The Government’s second stimulus package of $66.1 billion aims to boost income support payments, introduce targeted changes to the superannuation rules, provide cash flow support of up to $100,000 for small business employers and relax corporate insolvency laws.
Note: The stimulus measures proposed, are not yet legislated and the government has agreed that additional stimulus packages will be required; so we await further announcements.
For business in summary:
Tax-free payments up to $100,000 for small business and not-for-profit employers.
From: 28 April 2020
Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million. The measure will be based on prior year turnover and we are waiting for the finer details in the yet to be released legislation.An increase in the previously announced initial tax-free payments for employers to a maximum of $50,000. In addition to this, an additional round of payments will be made up to a maximum of $50,000. The cash flow support will be provided in two phases in the form of a credit in the activity statement system.
More details: Cash flow assistance for businessesSolvency safety net.
It will be more important than ever for a business to stay on top of their debtors.
A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.These include a temporary 6-month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000 and an increase in the time companies have to respond from 21 days to 6 months.
Directors also are provided with temporary relief from personal liability for trading while insolvent for 6 months.
More details: Temporary relief for financially distressed businessesAccess to working capital.
The Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new loans to SMEs up to $20 billion. These loans are new short-term unsecured loans to SMEs. They are subject to lenders’ credit assessment processes and the following conditions: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.
Sole traders and self-employed eligible for Jobseeker payment.
The eligibility criteria to access income support relaxed for the self-employed and sole traders.
More details:Temporary relief from some 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.
For individuals in summary:
Early release of superannuation.
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. The withdrawals will be tax-free and will not affect Centrelink or Veterans’ Affairs payments.More details: Early access to superannuation
Temporary reduction in minimum superannuation drawdown rates.
Superannuation minimum drawdown requirements for account-based pensions and similar products will be reduced by 50% in 2019-20 and 2020-21.More details: Providing support for retirees
Deeming rates reduced.
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 of 0.25%.More details: Providing support for retirees
Supplements increased, access extended and eased for 6 months from 27 April 2020.
A temporary coronavirus supplement of $550 will be paid to existing income support recipients (people will receive their normal payment plus $550 each fortnight for 6 months).A second one-off stimulus payment of $750 will be paid automatically from 13 June 2020 to certain income support recipients (in addition to the payment made from 31 March 2020).
Eligibility for access to income support eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation
More details: Income support for individuals.
Waiting periods and assets tests temporarily waived.
Note: The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.
Bankruptcy safety net.
Temporary 6-month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor from $5,000 to $20,000.
More information at your fingertips:
It’s important to contact us so we can ensure your business is using this crisis as an opportunity to check in on your business health.
Let us help you work through ways to maximise offsets and minimise tax implications for your business.
After all, there is strength in numbers.
Source: Economic Response to the Coronavirus, Australian Treasury