media

Updated Stimulus Package

By Tyler J. Wise|March 23rd, 2020|Podcast|

Video

Audio

Last week, we discussed the initial government stimulus package and what that would look like. If you recall it was broadly broken down into four areas, increasing business investment, think immediate asset write-off, cashflow assistance, think activity statement refunds, household support, think $750 cash payments, and support for hard hit areas, being tourism, education and agriculture areas.

These initial measures were slated to hit parliament this week, and in fact were just passed tonight without any material changes to the information we will discuss. Expect these stimulus packaged details to roll out as law very soon. It really is just the formalities left now. 

One change between the first and second stimulus package we noticed straight away was in regard to the cashflow assistance, which was open for exploitation however, has been rectified with the inclusion of the following into the legislation, in regards to qualification:

the entity (or an associate or agent of an entity) has not engaged in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the first cash flow boost or increase the entitlement of the entity to the first cash flow boost. 

If you suddenly pay yourself a wage when you never have, or an exorbitant one, compared to prior payments you will not qualify for this assistance. 

The most significant change to the stimulus package, that will impact small business was the cashflow assistance measures. Previously, the Government was to refund 50% of the PAYG withheld from wages between January and June 2020, with a maximum of $25,000, and a minimum of $2,000. This has been drastically increased to now be 100% of the withholdings over this period, with a minimum payment of $10,000 and maximum of $50,000. This will also now be available to businesses who operate in the not-for profit sector. Furthermore an additional payment equal to this amount will also be available from July to October 2020, taking the total available payments to $100,000 (minimum $20,000). Once you lodge your business activity statement, the government has the necessary data to complete the necessary payment. Stay up to date with your lodgements and you will qualify.

An entity will not be eligible for these cashflow assistance payments, if the entity was not established and registered prior to the first announcement date, being March 12th.
To qualify your business must turnover less than $500 million per annum

There have been no further proposed adjustments to the immediate asset write off that will increase to $150k, and be effective until 30th June 2020 as well as the 15 month asset incentive (depreciation) plan that will run through to next June, 2021. The apprentice and trainee wage subsidy also remains unchanged.

One change that was not present on the previous announcement is that the government is allowing early access to superannuation, on an application by application basis, which can be done online on myGov, with amounts not to exceed $10,000. This will be allowed once for this financial year, and once for the next financial year, being $20,000 in total. The following conditions need to applybyou need to be:
▪️ unemployed; 
▪️ eligible for a job seeker payment; or 
▪️ on or after 1 January 2020: – made redundant; – reduction in working hours by 20% or more; or 
▪️ if a sole trader — the business was suspended or reduction in turnover of 20% or more.

If you are in pension phase in your superannuation fund, the minimum pension has been reduced form 4% to 2%.

Also, the previously announced $750 payment for income support recipients and concession card holders will now be two separate $750 payments: one from 31 March 2020 and the other from 13 July 2020. These payments are expected to benefit around 5 million Australians with about half being pensioners.

There will also be a new time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight from 27 April for the next 6 months. This will be paid to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

New and existing income support recipients will also have: 
▪️ expanded access 
▪️ reduced means testing 
▪️ reduced waiting times 
▪️ claims accelerated 
▪️ the application process streamlined

Continuing on with support payments on top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.

As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.

The Government will establish the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help them get them through the impact of the coronavirus. 

The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs. 

The Scheme will complement the announcement the Government has made to cut red-tape to allow SMEs to get access to credit faster. It also complements announcements made by Australian banks to support small businesses with their existing loans.

It further supports the Reserve Bank of Australia’s announcement of a $90 billion term funding facility for ns ADIs, that will reduce the cost of lending, with particular incentives to lend to small and medium enterprises.

 

<< Back to Media