The economic impact of the COVID-19 pandemic seems to get more and more serious with every passing day. With everyone more or less practicing social distancing if not outright self-quarantining, many businesses and casual workers are struggling in the current economic environment.
It is little wonder then the government has deemed it necessary to release a second round of wide-ranging stimulus designed to keep people employed, reduce the regulatory burden on businesses, and provide financial support for businesses and households.
To further support businesses and workers ride out the COVID-19 pandemic and minimise the impact on the overall economy, the government has released a second round of stimulus in addition to the initial $17.6bn package. This $66.1bn package is not only aimed at businesses but also includes support for households (including casuals, sole-traders, retirees and those on income support).
“We know this will be temporary. That’s why all our actions are geared towards building a bridge, keeping more people in work, enhancing the safety net for those that aren’t and keeping businesses alive so they can get to the other side and stand up their workforce as quickly as possible.” – PM Scott Morrison
Cash payments to small to medium employers
Tax-free payments of up to $100,000 (minimum payment of $20,000) will be available for eligible small and medium entities (SME), and not-for-profits with an aggregated annual turnover under $50m that employ people. Employers will receive a payment equal to 100% of their salary and wages withheld subject to monetary limits. It will be available to employers from 28 April 2020.
Temporary relief for directors of distressed businesses
The threshold at which creditors can issue a statutory demand on a company will be temporarily increased from $2,000 to $20,000, and the time companies have to respond to those statutory demands will be extended from 21 days to 6 months. Directors will also be provided temporary relief from any personal liability for trading while insolvent.
SME loan guarantee scheme
A “Coronavirus SME Guarantee Scheme” will be established to support SMEs get access to working capital. Under the scheme, the government will guarantee 50% of new loans issued by eligible lenders. The scheme is able to support $40bn worth of lending to SMEs.
Increase in job-seeker supplement
A new temporary Coronavirus supplement of $550 per fortnight will be implemented. Eligible recipients will receive the full amount of $550 on top of their payment each fortnight, effectively doubling the current payment. The supplement will be paid for the next 6 months to existing and new recipients of the various Centrelink payments including the JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Further $750 for pensioners
In addition to the initial $750 stimulus payment previously announced, a further $750 payment to social security and veteran income support recipients and eligible concession card holders will be provided. This does not apply to those receiving the temporary Coronavirus supplement (above). Payments will be made automatically from 13 July 2020.
Superannuation early release allowed
Individuals in financial distress as a result of the pandemic will be allowed to access a tax-free payment of up to $10,000 from their superannuation in 2019-20 and a further $10,000 in 2020-21. Eligible individuals will need to apply online to the ATO through myGov before 1 July 2020 to receive the payment for the 2019-20 income year. The amounts withdrawn will not affect Centrelink payments.
Pension drawdown rate and social security deeming rate both reduced
The annual superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% for 2019-20 and 2020-21. In addition to the deeming rates changes made in the first stimulus package, the government will further reduce rates by another 0.25%. From 1 May 2020, the lower deeming rate will be 0.25% and the upper deeming rate will be 2.25%
What to do now?
If you or your business would like to help during this difficult and uncertain time, Hunter Partners can assist with working out what support payments you are entitled to and can apply for. If you would like to apply for superannuation early release or to work out how the pension drawdown rate and social security deeming rate changes affect you, call Hunter Partners today on (07) 4723-1223.
Hunter Partners are Accountants, Tax Agents and Financial Planners. We can assist you with all aspect of your accounting, tax and financial planning requirements, call Hunter Partners on (07) 4723-1223.