The Australian Government has announced a second stimulus package to further support individuals, households and businesses, through the economic impact of COVID-19.
The first stimulus was announced on 12 March 2020, and a second stimulus package was announced on 22 March 2020 as a response to the further deteriorating economy, with the full economic effects of the virus yet to be known.
Both the first and second stimulus measures passed in Parliament without objection, late on Monday 23rd March 2020.
Here is a summary of some of the new legislation.
Temporary reduction in minimum pension rates
Retirees with account-based pensions can reduce the minimum amount they are required to withdraw from their super as per the table below:
|Age||Default minimum pension rate (%)||50% reduced rates for the 2019-20 and 2020-21 income years (%)|
Reduction in deeming rates
Effective from 1 May 2020, the upper deeming rate will reduce from 3% to 2.25% and the lower deeming rate will reduce from 1% to 0.25%.
This means income support recipients and those receiving an age pension might gain an increase to their payments depending on the amount of their income and/or assets.
Economic Support Payment
Two separate $750 payments will be made by the Government to social security recipients and eligible concession card holders. These include the Age Pension, Disability Support Pension, Carer Payment, ABSTUDY, Austudy, Newstart, Pensioner Concession Card, Commonwealth Seniors Health Care Card or a Veteran Gold Card.
The first payment be paid from 31 March 2020 and the second payment will begin from 13 July 2020.
A supplement of $550 per fortnight begins on 27 April for six months if you receive a Parenting Payment, Partner or Widow Allowance, Sickness Allowance, JobSeeker payment, Youth Allowance, Austudy, ABSTUDY, Farm Household Allowance or Special Benefit.
Temporary early access to super
Eligible individuals will be able to access up to $10,000 of their super before 1 July 2020 and up to an additional $10,000 after 1 July 2020. No tax needs to be paid on amounts released and the money they withdraw will not affect Centrelink payments.
To be eligible for an early release, one or more of the following must apply to you:
- You are unemployed;
- You are eligible to receive a job seeker or parenting payment, special benefit or farm allowance;
- On or after 1 January 2020 you were made redundant or your working hours were reduced by 20% or more, or you are a sole trader and your business was suspended or your turnover was reduced by 20% or more.
Applications for early access to super begins mid-April 2020.
Cashflow support for small to medium-sized businesses
The Government is providing cashflow support to small and medium-sized business entities with annual turnover under $50 million. This includes not-for-profits and charities.
The payment is tax free subsidy capped at $100,000. My understanding is:
|Payment 1 is a credit of up to 100% of your March PAYG payment||Paid within 14 days of lodging March BAS|
|Payment 2 is a credit of up to 100% of your June PAYG payment||Paid within 14 days of lodging June BAS|
|Payment 3 is a credit of up to 50% of the combined March & June payment||Paid within 14 days of lodging June BAS|
|Payment 4 is a credit of up to 50% of the combined March & June payment||Paid within 14 days of lodging September BAS|
Minimum payment for eligible business is $20,000. Maximum for all 4 payments combined is $100,000.
This payment is not available to sole traders unless they employ other people. GST is not impacted by this measure, the above payments relate to PAYG withholding tax only.
Relief for financially distressed businesses
To assist with financial stress relief, the Government is also temporarily increasing 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.
In addition, it is also increasing 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.
Apprentice and trainee support
Small businesses with less than 20 full time employees who retain an apprentice or trainee can apply for a wage subsidy of 50% of the wages paid to the apprentice / trainee during the 9 months from 1 January 2020 to 30 September 2020.
To qualify, the apprentice or trainee must have been in training with the eligible small business at 1 March 2020. A cap of $21,000 applies to the amount of subsidy that can be provided, per eligible apprentice / trainee ($7,000 per quarter).
Expanding instant asset write-off
The Government is temporarily expanding the instant asset write-off for assets first used (or installed ready for use) from 12 March 2020 to 30 June 2020 by increasing the threshold from $30,000 to $150,000. This means assets purchased (e.g. a company car) of up to $150,000 can be claimed as a tax deduction in the current financial year.
The instant asset write-off can apply to both new and second hand eligible depreciating assets. Further information about the instant asset write-off can be found on the ATO website.
The government has introduced a number of measures in a short period of time. As always, you should seek tax advice before making a tax-related decision.
If you have any questions or concerns, please get in touch.
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Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online.