What is available to you?
On Sunday 22 March 2020 the Government released a second, far reaching $66.1 billion stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws.
These measures are not yet legislated and Parliament will reconvene on Monday 23 March.
What is available for Businesses?
- Tax-free payments up to $100,000 for small business and not-for-profit employers. This is an increase to the previously announced initial tax-free payments for employers to a maximum of $50,000 (up from $25,000). In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020. So increasing the package from $25,000 to $100,000.
- Solvency protection – temporary 6 month period where the threshold is increased at which creditors are able to issue a statutory demand on a company. Was $2,000 increased to $20,000. Also increases in the time companies have to respond from 21 days to 6 months. For Directors they will be provided with temporary relief from personal liability where trading while insolvent for up to 6 months.
- Access to working capital – Introduction of a Coronavirus SME guarantee scheme by 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
What is available for Individuals?
- Access to Early release of superannuation – individuals who are in financial distress are able to access up to $10,000 of their superannuation in 2019-20, then a further $10,000 in 2020-21. These withdrawals will be tax-free and won’t affect Centrelink or Veterans’ Affairs payments.
- Temporary reduction in minimum superannuation draw down rates – superannuation minimum draw-down 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 also announced that a further stimulus packages will be required to help Small Businesses get through this period.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.