The government announced a second $66.1bn stimulus package on the 22nd March 2020 to assist individuals and businesses impacted by the COVID-19 virus. This stimulus package is an extension of the original package announced on the 12th March 2020 which is detailed in my previous blog.
The government has warned that businesses should prepare for at least 6 months of disruption.
In summary, the following benefit's have been announced:
Tax-free payments up to $100,000 for small business and not-for profit employers
The government has increased the tax-free cash payment previously announced to a total maximum of $50,000 with a second round of payments up to a maximum of $50,000 accessible from July 2020.
The first phase will be issued as a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees (on a quarterly basis) and will be triggered once an activity statement has been lodged. The second phase will see employers receiving another series of credits, equal to the credits that were received in the first phase.
The payments will only be available to active eligible employers established prior to 12 March 2020 (charities and not-for-profits excluded from this criteria).
Solvency safety net
The current threshold at which creditors can issue a statutory demand on a company will increase from $2,000 to $20,000 temporarily for 6 months. There will also be an increase in the time companies have to respond to the demand from 21 days to 6 months. Directors will also have temporary relief from personal liability whilst trading insolvent for 6 months.
Access to working capital
An SME guarantee scheme that protects financial institutions by guaranteeing 50% of new loans to SME’s. Therefore making access to a new loan easier for SME’s.
Sole traders and self-employed eligible for Jobseeker payment
The government is relaxing the eligibility criteria for accessing income support for the self-employed and sole traders.
Temporary relief from some Corporations Act requirements
Wage subsidy up to 50% of an apprentice or trainee wage
If you employ an apprentice or trainee you may be able to apply for a subsidy of 50% of their wage paid between 1 January 2020 and 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter) if they satisfy the eligibility criteria.
Household stimulus payments to social welfare recipients
A coronavirus supplement of $550 will be paid for 6 months from 27 April 2020 to existing income support recipients. In addition, two one-off cash payments of $750 will be made to pensioners, social security, veteran and other income support recipients. The eligibility for access to these support payments will also be extended to income sole traders and the self-employed as well as those caring for someone infected or in isolation.
Changes to Superannuation
There are several changes made on the superannuation front. Firstly, individuals in financial distress may be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21 tax free. This is subject to meeting certain eligibility criteria.
In addition to this, there will be a temporary reduction in minimum superannuation draw down rates.
There is currently a great deal of economic uncertainty and government restrictions that will continue to change the way we all do business both now and in the future. We recommend planning and preparing your business for all possible outcomes.
If you do require further explanation and assistance on how the above measures will affect you, please contact us on 0422 238 060 or on rosa@murrayaccountingandtax.com.au.
The following links provide more detailed information on the above stimulus package measures: