The Prime Minister, the Hon Scott Morrison and Treasurer, the Hon Josh Frydenburg have announced the second stimulus package. The stimulus package provides unprecedented support to those ‘at the front line’ including small businesses, employers and workers who are experiencing the impact of coronavirus now.
The stimulus package is aimed at keeping businesses going, to keep people in jobs and provide further financial support to sole traders and individuals whose income is impacted through loss of revenue or loss of jobs.
The second stimulus package focuses on:
- Casual workers;
- Sole traders;
- Providing assistance for businesses to retain employees;
- Providing regulatory protection for company directors; and
- Providing financial support for businesses to stay in business.
Individuals, Sole Traders & Retirees
Sole traders, workers and retirees will receive essential support through:
- A doubling of the job seeker allowance through the introduction of a temporary coronavirus supplement. The coronavirus supplement will provide an additional $550 per fortnight to sole traders and workers directly impacted by coronavirus.
- The Government will temporarily waive the assets test and waiting period for the job seeker allowance. The income test will still apply.
- Individuals, including sole traders, who are eligible for the job seeker allowance and temporary coronavirus supplement will also benefit from access to various Government concessions such as rent assistance, pharmaceutical benefits, etc.
- A further $750 payment for individuals on income support. Individuals who receive an eligible Government payment (and are not eligible for the coronavirus supplement) will receive a further $750 cash payment from 13th July 2020.
- The Government will reduce deeming rates for Centrelink payments by .25% to reflect the Reserve Bank Rate cut.
- From April this year, certain individuals affected by coronavirus will gain access to their superannuation. Access will be capped at $10k this year and $10k next financial year. Withdrawals will be tax-free. Sole traders or casual workers who have experienced a 20% loss of income because of coronavirus will be able to access their superannuation. Applications will be through the ATO.
- Retirees will have more flexibility over superannuation. Where retirees are currently required to withdraw a minimum of 4 % of their superannuation, the Government will halve the requirement for this year and next year to 2%.
Scaling up of support for small to medium-sized businesses (SME)
There will be a scaling up of support for SMEs by providing support to retain employees and by providing Government supported loan funding. Measures include:
- Cash payments for SME employers with turnover of less than $50m boosted to $20k - $100k. All employing small businesses will receive the payment. This means an employer who has employees but does not have a withholding obligation (eg employees are under the tax-free threshold) will receive the minimum $20k. This means they will receive the $20k payment even if their PAYG withholding for the period is nil. The measure will also be extended to include not-for-profits with turnover under $50m. The cash payments will be processed by the ATO as a credit to the employers' relevant BAS or IAS.
- The Government will guarantee a 50/50 partnership with banks and other lenders to provide more lending for SMEs. Loans of up to $250k for up to three years will be available to businesses with turnover under $50m with no repayments required for the first six months. The loans will be unsecured.
Otherwise profitable and viable businesses will be protected by a number of measures to assist in keeping the business alive. Companies and directors will be provided regulatory relief including:
- An increase in the threshold for creditors to issue statutory demands from $2k up to $20k.
- Directors will be provided six months instead of 21 days to respond.
- Relief for directors from personal liability from trading while insolvent.
- The Treasurer will be provided with a temporary six-month power to deal with further corporate regulatory issues as they arise.
- Relief for directors from other obligations under the Corporations Act 2001 (Cth) for director meetings etc.
The Government and Treasury are to be commended on what is an outstanding response to the economic impact of coronavirus. The measures are extensive and address the immediate impacts of the health crisis.
Businesses impacted by coronavirus are advised to contact their RSM adviser as soon as possible to find out how the stimulus measures might benefit them. Taxpayers are also reminded that the ATO has also announced measures designed to assist taxpayers in meeting their tax obligations.
These are unprecedented and challenging times and the support measures announced by the Government and the ATO will cushion the blow.
RSM will continue to provide updates as legislation is released and more announcements are made. To read more about coronavirus, visit our advisory centre by clicking here.