Over the weekend, the government released the second stage of its economic plan to cushion the economic impact of the coronavirus, bringing the total sum being injected into the economy by all arms of the government to $189 billion.
This includes $17.6 billion for the government’s first economic stimulus package, $90 billion from the RBA and $15 billion from the government to deliver easier access to finance, and $66.1 billion in Sunday’s economic support package.
The latest package includes increased support for small businesses and households, including sole traders who will be eligible for the coronavirus supplement and jobseeker payment to assist them to continue working for the next six months.
SME cash payments
Building on the first stimulus, the new package will increase the initial tax-free cash payments to small and medium businesses to $100,000, from the initially announced $25,000 limit, with a minimum payment of $20,000, compared to the previously said $2,000.
Eligible businesses are those that employ workers and have an aggregated annual turnover under $50 million, as well as not-for-profits and charities.
The enhanced scheme will be delivered in two phases: Firstly, with employers set to receive a first payment equal to 100 per cent of their salary and wages withheld, up to a maximum of $50,000, when businesses lodge their activity statements for the 28 April and 28 July quarterly due dates.
Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
Secondly, an additional payment equal to the first payment will be made after businesses lodge their BAS by the 28 July and 28 October quarterly due dates.
For example, a business that receives $50,000 for the period up to June will subsequently receive another $50,000 for the period up to September upon lodgement of their BAS.
Monthly BAS lodgers will receive the first payment for the March 2020, April 2020, May 2020 and June 2020 lodgements, with a 300 per cent calculation in the March activity statement to provide the same treatment as quarterly lodgers.
The second payment for monthly BAS lodgers will be released once they lodge their June 2020, July 2020, August 2020 and September 2020 lodgements.
All entities are required to be active to receive the payment, with the measure set to benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs.
The expanded scheme is estimated to cost $31.9 billion over the forward estimates period.
The government also announced it is temporarily expanding eligibility to income support payments and establishing a new, time-limited coronavirus supplement to be paid at a rate of $550 per fortnight.
Permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers will be able to access the new coronavirus supplement under expanded access to the JobSeeker Payment, formerly known as Newstart.
The coronavirus supplement will be paid for the next six months. According to the government, eligible income support recipients will receive the full amount of the $550 coronavirus supplement on top of their payment each fortnight.
This measure is estimated to cost $14.1 billion over the forward estimates period.
Early release of super
The government is allowing individuals, including sole traders, affected by the coronavirus to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21.
From April, those affected will gain access to their superannuation capped at $10,000 this financial year, and a further $10,000 next financial year.
Eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020, tax-free. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months.
“I repeat, these withdrawals will be tax-free and available to those who are eligible for the coronavirus supplement, as well as sole traders who have seen their hours worked or income fall by 20 per cent or more as a result of the coronavirus,” the Prime Minister said.
“So, if you’re a sole trader or you’re a casual and you’ve seen your income or your hours worked fall by 20 per cent or more as a result of the coronavirus, you will be able to get early access to your superannuation.”
This measure is estimated to cost $1.2 billion over the forward estimates period.
The government is also temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019–20 and 2020–21.
Deeming rates for pensioners will also be reduced by another 0.25 of a percentage point. As of 1 May 2020, the lower deeming rate will be 0.25 of a percentage point and the upper deeming rate will be 2.25 per cent.
The change is seen to benefit around 900,000 income support recipients, including age pensioners.
Temporary insolvency relief
Company directors will be temporarily relieved from any personal liability for trading while insolvent, with respect to any debts incurred in the ordinary course of the company’s business, with the measure set to run 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.
The government is also temporarily increasing the 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 also apply for six months.
Furthermore, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from its current level of $5,000 to $20,000 for six months.
The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.