COVID-19 ECONOMIC STIMULUS PACKAGE
In response to the Coronavirus the Australian Government has released a stimulus package to combat the economic downturn due to the Coronavirus pandemic.
The government has split this into the following key areas:
Income support for individuals and households
Cash flow assistance for businesses
Providing Support for retirees
Assistance for severely affected regions
1. Income Support for Individuals
From the 27th of April 2020, the government will implement a time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to existing and new recipients and will include the following eligible categories:
Jobseeker Payment (formally Newstart Allowance)
Youth Allowance Jobseeker
Parenting Payment (partnered and single)
Farm Household Allowance
Special Benefit recipients
There will also be two separate payments of $750.00 tax-free payments to certain social security, veteran and eligible concession card holders. The first payment will be available from the 12th of March 2020 to 13th of April 2020 (inclusive). If you lodge a claim during this period and you are eligible, you will still receive the payment. The Second payment will be on the 10th of July 2020, however, those receiving the $550 fortnightly payments).
There also will be a new category of Jobseeker Payment and Youth Allowance Jobseeker that will be available for eligible individuals who financially impacted by the Coronavirus. It has been indicated by the Government that this will include:
Permanent employees that are stood down or lose employment
Sole Traders and self employed
Casual workers
Contract workers who meet the income tests
Asset testing for the jobseeker payment, the youth allowance jobseeker and the parenting payment, will be waived for the period of the coronavirus supplement.
There will also be an early access to superannuation under the ‘compassionate grounds’ conditions of release. This will be subject to the individual satisfying one or more of the following conditions to be eligible to access your super, these include:
Unemployed due to coronavirus
The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (single and partner payments), Special Benefit or Farm Household Allowance
On or after 1st of January 2020:
The individual was made redundant; or
The individual’s working hours were reduced by at least 20%; or
If the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%
If you meet one or more of these conditions you can access a lump sum up to $10,000.00 before 1st of July 2020 and another lump sum up to $10,000 after 1st of July 2020 (effectively across two financial years).
You will be able to apply directly to the ATO through the MyGov website (www.my.gov.au) from the mid-April 2020. No application can be made after the end of the period of six months from the ay on which the new compassionate ground of release commences.
2. Cash flow assistance for businesses
This is purely targeting employers and helping with cash flow to keep employees on. This will be provided by:
Payments that are based on the amount of PAYG withheld from salary and wages paid to employees.
Wage subsidies paid to eligible employers who retain an apprentice or trainee.
Increasing the instant asset write off.
Payments based on the amount of PAYG withheld from salary and wages will apply to following businesses:
Small to medium sized businesses and not-for-profit entities, with an aggregated turnover of less than $50 million (based on their prior year turnover) that employ people.
These businesses will be eligible for a maximum payment of $100,000 and minimum payment of $20,000 and be processed by the ATO through quarterly and monthly activity statements.
Theses payments will be broken down into two stages:
Stage 1
This will start from the next lodgement date (28th of April 2020)
Businesses that withhold PAYG tax from salary and wages will receive a tax-free payment equal to 100% of the amount withheld (maximum of $50,000).
Business that withhold PAYG tax from salary wages and are not required to withhold tax will receive a minimum tax-free payment of $10,000. This will be applied to an entities first activity statement lodgement from 28th of April.
Quarterly lodgers will receive this for the quarters ending March 2020 and June 2020
Monthly lodgers will receive this for the March 2020, April 2020, May 2020 and June 2020 lodgement periods.
Stage 2
This is designed for employers that continue to be active.
An additional payment will be available for the June 2020 to October 2020 period.
Quarterly lodgers will receive an additional payment being equal to 50% of their total initial (stage 1) payment, with a maximum payment of $50,000.
Monthly lodgers will receive an additional payment for July 2020, August 2020 and September 2020. Each payment will be equal to a quarter of their total initial (stage 1) payment, with a maximum payment of $50,000.
The ATO will automatically calculate and process the additional tax-free payment. Please note that this will only be available to employers registered for PAYG withholding tax before 12 of March 2020.
A wage subsidy for apprentices and trainees will be put in place. Employers with less than 20 full-time employees, that retain their apprentice or trainee as at the 1st of March, will be eligible for a Government funded wage subsidies equal to 50% of the apprentice’s or trainee’s wage. The maximum wage subsidy will be $21,000 per eligible employee.
Businesses can register for this from early April 2020, with final claims to be lodged by 31st of December 2020. This will be undertaken by the Australian Apprenticeship Support Network (ASSN) provider.
The government has also increased the instant asset write off from $30,000 to $150,000. This will apply to businesses with an aggregated turn over of less than $500 million until the 30th of June.
This will be available for Small Business Entities (SBEs) and Medium Business Entities (MBEs). SBEs will determined as having a turnover less than $10 million and MBE’s will be determined as having a turnover greater than $10 million and less than $500 million.
For Small Business Entities (SBEs) this will apply to both new and second-hand assets first used or installed ready for use in the period beginning on the 12th of March 2020 but before the 1st of July.
They will also extend this measure to assets from previous financial years that cost less than $150,000 and were acquired at or after 7:30pm (legal time in the ACT) on 12th of May 2015. For SBEs whose general small business pool (excluding current year depreciation) that have a balance less than $150,000 at the end of the 2020 financial year, can claim the entire balance as a deduction.
Medium Business Entities (MBEs) can immediately deduct the cost of an asset in an income year if the asset has a cost of less than $150,000and it was first acquired in the period at 7:30pm (legal time in the ACT) on the 2nd of April 2019 and ending on the 30th of June 2020. With the asset been used or installed ready for use for a taxable purpose in the period beginning on the 12th of March 2020 and ending 30th of June 2020.
3. Providing Support for retirees
The Government will be introducing temporary reductions to the minimum drawdown amounts for account-based pensions for superannuation. This will also apply to similar products by 50% for the 2020 and 2021 income years.
From 1st of May 2020 the government will be reducing the upper and lower social security deeming rates by a 0.75 percentage points. This will result in the upper deeming rate being reduced from 3% to 2.25% and the lower deeming rate being reduced from 1% to 0.25%. This will reduce the criteria for applying for the aged pension in relation to an individual’s earnings from financial investments.
4. Assistance for severely affected regions
They government has set aside $1billion to support regions, communities and industries that have been disproportionately affected by the economic impacts of the coronavirus. This will include those industries that are heavily reliant on industries such as tourism, agriculture and education.
At this stage the Government will disburse these funds through the existing or newly established Government programs or initiatives. The Deputy Prime Minister will work with affected industries and communities to develop recovery plans and measures.
For anything further please feel free to contact our offices;
Jindabyne - jindabyne@partell.com - 6456 1224
Sydney - tax@partell.com - 9958 7444
