This morning, Prime Minister Scott Morrison and Treasurer Josh Frydenberg released another $66 billion in spending to support the Australian economy through the Coronavirus pandemic. This is in addition to the first economic stimulus announced by the government on 12 March 2020.

The Prime Minister said that we cannot prevent all the hardships and sacrifices that will follow in the months ahead and this second tranche of economic stimulus is focusing on those that are going to feel the first blows from this crisis. The Treasurer said we can expect the economic shock to be deeper, wider, and longer and this additional $66 billion will cushion the blow to households and support businesses.

SUPPORT FOR BUSINESSES

The Government is supporting businesses to manage cash flow challenges and retain employees. Some of the key business support measures announced today are:

Boosting Cash Flow for Employers

On 12 March 2020, the Government announced that it will make tax free payments to employers, with a minimum payment of $2,000 and a maximum payment of $25,000.  Today, the Government announced it will extend this measure as follows:

• In addition to businesses with aggregated annual turnover under $50 million, not-for-profit entities. including charities, with aggregated annual turnover under $50 million that employ workers will also be eligible;
• The payment, which was previously announced to be calculated based on 50% of PAYG withheld from salaries, will now be calculated based on 100% of PAYG withheld from salaries;
• The minimum payment will increase from $2,000 to $10,000 and the maximum payment will increase from $25,000 to $50,000;
• An additional payment will be made in the Jul – October 2020 period that is equal to the total payments received in the first period. This means that eligible entities will receive at least $20,000 up to a total of $100,000 from both payments.

The first tax free payments will be made as follows:

Activity Statement Lodgement Cycle
Quarterly Activity Statement Lodgers	You will receive 100% of the PAYG Withholding reported in your March 2020 and June 2020 BAS, up to a maximum of $50,000 (for both quarters); If your total PAYG withholding is less than $10,000 for both the March 2020 and June 2020 quarters, you will still receive the minimum $10,000 payment; The payments will be made as a credit towards the BAS liability upon lodging of the BAS. If this results in a refund position, payment of the refund will be made by the ATO within 14 days.
Monthly Activity Statement Lodgers	You will receive 300% of the PAYG Withholding reported (for the month of March 2020) in your March 2020 BAS; You will receive 100% of the PAYG Withholding reported (for the months of April, May, and June 2020) in your April, May, and June 2020 activity statements; The maximum amount to be paid will be $50,000; If your total PAYG withholding is less than $10,000 for the above period, you will still receive the minimum $10,000 payment; The payments will be made as a credit towards the activity statement liability upon lodging of the activity statement. If this results in a refund position, payment of the refund will be made by the ATO within 14 days.

 The second tax free payments will be made as follows:

Activity Statement Lodgement Cycle
Quarterly Activity Statement Lodgers	You will receive half of the total of the first payments received when lodging your June 2020 and September 2020 BAS i.e. half in the June BAS and half in the September BAS, up to a maximum of $50,000 (for both quarters); The payments will be made as a credit towards the BAS liability upon lodging of the BAS. If this results in a refund position, payment of the refund will be made by the ATO within 14 days.
Monthly Activity Statement Lodgers	You will receive 25% of the total of the first payments received, upon lodgement of your June 2020, July 2020, August 2020, and September 2020 activity statements i.e. 25% for each activity statement, up to a maximum of $50,000; The payments will be made as a credit towards the activity statement liability upon lodging of the activity statement. If this results in a refund position, payment of the refund will be made by the ATO within 14 days.

Example – Sarah’s Construction Business
Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS).
Under the Government’s changes, Sarah will be eligible to receive the payment on lodgment of her BAS. Sarah’s business receives:

• A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.
• A credit of $4,976 for the April period, before she reaches the $50,000 cap.
• No payment for the May period, as she has now reached the $50,000 cap.
• An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.

Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000.
Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.

Supporting Immediate Cash Flow Needs for SMEs

The Government announced that it will provide a guarantee of 50% to SME lenders to support new unsecured short-term loans to SMEs to help SMEs fund their working capital. This will operate as follows:

• SMEs with a turnover of up to $50 million will be eligible to receive these loans;
• The loans will be for a maximum of $250,000 per borrower;
• The term of the loans will be up to 3 years;
• No loan repayments will be required to be made over the first 6 months;
• Borrowers will not have to provide assets as security, because the loans will be unsecured;
• The loans will commence by early April and be available until 30 September 2020.

Supporting Quick Access to Credit for Small Business

The Government announced that it will make it quicker and more efficient for small businesses to access credit for their businesses by providing an exemption from responsible lending obligations for lenders who provide credit to small businesses. This exemption will be for 6 months and will apply to any credit for business purposes including new credit and credit limit increases.

SUPPORT FOR INDIVIDUALS

In addition to supporting businesses, the Government is providing financial assistance to Australian individuals. Some of these measures are as follows:

Payments to Support Households

On 12 March 2020, the Government announced a $750 payment to be made from 31 March 2020 to social security, veteran and other income support recipients, and eligible concession card holders. Today, the Government announced a second $750 payment to the eligible payment recipients on 10 July 2020. Individuals receiving the age pension, family tax benefit, and various other government payments/allowances between 12 March 2020 and 13 April 2020 are eligible. This includes individuals who lodge a claim for one of the eligible payments between this period, and the claim is subsequently granted.

Early Access to Superannuation

Eligible individuals will be able to access $10,000 of their superannuation this financial year and another $10,000 next financial year. To be eligible, an individual must meet one of the following requirements:

• The individual is unemployed;
• The individual is 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;
• On or after 1 January 2020, the individual is made redundant, the individual’s working hours reduce by 20% or more, or if the individual is a sole trader, the business is suspended or revenue reduces by 20% or more.

Individuals will be eligible to apply for this from mid-April 2020 and applications will be made to the ATO through the myGov website.

Support for Retirees

Retirees who have account-based pensions in their superannuation funds are currently required to draw an annual pension equal to a minimum of 4% to 14% (depending on their age). For the years ending 30 June 2020 and 30 June 2021, the minimum pension  amount will be halved. This means that someone aged under 65 years will only have to draw 2% of his/her superannuation instead of 4% and someone aged between 65 and 74 years will only have to draw 2.5% instead of 5%.

This measure will give retirees more discretion on the management of their superannuation assets and reduce the need to sell investments to fund minimum pension requirements.

For more information, or to better understand your eligibility for these benefits and how to receive them, please don’t hesitate to contact us.