We have summarised the details of this second stimulus package below. If you are worried about your business in these uncertain times or would like to discuss how this package will affect you please do not hesitate to contact us. We are here to help.
2nd Stimulus Package
Boosting Cashflow For Business
Payment Deferrals
If you or your business have been affected by the virus the Australian Taxation Office (ATO) will work with you to defer payments and any vary instalments you have due for up to 6 months. This includes payments for the following:
Income tax
Activity Statements
PAYG Instalments
Fringe Benefits Tax & Excise Payments
2. PAYG Withholding Refunds for March to October 2020
The first stimulus package provided a 50% refund of PAYG Withholding from 28th April. This second stimulus package will boost this to a 100% refund of PAYG Withholding up to $50,000.
This will be done through the lodgement of activity statements for the March and June Quarters or if a monthly lodger, for the March, April, May and June instalments.
For businesses that lodge monthly, their March 2020 activity statement PAYG Withholding refund will be automatically multiplied by three. This is to ensure monthly lodgers receive a similar benefit to those businesses that lodge quarterly.
These PAYG Withholding refunds for BAS and Activity Statements:
Are capped at $50,000 in total payments for the period ending June 2020;
Have a minimum payment of $10,000.
After 30 June 2020 another payment will be made available in the July to October 2020 period equivalent to the payments received up to 30 June 2020. Refunds during the entire March to October 2020 period will be limited to $100,000.
The above PAYG Withholding refunds are applicable to businesses with aggregated turnover under $50 million.
3. Monthly GST Credits
If your GST turnover is less than $20 million you can consider changing your reporting cycle if it will benefit your cashflow, (for example from quarterly to monthly and from monthly to quarterly) and thereby bringing forward a GST refund or deferring a GST amount payable.
4. PAYG Instalments
You can vary your PAYG Instalments in the March 2020 quarter and request refunds of previously paid PAYG Instalments from September 2019 and December 2019 Quarters.
5. Temporary Relief for Financially Distressed Businesses
For Companies
The threshold at which creditors can issue a statutory demand or bankruptcy notice on a company will be increased from $2,000 to $20,000. This will apply for six months.
Response to a statutory demand will be extended from 21 days to 6 months, this will also apply for a 6-month period.
There will also be temporary relief for directors from any personal liability for trading while insolvent. This measure also applies for 6 months.
For Individuals
For sole traders the minimum amount of debt for a creditor to initiate bankruptcy proceedings against a debtor will be temporarily increased from $5,000 to $20,000. This will apply for 6 months.
Similarly, failure to respond to a bankruptcy notice has been extended from 21 days to 6 months. This will apply for 6 months.
Government Guarantee Scheme
The government will guarantee 50% of new loans provided by eligible lenders to businesses with a turnover up to $50 million.
This means the government will guarantee up to 50% of loans up to a maximum of $250,000 per borrower.
The loans will be up to 3 years with an initial 6 months repayment holiday and loans will be in the form of unsecured finance meaning that borrowers will not have to provide assets as security for the loan.
Early Release of Superannuation
The government will allow individuals in financial stress as a result of the virus early access to their superannuation from Mid-April 2020.
This includes the ability to withdraw up to $10,000 tax free in both the 2020 financial year and the 2021 financial year.
To apply for early release, you must satisfy one or more of the following requirements:
You are unemployed; or
You are eligible to receive a jobseeker payment, youth allowance for jobseekers, 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 a reduction in turnover of 20% or more
You need to apply directly to the Australian Taxation Office (ATO) via the myGov website. The ATO will release further guidance for Self-Managed Superannuation Funds (SMSFs).
Temporary Reduction of Superannuation Drawdown Rates
The minimum pension drawdown percentage for 2020 and 2021 has been reduced by 50%.
Payments to Support Households
In addition to the $750 announced in the first stimulus package for social security, veteran income support recipients and eligible concession card holders, an additional second payment of $750 will be paid to the same recipients from 13th of July. Note the first payment from stimulus package 1 was payable from 31st of March.
Coronavirus Supplement
Improvements to income support have also been announced, with the new Jobseeker payment amount of $550 per fortnight for the next 6 months for those who find themselves unemployed. This payment is in addition to the normal Jobseeker allowance (previously known as Newstart) and will be paid to new and existing recipients of Jobseeker payments, youth allowance jobseeker, parenting payments, farm household allowance and special benefit payments.
From April 27th they are expanding the eligibility and qualification criteria for 6 months, temporarily waiving:
Assets test
Ordinary waiting period
Liquid assets waiting period
This will apply to those:
Looking for work
Who temporarily cannot work due to injury or illness; or
Who are bereaving their partner.
Should you have any queries, please do not hesitate to contact our office.
Yours sincerely,
Ashley Brown