The Federal Government has announced stage 2 of its economic plan to provide financial assistance to Australians.
Boosting cash flow assistance
- Cash flow assistance
► The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000.
► Under the enhanced scheme Employers will receive a payment equal to 100 percent of their salary and wages withheld with the maximum payment of $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
► An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received.
This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating.
► The cash flow boost provides a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.
- Eligibility
Small and medium-sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.
► The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.
► Eligible employers that withhold tax to the ATO on their employees’ salaries and wages will receive a payment equal to 100 percent of the amount withheld, up to a maximum payment of $50,000.
► Eligible employers that pay salaries and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
► The payments will only be available to active eligible employers established prior to 12 March 2020.
However, charities that are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the Coronavirus pandemic.
- Additional payment
To qualify for the additional payment, the entity must continue to be active.
► For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).
► For quarterly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).
- Timing
The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements.
Where this places the entity in a refund position, the ATO will deliver the refund within 14 days and the payment will be available from 28 April 2020.
Financial support for businesses
- Establishing the Coronavirus SME Guarantee Scheme which will support small and medium enterprises (SMEs) to get access to working capital to help get them through the impact of the COVID-19 – Government will guarantee 50% of new loans issued by eligible lenders to SMEs.
- Up to $715 million in support of the aviation industry.
Temporary relief for financially distressed businesses
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive;
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition
- Temporary relief for directors from any personal liability for trading while insolvent; and
- Providing temporary flexibility in the Corporations Act 2001to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
Income support for individuals
- The Government is temporarily expanding eligibility to income support payments and establishing a Coronavirus supplement to be paid at a rate of $550 per fortnight. These changes will apply for the next six months.
- The income support payment categories eligible to receive the Coronavirus supplement are:
► Jobseeker Payment (and all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension)
► Youth Allowance Jobseeker
► Parenting Payment (Partnered and Single)
► Farm Household Allowance
► Special Benefit recipient
- Expanded access
For the period of the Coronavirus supplement, Jobseeker Payment and Youth Allowance Jobseeker criteria will provide payment access for:
► permanent employees who are stood down or lose their employment;
► sole traders;
► the self-employed;
► casual workers; and
► contract workers who meet the income tests as a result of the economic downturn due to the Coronavirus.
This could also include a person required to care for someone who is affected by the Coronavirus.
- Reduced means testing
Asset testing for JobSeeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus supplement.
Income testing will still apply to the person’s other payments, consistent with current arrangements.
- Reduced waiting times
The one week Ordinary Waiting Period has already been waived.
People will not be permitted, and will need to declare that they are not, accessing employer entitlements (such as annual leave and/or sick leave) or Income Protection Insurance, at the same time as receiving Jobseeker Payment and Youth Allowance Jobseeker under these arrangements.
- Fast claim process
New applicants are encouraged to claim through on-line and mobile channels. If applicants do not have internet access, they can claim over the phone.
Temporary early release of Superannuation
- The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
- Eligibility
To apply for early release you must satisfy any one or more of 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 you were made redundant; or
► your working hours were reduced by 20 per cent or more; or
► if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
- How to apply
If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGovwebsite: www.my.gov.au.
You will need to certify that you meet the above eligibility criteria. After the ATO has processed your application, they will issue you with a determination. The ATO will also provide a copy of this determination to your superannuation fund, which will advise them to release your superannuation payment. Your fund will then make the payment to you, without you needing to apply to them directly.
However, to ensure you receive your payment as soon as possible, you should contact your fund to check that they have your correct details, including your current bank account details and proof of identity documents.
Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Further guidance will be available on the ATO website: www.ato.gov.au.
- Timing
You will be able to apply for early release of your superannuation from mid-April 2020.
Support for retirees
- The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 percent for the 2019-20 and 2020-21 income years.
- The reduction applies for the 2019-20 and 2020-21 income years.
| Age | Default minimum drawdown rates (%) | Reduced rates for 2019-20 and 2020-21 income years (%) |
| Under 65 | 4 | 2 |
| 65-74 | 5 | 2.5 |
| 75-79 | 6 | 3 |
| 80-84 | 7 | 3.5 |
| 85-89 | 9 | 4.5 |
| 90-94 | 11 | 5.5 |
| 95 or more | 14 | 7 |
- Both the upper and lower social security deeming rates is also reduced by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.