The summary below is provided as an update of our recent newsletter article on the stimulus measures.
1. Early access to superannuation benefits
The Government will introduce a new compassionate ground of release that will allow individuals to access their superannuation entitlements where those benefits are required to assist them to deal with the adverse economic effects of the Coronavirus, but only where one or more of the following requirements are satisfied:
- The individual is unemployed.
- The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance.
- On or after 1 January 2020 either:
- the individual was made redundant; or
- the individual’s working hours were reduced by at least 20%; or
- if the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%.
Under this new compassionate ground of release, eligible individuals will be able to access (as a lump sum) up to $10,000 of their superannuation entitlements before 1 July 2020, and a further $10,000 from 1 July 2020 (subject to a six-month time frame).
Eligible individuals who are looking to access their superannuation entitlements under the above new ground of release will be able to apply directly to the ATO through the myGov website (at www.my.gov.au) and certify that the relevant eligibility criteria is satisfied.
The lump sum withdrawals will be tax-free and will not affect Centrelink or Veteran’s Affairs payments.
2. Reducing the minimum drawdown amounts for superannuation pensions
The Government will temporarily reduce the superannuation minimum drawdown amounts for account-based pensions and similar products by 50% for the 2020 and 2021 income years.
The new table of minimum pensions is as follows:
Cash flow assistance for businesses
The government has boosted the previously announced cash flow assistance to businesses to be channelled through activity statements. The measures apply to SME’s with an aggregated annual turnover of less than $50 million (usually based on their prior year’s turnover) that employ people.
Eligible businesses may be able to receive a total payment (in the form of a refundable credit) of up to $100,000 (with a minimum total payment of $20,000) based on their PAYG withholding obligations. The payments or credits will be made in two stages, as outlined below:
Stage 1 payment (credit)
Commencing with the lodgement of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees’ salary and wages will receive a tax-free payment equal to 100% of the amount withheld, up to a maximum of $50,000.
Eligible employers that pay salary and wages will receive a minimum (tax-free) payment of $10,000, even if they are not required to withhold PAYG tax.
The tax-free payment will broadly be calculated and paid by the ATO as an automatic credit to an employer, upon the lodgement of activity statements from 28 April 2020, with any resulting refund being paid to the employer. This means that:
- Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020; and
- Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. Note, the payment for the March 2020 activity statement will be calculated as three times the actual amount withheld.
Note that, the minimum payment of $10,000 will be applied to an entity’s first activity statement lodgement (whether for the month of March or the March quarter) from 28 April 2020.
Stage 2 payment (credit)
For employers that continue to be active, an additional (tax-free) payment will be available in respect of the June to October 2020 period, basically as follows:
- Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020, with each payment being equal to 50% of their total initial (or Stage 1) payment (up to a maximum of $50,000).
- Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 activity statement lodgements, with each additional payment being equal to a quarter of their total initial (or Stage 1) payment (up to a maximum of $50,000).
Again, the ATO will automatically calculate and pay the additional (tax-free) payment as a credit to an employer upon the lodgement of their activity statements from July 2020, with any resulting refund being paid to the employer.
4. Loan support for businesses
The government has flagged funds to guarantee 50% of loans to small businesses. However details of this measure and other loan guarantee measures to support SME’s are not yet clear.