The Federal Government announced a second, far reaching stimulus package to help fight the Coronavirus and its impact on Australia. The aim is to add $189 Billion into the economy to reduce the impact of the challenges arising from current Corona Virus pandemic.
A. Corona Virus Supplement:
Permanent Employees, The Self Employed, Sole Traders, Contract Workers (who meet the income test), Casuals and Carers (of someone affected by Corona Virus)
You could receive a supplement of $550 a fortnight for the next six months, applying from 27 April 2020. To qualify, you need to be receiving (or be eligible to receive) an eligible income support payment like Youth Allowance, Job Seeker, Parenting Payment, Farm household allowance, Special Benefits recipients etc.
- You should be eligible for the full supplement If you are making less than $1075 a fortnight.
- 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.
The qualifying criteria will be lowered by a further 0.25%. This will allow more people to have access to an income support payment such as the age pension or obtain further fortnightly funds due to these new criteria.
C. Superannuation (Early Release)
From mid-April, individuals in distress can access of up to $10,000 of your super in the 2020 year and another $10,000 in the 2021. 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.
Also a temporary reduction in the minimum drawdown needs by 50% for account-based pensions. This will apply for the 2020 and 2021 tax years. For example, if you are under 65 and are required to draw down 4% of the pension balance at year start, you will now only need to draw down 2%.
D. Second Corona Supplement: $750 One Off Payment
For those who don’t qualify for the Coronavirus supplement, a $750 stimulus payment (from 31 March to 14 April) and, another $750 will be paid automatically from July 13 to certain income support recipients (Including Age Pension, Social Security, Veteran and eligible Concession Card Holders). 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.
E. Business Support (who employ staff)
From 28th July 2020, Small and Medium Business entity employers and Not-For-Profit entities with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 (instead of the maximum $25,000 announced last week, with the minimum being raised from $2,000 to $20,000). The cash flow support measures will be provided in the form of a credit in the Activity Statement system.
The support will be provided in two phases:
Phase 1: Applying Eligible employers collect 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.
Phase 2: Eligible employers collect a credit, equal to the credits that were collected under Phase 1. For example, if a business only collects $28,000 of credits in Phase 1 it will only receive a further $28,000 of credits in Phase 2.
- The credits are automatic and calculated by the ATO
- Employers will need to lodge an activity statement to generate the entitlement
- If the credit leaves a refund position, this amount will be refunded within 14 days by the ATO
- If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.
- Additional credits will be distributed over the statement periods, depending on whether the lodgment is quarterly or monthly.
- Businesses that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.
- Business that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September lodgments. The minimum $10,000 payment will be applied to the first lodgement.
- Eligibility for the measure will be based on prior year turnover.
Government Guaranteed Loans
Government guarantee of up to $20 billion to support $40 billion in small business loans. Processing to occur through banks and mortgage brokers as per usual.
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.
In this unprecedented climate, we know it’s impossible to answer every possible scenario. And when the Government introduces more updates, we know there will be even more questions that will need urgent, professional and qualified answers. So please familiarise yourself with ITP Qld, read this blog, share it with loved ones and lean on us to help. We’re here, and should the circumstances arise, we will be working remotely with virtual offices and will be contactable via chat, phone or email.