory demand.
- Relief for directors for personal liability when the company is trading while insolvent.
- The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
- This relief will be provided over the next six months.
- ASIC has also released guidance on AGMs and reporting for listed entities.
Payments for households
- A further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the coronavirus supplement. This second payment will be made automatically from 13 July 2020.
Increased income support
- Temporary eligibility expansion to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
- The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.
Early release of superannuation
- From April, individuals will be able to access their superannuation, capped at $10,000 for the 2020 financial year and a further $10,000 for the 2021 financial year. The withdrawals will be tax-free and will be made available to those eligible for the coronavirus supplement as well as sole traders who have seen that hours of work, or income fall, 20% of more as a result of the coronavirus.
- Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months.
Superannuation minimum drawdown rates and social security deeming rates
- Temporary reduction to superannuation minimum drawdown requirements for account based pensions and similar products by 50 per cent for 2019-20 and 2020-21.
- Reduction of the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA. As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.
Please keep in mind that this plan was announced very recently. It is possible that future updates are coming. In the meantime, please contact our friendly team for further clarification.
For a specific breakdown of how this impacts your business, contact your relevant partner.
If you require any assistance in respect of any of the relief measures, please don’t hesitate to reach out to us.
(07) 4951 9333
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admin@concar.com.au
12 Gregory Street, Mackay QLD 4740
PO Box 1396, Mackay QLD 4740
