The Australian Government has begun rolling out a considerable fiscal stimulus package in an effort to support and assist those individuals and businesses that have been negatively impacted by the unfolding Coronavirus (COVID-19) crises. We have collated the key measures announced and will continue to update this as further announcements are made. If you have any questions regarding how any of these measures may be relevant to your situation, please get in touch.
Support for individuals and households
The government has announced several measures to provide financial assistance to Australians impacted by COVID-19, including income support payments, household support payments and the temporary early release of superannuation.
In an effort to help Australians retain their jobs and continue earning an income, the government has rolled out JobKeeper payments to help businesses impacted by COVID-19 cover the costs of employee wages. Eligible businesses will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020 for a maximum period of 6 months. For more information, click here.
Income support for individuals
A new Coronavirus supplement paid at a rate of $550 per fortnight has been established and will be paid to eligible recipients (both existing and new) of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit over the next six months. Eligibility for receiving these payments has also been temporarily expanded. For more information, click here.
Payments to support households
Social security, veteran and other income support recipients and eligible concession card holders will receive two separate one-off payments of $750, with the first to be made between 12 March 2020 and 13 April 2020 and the second to be made from 13 July 2020. Please note that those receiving the Coronavirus supplement (above) will not be eligible for the second payment. For more information, including eligibility requirements, click here.
Temporary reduction in superannuation drawdown rates
The superannuation minimum drawdown requirements for account-based pensions has been reduced by 50% for the 2019-20 and 2020-21 financial years. This means that the drawdown rates will be reduced to 2% for those aged 64 or under and 2.5% for those aged between 65 and 74. This measure will benefit retirees with account-based pensions by reducing the need to sell investment assets to fund minimum drawdown requirements. For more information, click here.
Temporary early release of superannuation
Those suffering financial hardship due to COVID-19 will be able to access up to $10,000 of their superannuation in the 2019-20 financial year and a further $10,000 in the 2020-21 financial year. Those individuals will not be required to pay tax on amounts released and the superannuation payments withdrawn will not affect Centrelink or Veteran’s Affairs payments. For more information, click here.
Reduction in social security deeming rates
On 12 March 2020, the government announced a 0.5% point reduction in the upper and lower social security deeming rates. This has been reduced by a further 0.25% and reflects the current low-interest rate environment and its impact on income from savings. 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. For more information, click here.
Support for businesses
The government has announced several measures to provide support to Australian businesses impacted by COVID-19. These measures are designed to help impacted businesses manage cash flow challenges and retain employees.
In an effort to help impacted Australian businesses retain their employees, the government has rolled out JobKeeper payments to help cover the costs of employee wages. Eligible businesses will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020 for a maximum period of 6 months. For more information, click here.
Cash flow support for businesses
The government has announced a payment of between $20,000 and $100,000 for eligible small- and medium-sized businesses and not-for-profits (NFPs) that employ people and have an aggregated annual turnover of under $50 million. This measure aims to help impacted businesses and NFPs manage cash flow so that they can continue operating, pay bills and retain their staff. For more information, click here.
Temporary relief for financially distressed businesses
To help businesses impacted by COVID-19, the government has announced 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 the statutory demands they receive. This measure also includes temporary relief for directors from any personal liability for trading while insolvent as well as temporary flexibility in the Corporations Act 2001. For more information, click here.
Instant asset write-off increase
The instant asset write-off threshold has been increased from $30,000 to $150,000. It will be applied from now until 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020. This will be available to businesses with turnover of less than $500 million (up from $50 million) and will be applied on a per asset basis so eligible businesses can immediately write-off multiple assets. Aside from these changes, the rest of the rules governing the write-off, including what assets can be written off, remain unchanged. For more information, click here.
Support for business investment
Assets not subject to the instant asset write-off (e.g. assets valued at more than $150,000) may be eligible for new accelerated depreciation rules to be introduced by the government. Under the rules, eligible businesses with turnover below $500 million will be able to deduct 50% of the cost base of the asset upon installation. Existing depreciation rules will apply to the remaining 50% of the asset’s cost base. The new rules will be available for 15 months (through until June 2021). For more information, click here.
Support for apprentices and trainees
In an effort to help small businesses retain their apprentices and trainees, eligible employers can apply for wage subsidies of 50% of an apprentice or trainee’s wage for up to 9 months. This will be available from 1 January 2020 to 30 September 2020 and employers will be reimbursed up to a maximum of $21,000, per eligible apprentice or trainee ($7,000 per quarter). For more information, click here.
Targeted regional assistance
The government has announced $1 billion to support regions and industries impacted by COVID-19 during the outbreak and recovery. In addition, the government has announced relief from a number of taxes and government charges for the airline industry. For more information, click here.
Support for not-for-profits
The government is providing additional support for not-for-profits, including the JobKeeper Payment Scheme, boosting cash flows, the Coronavirus Small and Medium Enterprises Guarantee Scheme and a $200 million community support package. For more information, click here.
Support for sole traders
The government is providing additional support for sole traders, including income support, early access to superannuation, supporting the immediate cash flow needs of sole traders, temporary relief for financially distressed businesses, boosting cash flow for employers, ATO administration relief, increasing the instant asset write-off and backing business investment. For more information, click here.
The Australian Taxation Office (ATO) has also announced several concessions in light of COVID-19 that will be available on a case-by-case basis. These include:
- Deferring payments relating to Activity Statements, Income Tax assessments and Fringe Benefits Tax assessments by up to four months;
- Allowing businesses who report GST quarterly to swap to monthly reporting in order to access GST refunds faster than they would usually be able to;
- Allowing businesses to vary down their Pay As You Go (PAYG) instalments to zero for the March 2020 quarter;
- Allowing businesses to claim refunds for PAYG instalments paid during the September 2019 and December 2019 quarters;
- Remitting interest and penalties incurred after 23 January 2020 which had been applied to tax liabilities; and
- Allowing businesses to enter low-interest payment plans for their existing and ongoing tax liabilities.
Queensland Government economic response
In addition to the above, the Queensland Government has also announced a number of economic relief measures to support Queensland individuals and businesses through this time. These include:
- Payroll tax relief for those employers who pay $6.5 million or less in Australian taxable wages. For further information, click here.;
- Power bill relief for households and businesses which includes a $500 rebate off energy bills if less than 100,000 kWh is consumed. For further information, click here.;
- A hold on evictions over the next six months for commercial and residential tenancies in financial distress. For further information, click here.; and
- A $500 million COVID-19 Jobs Support Loan scheme for Queensland business and NFPs that have been financially affected by COVID-19. For more information, click here.
- Land tax relief for eligible properties which includes a reduction in land tax liabilities by 25%, a waiver of the 2% land tax foreign surcharge for foreign entities and a 3-month deferral of land tax liabilities for eligible properties for the 2019-20 assessment year. For more information, click here.
Please note that all Australian State and Territory governments and, in some cases, local councils have announced COVID-19 relief measures. You should refer to your applicable state and local government website for further information.
If you would like to discuss any of the above measures and how they may be relevant to your current situation, please get in touch. We will continue to update this as new announcements are made in the coming weeks and months.
Disclaimer: This article contains general information only and is not intended to constitute financial advice. Any information provided or conclusions made, whether express or implied, do not take into account the objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice. Any tax information included in this article is not based on an individual’s unique circumstances and should not be relied on as tax advice.