Australian Government COVID-19 Stimulus Package Summary

The COVID-19 stimulus package, which included both the first and second Coronavirus stimulus package announcements, has now been passed through parliament.

We have outlined the sections that we believe will be most relevant to you. We have tried to keep this as basic as possible to outline what measures have been included, what you are entitled to and when it is available. We urge everyone to follow us on Facebook as we will be posting more updates as they are announced that will be relevant to you.

SUPPORT MEASURES FOR BUSINESSES
If you have employees
Benefit:

  • $20,000 to $100,000

Who can receive this:

  • Small and medium-sized businesses, and not for-profits (NFPs) (turnover under $50 million).

Eligibility to access this:

  • You must be a Small to medium-sized businesses, or a not for-profit (NFP) that employs people.

How much are you entitled to:

  • Employers will receive a payment equal to 100% of the PAYG withheld (the tax you withhold from an employee’s wages) on the salary and wages they pay to their employees.

What do you need to do to get your entitlement:
If you lodge your Activity Statement reporting wages quarterly:

When you lodge your March 2020 quarter’s Activity statement the ATO will apply a credit equal to the amount of PAYG withheld for the quarter to the businesses Activity Statement account upon lodgement of your activity statements. Where this places your Activity Statement account into credit, a refund will be delivered by the ATO. The proposed timeframe is within 14 days.

  • The same scenario will apply when you lodge your June 2020 quarter’s Activity Statement.

The amount of the credit available is capped at $50,000 for the combined March 2020 and June 2020 quarters (if you withhold more than $50,000 from employee’s wages for the period 1 January 2020 – 30th June 2020 you will not receive any more). 

  • Additional payments will be applied by the ATO based on what you have withheld from employee’s wages for the period 1 January 2020 – 30th June 2020 capped at $50,000. These credits will be applied to your Activity Statement account as follows:

    • 50% of the tax withheld of the combined total reported on the March and June 2020 Activity Statements – the credit will be applied on 28th July 2020.

    • 50% of the tax withheld of the combined total reported on the March and June 2020 Activity Statements – the credit will be applied on 28th October 2020

If you lodge your Activity Statement reporting wages monthly:

  • When you lodge your March 2020 monthly Activity statement, the ATO will apply a credit equal to 3 x the amount of PAYG withheld for the month of March 2020 to the businesses Activity Statement account upon lodgement of your activity statements. Where this places your Activity Statement account into credit, a refund will be delivered by the ATO. The proposed timeframe is within 14 days.

  • When you lodge your April 2020 monthly Activity statement, the ATO will apply a credit equal to the amount of PAYG withheld for the quarter to the businesses Activity Statement account upon lodgement of your activity statements. Where this places the your Activity Statement account into credit a refund will be delivered by the ATO. The proposed timeframe is within 14 days.

  • The same scenario will apply when you lodge your May and June 2020 monthly Activity Statements.

The amount of the credit available is capped at $50,000 for the combined March, April, May and June 2020 months (if you withhold more than $50,000 from employee’s wages for the period 1 March 2020 – 30th June 2020 you will not receive any more). 

  • Additional payments will be applied by the ATO based on what you have withheld from employee’s wages for the period 1 January 2020 – 30th June 2020 capped at $50,000. These credits will be applied to the businesses Activity Statement account as follows: 

    • 25% of the tax withheld on the March 2020 – June 2020 Activity Statements – the credit will be applied on 21st July 2020

    • 25% of the tax withheld on the March 2020 – June 2020 Activity Statements – the credit will be applied on 21st August 2020

    • 25% of the tax withheld on the March 2020 – June 2020 Activity Statements – the credit will be applied on 21st September 2020

    • 25% of the tax withheld on the March 2020 – June 2020 Activity Statements – the credit will be applied on 21st October 2020

What if you pay employees but due to their income levels you are not required to withhold tax, or you withhold less than $10,000 for the period 1 January 2020 – 30 June 2020:

  • When you lodge your March 2020 quarter’s Activity statement, the ATO will apply a credit of $10,000 to the businesses Activity Statement account upon lodgement of your activity statement. Where this places your Activity Statement account into credit, a refund will be delivered by the ATO. The proposed timeframe is within 14 days.

  • Additional payments will be applied to your Activity Statement account as follows:

    • $5,000 – the credit will be applied on 28th July 2020

    • $5,000 – the credit will be applied on 28th October 2020

If you employ apprentices or trainees directly
Benefit:

  • ·          Up to $21,000 per eligible apprentice or trainee

Who can receive this:

  • Small businesses*

Eligibility to access this:

  • You must be a small business employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with your business as at 1 March 2020.

How much are you entitled to:

  • Up to 50% of an apprentices or trainees wages paid during the period 1 January 2020 – 30 September 2020. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

*Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy.

What do you need to do to get your entitlement:

  • You can register for the subsidy from early April 2020. Final claims for payments must be lodged by 31 December 2020.

  • Have an eligibility assessment undertaken by an Australian Apprenticeship Support Network (AASN) provider

If your business needs to purchase plant and equipment
The Instant Asset Write-off
Benefit:

  • Claim a tax deduction for depreciable assets purchased valued up to $150,000 for the 2019/20 financial year.

Who can receive this:

  • Businesses with an aggregated annual turnover of less than $500 million.

Eligibility to access this:

  • Be a business with an aggregated annual turnover of less than $500 million and purchase a depreciable asset up to $150,000. This also applies to new and second hand assets that are new to your business acquired and installed ready for use for the period 12th March, 2020 to 30 June, 2020.

How much are you entitled to:

  • You are entitled to claim a tax deduction

  • Please note the value of an instant deduction for an asset from 1 July 2020 is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.

WARNING - Please be mindful, all depreciable assets are able to be claimed as a tax deduction over their useful life. This measure merely speeds up the timing of the deduction you are able to claim.

What do you need to do to get your entitlement:

  • Lodge your 2019/20 Tax Return.

 

Backing Business Investment (BBI)
Benefit:

  • Claim a tax deduction of 50% of the cost of an eligible depreciable asset on installation plus still claim a deduction for depreciation for the balance of the cost of the asset.

Who can receive this:

  • Businesses with an aggregated turnover below $500 million.

Eligibility to access this:

  • Purchase and have installed ready for use a new asset that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (e.g. plant and equipment, machinery etc) between the period 12th March, 2020 – 30th June, 2021. Second hand items are not included under this measure. 

How much are you entitled to:

  • You are entitled to claim a tax deduction for 50% of the cost of the asset as well as depreciation as a deduction on the remaining balance in the year of purchase.

Who can receive this:

  • Businesses with an aggregated turnover below $500 million.

Eligibility to access this:

  • Purchase and have installed ready for use a new asset that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (e.g. plant and equipment, machinery etc) between the period 12th March, 2020 – 30th June, 2021. Second hand items are not included under this measure. 

How much are you entitled to:

  • You are entitled to claim a tax deduction for 50% of the cost of the asset as well as depreciation as a deduction on the remaining balance in the year of purchase.

 

Temporary relief for financially distressed businesses
What has changed:

  • If you trade as a company and you owe suppliers money, they will not be able to issue a statutory demand unless the amount you owe them is over $20,000 (this amount has been increased from $2,000 for 6 months). A statutory demand can potentially put a company into liquidation.  

  • If your business owes suppliers money, they will not be able to initiate bankruptcy proceedings unless the amount you owe them is over $20,000 (this amount has been increased from $2,000 for 6 months).

 WARNING – These measures work both ways. 

  • Directors of a company will have relief from personal liability if the company trades whilst insolvent (incurring debts without the ability to pay all debts as and when they become due and payable) for 6 months.  

SUPPORTING THE FLOW OF CREDIT
Coronavirus SME Guarantee Scheme
What does this mean and what’s available:

  • The Government will provide eligible lenders with a guarantee for loans.

Eligibility to access this:

  • Small to medium size entities with a turnover of up to $50 million will be eligible to receive these loans.

What are the terms:

  • The Government will provide a guarantee of 50% to SME lenders for new unsecured loans to be used for working capital.

  • Maximum total size of the loan is $250,000 per borrower.

  • The loan term will be up to three years, with no obligation for repayments for the initial six months

  • The loans will be in the form of unsecured finance, meaning you will not have to provide an asset as security for the loan.

  • Loans will be subject to lenders’ credit assessment processes

  • The Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed to minimise the interest impact (you will only pay interest as you drawdown on the finance facility).

WARNING – Interest rates will likely be higher as it is unsecured  

When is this available:

  • The proposed availability of the scheme is expected early April 2020 and will be available until 30 September, 2020.

 

Quick and efficient access to credit for small businesses
What does this mean:

  • The Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers.

How long will this be available:

  • This exemption is available for six months.

How can this assist you:

  • This measure applies to any credit for business purposes, including new credit, credit limit increases and credit variations and restructures. With the exemption from responsible lending obligations for lenders it is aimed to speed up the process in being able to access credit.

INCOME SUPPORT FOR INDIVIDUALS
The Coronavirus supplement
What does this mean:

  • The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.

Eligibility:

  • Anyone who is receiving payments for:

    • Jobseeker Payment (and all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension) – This will expand to include permanently employed stood down workers or those that have lost 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. Someone that has to care for someone affected by Coronavirus could also be eligible.

    • Youth Allowance Jobseeker – This will expand to include permanently employed stood down workers or those that have lost 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. Someone that has to care for someone affected by Coronavirus could also be eligible.

    • Students receiving Youth Allowance, Austudy and Abstudy payments

    • Parenting Payment (Partnered and Single)

    • Farm Household Allowance

    • Special Benefit recipients

Reduced means testing:

  • The Asset test for eligibility for JobSeeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus supplement however the income test will still apply.

Reduced wait time:

  • The one week ordinary waiting period has been waived.

Faster claim process:

  • To ensure timely access to payments, new applicants are encouraged to claim through on-line and mobile channels.

  • From April, 2020, Services Australia will allow new applicants to call to verify their identity to reduce the need to visit a Services Australia office.

  • To claim online, people who do not already deal with Services Australia will need to set up their myGov account, call to verify their identity, and get a link to their Centrelink online account.

  • Applicants for Jobseeker Payment and Youth Allowance Jobseeker will need to make an initial declaration about their identity, residency status, income and that they have been made redundant, or had their hours reduced (including to zero) as a result of the economic downturn due to Coronavirus. In the case of sole traders and the self-employed, applicants will make a declaration that their business has been suspended or had turnover reduced significantly.

 

Payments to support households
Benefit:

  • Two separate $750 Tax Free payments to social security, veteran and other income support recipients and eligible concession card holders.

  • The first payment will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.

  • The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.

  • Only one payment of $750 can be received in each round of payments, even if you qualify in each round of the payments in multiple ways.

Eligibility for the first payment:

  • You must be residing in Australia and receiving one of the following payments, or hold one of the following concession cards, at any time from 12 March 2020 to 13 April 2020, inclusive:

    • Age Pension

    • Disability Support Pension

    • Carer Payment

    • Wife Pension

    • Austudy

    • Bereavement Allowance

    • Newstart Allowance

    • JobSeeker Payment

    • Youth Allowance

    • Partner Allowance

    • Veteran Gold Card holders

    • Carer Allowance

    • Farm Household Allowance

    • Parenting Payment

    • ABSTUDY (Living Allowance)

    • Pensioner Concession Card (PCC) holders

    • Widow Allowance

    • Widow B Pension

    • Special Benefit

    • Sickness Allowance

    • Family Tax Benefit, including Double Orphan Pension

    • Commonwealth Seniors Health Card holders               

    • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment.         

    • DVA PCC holders; DVA Education Scheme recipients; Disability Pensioners at the temporary special rate; DVA Income support pensioners at $0 rate.

Eligibility for the second payment:

  • You must be residing in Australia and receiving one of the payments or holding one of the concession cards that were eligible for the first payment, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement. If you are receiving any of the following you will be eligible:

    • Age Pension

    • Disability Support Pension

    • Carer Payment

    • Wife Pension

    • Bereavement Allowance

    • Newstart Allowance

    • Widow B Pension

    • Youth Allowance

    • Veteran Gold Card holders

    • Carer Allowance

    • Commonwealth Seniors Health Card holders

    • Partner Allowance

    • Pensioner Concession Card (PCC) holders

    • Widow Allowance

    • Sickness Allowance

    • ABSTUDY (Living Allowance)

    • Family Tax Benefit, including Double Orphan Pension

    • Austudy        

    • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment.

    • DVA PCC holders; DVA Education Scheme recipients; Disability Pensioners at the temporary special rate; DVA Income support pensioners at $0 rate.            

When will you receive your payment:

  • The first payment will be paid 31st March, 2020.

  • The second payment will be paid 13th July, 2020.

Early access to superannuation
What does this mean:

  • You can access up to $10,000 of your superannuation before 1 July, 2020. You will also be able to access up to a further $10,000 from 1 July, 2020 for approximately three months.

Eligibility:

  • 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% or more.

How can you apply if you are eligible:

  • You can apply directly to the ATO through the myGov website: www.my.gov.au. You will need to certify that you meet the above eligibility criteria.

  • Please note, if you do access your superannuation under this measure, you will not need to pay tax on the amounts released and the money you withdraw will not affect Centrelink or Veterans’ Affairs payments.

  • We suggest you seek financial advice unique to your situation prior to taking advantage of this measure.

Providing support for retirees

  • The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for the 2019-20 and 2020-21 financial years.

  • The Government is also reducing both the upper and lower social security deeming rates by a further 0.25% points in addition to the 0.5% point reduction to both rates announced on 12 March, 2020.

Please contact our office if you need to discuss any of these items in further detail.

We would like to remind you all that we are here to help you and will continue to be throughout this challenging time.

Stay safe and look after each other.

Sources: https://treasury.gov.au/coronavirus

Regards,
The Team at Milanese & Co Accountants              

Milanese & Co Accountants