The Federal Government has unveiled a $66 billion relief package that includes a suite of new measures designed to help reduce the economic impact of the coronavirus pandemic. So what do these new measures mean for you?
Employers / Small Businesses
Cash payments for small to medium businesses. This is the largest part of the package. All employing small businesses with a turnover under $50 million will receive a tax-free cash payment of at least $20,000, and larger small businesses will receive up to $100,000. The payments will be delivered by the Tax Office as a credit on activity statements from late April. Around 690,000 businesses employing 7.8 million people will be eligible. For more details, see Cash flow assistance for businesses.
More money into the financial system through the Coronavirus SME guarantee scheme. In addition to an injection of $105 billion, with the intention of increasing the availability of credit, the government will guarantee 50 per cent of new loans to small-to-medium businesses. This will include loans of up to $250,000 over 3 years – with no payments required for 6 months.
This latest measure builds on the previous initiatives to ensure small business can access capital, including:
- An exemption to the responsible lending obligations to enable financial institutions to provide new credit, credit limit increases, and credit variations and restructures,
- $15bn to the Australian Office of Financial Management to invest in wholesale funding markets used by small banks and non-banks to enable these lenders to support SMEs, and
- Australian Banking Association members will defer loan repayments for 6 months for small businesses (affected small businesses will need to apply for relief).
Increased flexibility in insolvency and bankruptcy law. This includes increasing the threshold at which a creditor can pursue insolvency proceedings – from $2,000 to $20,000 – and giving people up to six months to respond, over the current 21 days. Most significantly, businesses will be able to trade while insolvent, with the package including temporary relief for directors from any personal liability. For more details, see Temporary relief for financially distressed businesses.
Sole Traders & Casual Workers
An effective doubling of income support for those on the JobSeeker payment. The payment, formerly known as Newstart, will be supplemented with an additional $550 per fortnight, bringing it to a total of $1,100 per fortnight for the next six months. The coronavirus supplement will go to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. Eligibility for access to income support has also been eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation. The assets test and the waiting period have been abolished. The income test still applies. For more details, see:
A further $750 payment, on top of the first payment (announced March 12), for those on income support who are not eligible for the coronavirus supplement. For example, this would include social security and veteran income support recipients and eligible concession card holders (see the full list here). It will automatically be paid on July 13 and benefit about five million people. For more details, see Payments to support households.
The ability to withdraw super, for those who are facing coronavirus-led financial hardship. Those eligible will be able to draw down $10,000 of their super this financial year, and $10,000 next financial year. People will not pay tax on the money they access, and withdrawals will not affect Centrelink or veterans’ payments. For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April. For more details, see Early access to superannuation.
The minimum superannuation drawdown requirements for retirees will also be cut by 50 per cent for the next two financial years, and the deeming rate will be reduced from 1 May to a lower rate of 0.25% and upper rate of 2.25%. This change will benefit around 900,000 income support recipients, including age pensioners. For more details, see Providing support for retirees.
For more information about these measures, see:
- Joint media release with The Hon. Scott Morrison MP Prime Minister
- Treasury: Support for Businesses
- Treasury: Supporting Individuals and Households
We’ll bring you more details as soon as they become available. If you have any questions in the meantime, please call us on 9887 8751.