COVID-19 – GOVERNMENT STIMULUS PACKAGE SUMMARY

Last updated: 26 March 2020

Government support to date:

Over the weekend the nation’s leader made major announcements to address the impact of the Coronavirus on the Australian economy.

The Federal Government announced an additional $66bn in government assistance, in addition to the initial $17.6 billion Coronavirus stimulus package and subsequent $105bn injection from the RBA. This takes total government support to $189bn, or 9.7% of GDP.

More support has already been foreshadowed, with the government signalling a third package will most likely be needed to rescue the economy.

Below is a summary of new measures that businesses and individuals can start to access now.

  • Early access to superannuation of up to $20,000, for affected individuals
  • Reduction in required minimum super drawdown
  • Cash flow boost of up to $100,000 to help employers retain their staff, between now and September
  • Cheap, government-guaranteed loans of up to $250,000 for 3 years
  • Corporations Act changes to limit insolvency/bankruptcy cases, and personal liability of directors
  • Increased support for at-risk individuals and households

Summary for individuals and households

Increased support for individuals & households

Additional temporary financial assistance has been released for individuals and households, including income support payments, temporary early releases of superannuation and reduced superannuation minimum drawdown rates as well as the initial $750 payment to those eligible income support recipients.

Temporary early release of superannuation

The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation before 30 June, and a further $10,000 on 1 July 2020 in FY2020-21. Tax will not need to be paid on amounts released and the money withdrawn with not affect payments from Centrelink or Veterans’ Affairs.

Eligibility individuals will be able to apply online through myGov.

To apply for early release, an individual 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 job seekers, 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% 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.

Temporarily reducing superannuation minimum drawdown rates

To help retirees manage the impact of market volatility on their savings, the Government is temporarily reducing superannuation minimum drawdown requirements by 50% for the 2019-20 and 2020-21 income years.

Increased and accelerated income support

A new, time-limited Coronavirus supplement of $550 per fortnight will be paid to both existing income support recipients as well as an expanded recipient base.

Permanent employees who are stood down or lose their employment, sole traders, self-employed, casual workers and contract workers who meet the income tests as a result of the economic downturn due to Coronavirus, will be eligible to apply for support payments.

Those already receiving payments under the Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefits Allowance will receive the supplement payment.

Summary for Businesses

Boosting cash flow for employers

The Boosting Cash Flow for Employers package, initially up to $25,000, has been increased to a cap of $100,000, to assist businesses to improve cash flow and thereby retain their employees. The package has also been extended to now include not-for-profits and charities.

There has also been an increase in the minimum payment, up from $2,000 to now $20,000, to businesses who employ staff between 1 January and 30 June 2020.

The cash benefits are still based on a multiple of the company’s monthly PAYG withholding, however the benefits have been divided and extended to provide support until September 2020.

Criteria remains the same meaning businesses with turnover of up to $50 million and who employ staff will be eligible.

Cheap, government-guaranteed loans

Also announced was a $40 billion loan facility for small and medium businesses, funded equally by government and the banks (but administered by the banks). This complements an announcement by the Big 4 banks on Friday that they would freeze repayments on business loans for six months.

Under the Coronavirus SME Guarantee Scheme, banks will provide unsecured loans of up to $250,000, which will be interest free for the first six months. The loans will have a maximum term of three years.

The Commonwealth government will guarantee 50% of each loan.

Temporary relief for financially distressed businesses

Additionally, the Corporations Act is being temporary amended to protect corporates from potential collapse. Key measures include:

  • Statutory demands: Increasing threshold from $2,000 to $20,000 a creditor can issue a statutory demand to wind up a company. Companies will have 6 months to respond to such a demand (previously 21 days);
  • Bankruptcy proceedings: Increasing threshold a creditor can initiate bankruptcy proceedings from $5,000 to $20,000;
  • Insolvent trading: Relief for directors from personal liability when the company is trading whilst insolvent; and
  • ATO: Will be more flexible with clients including temporary reductions/deferrals of payments or withholding enforcement actions including Director Penalty Notices and wind-ups.

Apprentices and Trainees

The government is going to subsidise 50% of the apprentice or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020, up to $21,000 per eligible apprentice or trainee. It will be capped at $7,000 per quarter.

The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as of 1 March 2020.

You will be required to have an eligibility assessment undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Other useful resources:

Stimulus packages have also been announced in each state and territory:

New South Wales

Victoria

Queensland

Western Australia

Tasmania

Northern Territory

Australian Capital Territory

South Australia

Latest Government Restrictions:

https://www.health.gov.au/resources/publications/coronavirus-covid-19-isolation-guidance

Economic Support:

https://nsw.gov.au/news-and-events/news/health-boost-and-economic-stimulus/

UFI:

https://www.ufi.org/industry-resources/coronavirus/