Second Stimulus Package to combat COVID-19
The Federal Government has announced a second stimulus package as the initial package offered was not sufficient enough to target all the various types of Small Businesses in Australia. Sole Traders were inadvertently ignored – but this has now been addressed.
Prime Minister Scott Morrison announced further assistance to support Businesses and Jobs for Australia.
The package announced is estimated to be worth approximately $66 Billion and can be summarised as follows:
Support for Small Business
Last week, small business was promised up to $25,000 (with a minimum of $2,000) to be paid through the lodgement of Activity Statements. This has now been upgraded as follows:
- Minimum payment is increased to $10,000 (previously $2,000) including Not for Profits. This is based on 100% of the PAYG Withholding amount reported on Activity Statements from January to June 2020 – tax free.
- Those employers who are not required to withhold tax will receive a minimum payment above of $10,000.
- Maximum amount tax free available is $50,000 (up from previously advised $25,000)
- An additional payment equal to this amount will be available from July to October 2020, taking total available payments to $100,000
- Credits will start from late April 2020 and eligible employers established prior to 12 March 2020.
This highlights the importance of having your next activity statements prepared and lodged promptly to maximise these benefits. There will be additional work required by us to ensure that your credit is applied to your account promptly, so it is imperative that you respond quickly to any queries we have and also provide us with any information we require as early in April as you possibly can.
Small Business Loans – Relief Package
An Unsecured loan of up to $250,000 will be made available for Small Businesses that have been affected by COVID-19. These loans will be interest free for a period of 6 months and can be for up to 3-year terms. Australian banks will provide support to eligible small businesses by deferring loan payments for up to six months, where assistance is required as a result of COVID-19. The intention is for banks to implement this as soon as possible.
More details on this will be provided as more information is released.
Cash for Welfare Recipients
The last announcement was for $750 to be paid to recipients of Welfare to be paid on 31 March 2020. This has now been extended to a further payment of $750 to be paid on 13 July 2020
On top of this, Sole Traders & Casual workers (who meet the income tests) will qualify for the additional funds that are currently available to Job Seekers. It was announced that the Newstart payments (payment to Job Seekers) will temporarily double which will provide an additional $550 per fortnight for the recipients. It is expected that these additional payments will continue for some time.
Sole Traders and Casual workers will be required to demonstrate a reduction in their income and WILL NOT be required to meet the assets test or wait for the qualifying periods. This will be waived to ensure that prompt payments can start for all recipients of these welfare payments.
Access to Superannuation
Whilst this should be considered as a last resort, people can now access up to $10,000 from their superannuation funds in the current financial year, and a further $10,000 in the new financial year. These payments will be tax free
Access to superannuation savings will be broadened where you’re in financial distress because of the Coronavirus and meet certain eligibility conditions. If you’re eligible, you’ll be able to access up to $10,000 before 30 June 2020 and an additional $10,000 from 1 July for approximately three months (depending on the timing of legislation). To be eligible, you must meet one of the following conditions:
- you’re unemployed
- you’re eligible to receive Jobseeker Payment, Youth Allowance (jobseekers), Parenting Payment, Special Benefit or Farm Household Allowance
on or after 1 January 2020, you were made redundant, your hours of work reduced by at least 20%, or if you’re a sole trader, your business was suspended, or your turnover reduced by at least 20%.
- Applications will be through MyGov and you’ll need to certify that you meet one of the above eligibility requirements. Once the ATO confirms you’re eligible, they will issue you and your super fund with a determination and the payment will be made to you. If you have a self-managed super fund, arrangements will differ.
Payments will be tax-free, and amounts received will not impact Centrelink or DVA entitlements. It is expected that claims can be made from mid-April.
Further to this, those currently receiving pension payments from their superannuation funds, will have a temporary reduction of 50% in the amounts that they are required to draw down from their Account Based pensions for the 2019-20 and the 2020-21 financial years.
The mechanisms for all the above is unclear – please rest assured that we are continually monitoring the news and releases and will bring them to your attention as soon as they come available.
The team at Westwoods BGA are totally committed to providing you with as much knowledge, information and assistance as we possibly can. The survival and continuity of your business is important to us and we will work with you to battle these turbulent times together.
As always, please feel free to contact us on 08 8243 8700 or if you are unsure who to speak to within our team, please email email@example.com and we will get the right person to contact you.
Sincerely, The Team at Westwoods BGA