The Federal Government has announced stage 2 of its economic plan to cushion the economic impact of Coronavirus. Read about the stage 1 package HERE.
The 4 parts to the plan are listed below:
1. Boosting Cash Flow for Employers
This applies to:
A business or a not for profit entity or charity with an aggregated annual turnover of less than $50 million per annum ( based on prior year turnover) AND employs staff from before 12 March 2020.
STAGE 1 – credit to ATO account
- Employers will receive 100% of the PAYG withholding tax for employees up to a maximum of $50 000.
- A business that has less than $10 000 PAYG withholding tax, will receive $10 000 applied against their account.
- This money will not be included in taxable income of the business.
- Relates to the period 1 January 2020 to 30 June 2020.
- The benefit will apply to the BAS or IAS returns for the January to June 2020 periods.
- The ATO will automatically credit the amounts to the Activity Statement Account after the BAS or IAS returns have been lodged.
STAGE 2 – credit to ATO account
An additional payment will apply for the period June to September 2020.
- Quarterly BAS lodger – Will receive 2 credits ( total equal to stage 1 credit) one after each BAS lodgement for June 2020 and September 2020.
- Monthly BAS Lodger – will receive 4 credits ( total equal to stage 1 credit) one after each BAS lodgement for June, July, August, September 2020.
- The ATO will automatically credit the amounts to the Activity Statement Account after the BAS or IAS as above have been lodged.
2. Income Support for Individuals
The new Coronavirus supplement
A new six-month ‘Coronavirus supplement’ of $550 per fortnight will be paid to individuals who are currently eligible for certain income support payments, including the:
- Jobseeker Payment;
- Youth Allowance; and
- Parenting Payment (Partnered and Single).
Furthermore, it appears that this new (additional) supplement will be paid to eligible individuals as part of their existing income support payments (e.g., Jobseeker Payment and Youth Allowance).
This will commence from 27 April 2020.
Expanding access (and eligibility) to certain income support payments
For the period that the Coronavirus supplement is paid, the Government will also expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals.
For example, a new category of Jobseeker Payment and Youth Allowance Jobseeker will become available for eligible individuals financially impacted by the Coronavirus.
According to the Government, this could include, for example, permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests, as a result of the economic downturn due to the Coronavirus.
Additionally, asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.
Tax-free payments of $750 to eligible recipients
The Government will be providing two separate $750 tax-free payments (referred to as ‘economic support payments’) to social security, veteran and other income support recipients and to eligible concession card holders.
The first $750 payment will be available to individuals who are residing in Australia and are receiving an eligible Government payment, or are the holders of an eligible concession card, at any time from 12 March 2020 to 13 April 2020 (inclusive). This payment will be made automatically to eligible individuals from 31 March 2020.
The second $750 payment will be available to individuals who are residing in Australia and are receiving one of the eligible Government payments or are the holders of one of the eligible concession cards on 10 July 2020 (except for those receiving an income support payment that qualifies them to receive the $550 fortnightly Coronavirus supplement). This payment will be made automatically to eligible individuals from 13 July 2020.
Each of the $750 payments will be exempt from income tax and will not count as income for the purposes of Social Security, the Farm Household Allowance and Veteran payments.
3. Early Access to Superannuation
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.
Eligible individuals will be able to apply online through myGov to access 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 approximately three months (exact timing will depend on the passage of the relevant legislation).
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 (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 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.
People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
How to apply
If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website: www.my.gov.au. You will need to certify that you meet the above eligibility criteria. After the ATO has processed your application, they will issue you with a determination. The ATO will also provide a copy of this determination to your superannuation fund, which will advise them to release your superannuation payment. Your fund will then make the payment to you, without you needing to apply to them directly.
However, to ensure you receive your payment as soon as possible, you should contact your fund to check that they have your correct details, including your current bank account details and proof of identity documents.
Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF). Speak to us for guidance.
You will be able to apply for early release of your superannuation from mid-April 2020.
Reducing the minimum drawdown amounts for superannuation pensions
The minimum amounts that need to be withdrawn out of a superannuation fund for account-based pensions and similar products will be reduced by 50% for the 2020 and 2021 years.
4. Temporary Relief for Distressed Businesses
The elements of the package are:
- A temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive; ($2 000 to $20 000 / 21 days to 6 months)
- A temporary increase in the threshold for a creditor to initiate bankruptcy proceedings, an increase in the time period for debtors to respond to a bankruptcy notice, and extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition; ( $5 000 to $ 20 000/ 21 days to 6 months)
- Temporary relief for directors from any personal liability for trading while insolvent; and
- Providing temporary flexibility in the Corporations Act 2001 to provide targeted relief for companies from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
Click HERE for examples of these measures in our following blog.
Should you have any further questions, please phone us on 08 6263 4466 or email firstname.lastname@example.org