COVID-1 9 STIMULUS PACKAGE 2 - FAMILITES AND SMALL BUSINESS

The Government yesterday released a second, far reaching $66.1 bn stimulus package to support the economy for the impact of the coronavirus.

See below what you will get in simple words:

The stimulus measures are not yet legislated. We are still waiting for the finer details:

Small Business:

Tax Free Payments:

·         Small Business employing staff will get two payments of minimum $10000 and Maximum $50000 based on the PAYG TAX reported in the March BAS and June BAS. The minimum amount of $10k is payable to those who have staff, but they are not deducting any tax or the tax deducted is not more than $10k for the March Quarter.

·         The first payment will be released after the March BAS is lodged but the amount payable on the BAS will be first deducted from the Incentive Amount.

·         Second Payment will be released after the June BAS and September BAS are lodged but the incentive amount payable over these periods will be same as for the march quarter and again reduced by the BAS liability.

For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

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 lodgements. The minimum $10,000 payment will be applied to the first lodgement.

Unsecured Loans to Small Business:

SMEs with a turnover of up to $50 million will be eligible to receive these loans.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

·      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.

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

Individuals

Early release of superannuation

From mid-April, individuals in financial distress will 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.

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:

o   you were made redundant; or

o   your working hours were reduced by 20% or more; or

o   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.

Time limited fortnightly $550 ‘coronavirus supplement’

For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.

The payment will be made to those receiving:

·      Jobseeker payment (and those transitioning to the jobseeker payment)

·      Youth allowance jobseeker

·      Parenting payment

·      Farm household allowance

·      Special benefits recipients

In addition, eligibility to income support payments will be expanded to:

·      Permanent employees who are stood down or lose their job

·      Casual workers

·      Sole traders

·      The self-employed

·      Contract workers who meet the income test

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.

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.

Second $750 payment to households

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia . 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.

·      Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;

·      Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.

The payments will be made automatically to those that meet the criteria.