$66.1 bn Stimulus Package: What You Need To Know
Targeted support for income, changes to superannuation rules, cash flow for small businesses, and relaxation of insolvency laws are key features of the Government's second stimulus package.
The Federal Government has announced a second stimulus package worth $66.1 billion, designed to keep cash in small business, support casual workers to deal with the impact of lost work, and to help Australians access super to mitigate the impact to Australian households.
The new measures include:
- A boost to income support payments
- Targeted changes to superannuation rules
- Cash flow support of up to $100,000 for small business employers
- Relaxation of corporate insolvency laws.
The stimulus measures are not yet legislated. Parliament will reconvene on Monday 23 March.
The Prime Minister has warned that there are no "quick solutions" and that business should prepare for 6 months of disruption.
So what do these measures look like for you, your family, and your business.
Tax-free credits up to $100,000 for small business and not-for-profit employers.
An increase in the previously announced initial tax-free credits for employers to a maximum of $50,000. In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020.
Solvency safety net
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.
Access to working capital
Introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.
Sole traders and self-employed eligible for Jobseeker payment
The eligibility criteria to access income support relaxed for the self-employed and sole traders.
Temporary relief from some Corporations Act requirements
For more information about the relaxation of the rules, click here.
Early release of superannuation
Individuals in financial distress 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.
Temporary reduction in minimum superannuation draw down rates
Superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.
Deeming rates reduced
From 1 May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.
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.
- Waiting periods and assets tests temporarily waived.
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.
The Government has flagged that additional stimulus packages will be required.
The coronavirus and impacts to the economy, business, and individuals is constantly evolving. Please reach out to your accountant for support with any of these measures for guidance on eligibility, access, or payment timelines.
Our team can be reached on 02 9957 4033 or via email to your Client Manager or our general inbox at firstname.lastname@example.org.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.