Morrison Government’s Economic Stimulus Package – (UPDATED 23/03/2020)

Morrison Government’s Economic Stimulus Package – (UPDATED 23/03/2020)

Key Points:

  • The package announced at the and is now law (23/03/2020).
  • The package targets business, households with people receiving government benefits and severely affected regions impacted by COVID-19.
  • Victorian Payroll tax measures have been included at the bottom of the article.
  • This article has been updated with new measures announced on 22nd March 2020. Updates and new measures appear fully bold.

Business Measures:

Depreciation

  • Increase the instant asset write-off threshold from $30,000 to $150,000 (until 30th June 2020):
    • Applies to business with a turnover of up to $500 Million (up from $50 Million).
    • It is unclear when the start date for the threshold being raised is e.g. assets purchased from 12/3/2020.
  • Businesses with a turnover of less than $500 million will also now be able to deduct an additional 50 per cent of the asset cost in the year of purchase. (until 30th June 2021).
    • It is unclear how this will operate if the asset is less than $150K and instantly written off.

Cashflow

  • Boosting Cash Flow for Employers -Businesses will receive payments of 100 per cent of the amount withheld on their Business Activity Statements or Instalment Activity Statement from 28 April
    • Refunds to then be paid within 14 days.
    • Tax Free payment up to $50,000 with a minimum payment of $10,000.
    • To be eligible business needs turnover of less than $50 million and employ staff, between 1 January 2020 and 30 June 2020.
    • The payments will only be available to active eligible employers established prior to 12 March 2020.
    • Payments will be made via a credit to a business integrated client account with the ATO.
    • Will operate for BAS quarters March 2020 and June 2020.
    • The payment for monthly lodgers will be calculated at three times the withholding amount in the March 2020 activity statement.
  • An additional payment is also being introduced in the July – October 2020 period.
    • Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received.
    • This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
    • The cash flow boost provides a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.
    • For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).
    • For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).
  • Eligible Businesses that employ apprentices and trainees can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.
    • Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
    • The maximum subsidy for each apprentice/trainee is $21,000. ($7,000 per quarter)
    • An eligible employer is an employer with less than 20 employees.
    • The apprentice or trainee must have been in training with a small business as at 1 March 2020.
    • Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Temporary relief for financially distressed businesses

The economic impacts of the Coronavirus and health measures to prevent its spread could see many otherwise profitable and viable businesses temporarily face financial distress. It is important that these businesses have a safety net to make sure that when the crisis has passed they can resume normal business operations. One element of that safety net is to lessen the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business.

  • Current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000. (This will apply for six months.)
  • The statutory time-frame for a company to respond to a statutory demand will be extended temporarily from 21 days to six months. This will apply for six months.
  • Directors will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business.
    • This will relieve the director of personal liability that would otherwise be associated with the insolvent trading. It will apply for six months.
    • Any debts incurred by the company will still be payable by the company.

SME Loan Gurantee Scheme

  • The Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans to be used for working capital.
  • SMEs with a turnover of up to $50 million will be eligible to receive these loans.
  • The Government will provide eligible lenders with a guarantee for loans with the following terms:
    • Maximum total size of loans of $250,000 per borrower.
    • The loans will be up to three years, with an initial six month repayment holiday.
    • The loans will be in the form of unsecured finance
    • Loans will be subject to lenders’ credit assessment processes.
  • Commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.


Household Measures:

$750 Tax Free Payments

  • To social security, veteran and other income support recipients and eligible concession card holders.
  • It is estimated that around half of those who will benefit will be pensioners.
  • These payments will commence to be automatically made from 31 March 2020.

Coronavirus supplement

  • The income support payment categories eligible to receive the Coronavirus supplement are:
    • Jobseeker Payment
    • Youth Allowance Jobseeker
    • Parenting Payment (Partnered and Single)
    • Farm Household Allowance
    • Special Benefit recipients
  • Anyone eligible for the Coronavirus supplement will receive the full rate of the supplement of $550 per fortnight
  • Will be paid for the next six months.

Early release of superannuation

  • Access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
  • Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020.
  • They will also be able to access up to a further $10,000 from 1 July 2020 for another three months.
  • They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans Affairs payment.
  • Eligibility:
    • To apply for early release you 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 jobseekers, parenting payment household allowance; or
      • On or after 1 January 2020: you were made redundant; or your working hours were reduced by 20 per cent or more; or if you are a sole trader your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Reducing superannuation minimum drawdown rates

  • Reduction by 50 per cent for the 2019-20 and 2020-21 income years.

Reducing social security deeming rates

  • As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent.


Assistance to severely affected regions:

The Government has also committed to set aside $1 billion to support regions and communities that have been disproportionately affected by the economic impacts of the COVID-19, including those heavily reliant on industries such as tourism, agriculture and education.

This will include:

  • The waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and the waiver of entry fees for Commonwealth National Parks.
  • The provision of additional assistance to help businesses identify alternative export markets or supply chains.
  • Further targeted measures to further promote domestic tourism.

Victorian Government’s Economic Survival Package:

Payroll Tax Refunds

Full payroll tax refunds for the 2019-20 financial year to businesses with annual payroll of less than $3 million.

Payments from the Government are due to commence Friday 27th March 2020.

Payroll Tax Deferral

Businesses with annual payroll of less than $3 million will also be able to defer any payroll tax for the first three months of the 2020/21 financial year until 1 January 2021.

This means payroll tax will be accruing and payable by 1 January 2021.


More information: