The Government Stimulus Package: What it means for you.

The Government’s Covid-19 stimulus package provides superannuation, social security and tax relief for individuals, households and businesses. We have summarised the key measures below.

Superannuation

Early access to superannuation on compassionate grounds – coronavirus

  • Maximum of $20,000 ($10,000 in FY19/20 and $10,000 in FY20/21)
  • must meet eligibility criteria
  • Applications open mid-April via MyGov
  • First application deadline is 30 June 2020
  • released amount is non-assessable non-exempt income (ie tax free)

Minimum pension drawdown requirements reduced

  • For FY2019/20 and FY20/21, minimum pension drawdown rules for account based pensions and similar products have halved for all age groups.
Age Minimum Pension Payments
Previous New
Less than 65 4%2%
65 – 74 5%2.5%
75 – 79 6%3%
80 – 84 7%3.5%
85 – 89 9%4.5%
90 – 94 11%5.5%
95+ 14%7%

Social Security

Up to 2 x $750 Economic Support payments for income support recipients and concession card holders

  • 24 categories of income support recipients eligible including Age Pension, Newstart and Youth Allowance
  • Tax-free and not deemed as income for social security purposes
  • First payment to be made automatically by 13 April 2020
  • Second payment to be paid automatically from 13 July 2020. Second payment not available in conjunction with the Coronavirus supplement (see below)

Coronavirus supplement of $550 per fortnight for eligible income support recipients

  • Paid automatically from 27 April 2020 for an initial six-month period
  • Not available in conjunction with second Economic Support payment

Relaxed access to JobSeeker / Youth Allowance and Parenting Payment

  • Asset test exemption applied for six months from 24 March 2020
  • Exemption from waiting periods

 New category of Crisis Payment

  • Individuals on income support may be eligible for a one-off, tax-free Crisis Payment, if forced to self-isolate

Reduction in deeming rates

  • Deeming rates will reduce from 1 May 2020. The lower deeming rate will reduce to 0.25% and the upper deeming rate will reduce to 2.25%
  • Deeming thresholds remain unchanged at $51,800 (single) and $86,200 (couple)

Delay of social security income reporting changes

  • Changes to method for reporting employment income delayed to 1 July 2021 for now

Tax measures for small and medium businesses

Expanded instant asset write-off

  • For businesses with a turnover under $500 million (previously $50 million), the instant asset write-off is expanded to $150,000 (previously $30,000) until 30 June 2020
  • Entities with a turnover under $10 million can write off all their general small business pool if it is less than $150,000

Accelerated depreciation

  • Where the instant asset write off rules do not apply, accelerate depreciation rates may apply to assets acquired and used between 12 March 2020 and 30 June 2021
  • The cost of 50% of an eligible asset can be deducted. Existing rules apply for the balance
  • For entities with a turnover of under $10 million, the accelerated rate of 57.5% will apply

Cash flow boost

  • Eligible businesses and not-for-profit organisations employing people may be eligible for two payments
  • 100% of PAYG withheld between January 2020 and June 2020 will be credited to a maximum of $50,000 for the six month period. The minimum amount an employer will be able to receive is $10,000, up to the maximum of $50,000 for this period.
  • An additional payment in the July — October 2020 period equal to the total of the PAYG withheld refunded in the previous six months to provide a total refund of up to $100,000 per entity.
  • The ATO will process payments based on the entity’s activity statements
  • Small business owners should work with their registered tax agent to determine eligibility

Further cash flow boost for small and medium businesses

  • Employers with apprentices or trainees may be eligible for a 50% wage subsidy of the employee’s wage for the period of 1 January to 30 September 2020
  • The maximum payment is $21,000 per apprentice or trainee

Job Keeper Payment

  • Will subsidise wages of $1,500 for each eligible employee per fortnight fpr a period of up to six months for all eligible businesses
  • businesses with annual turnover below $1 billion must have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago
  • businesses with annual turnover greater than $1 billion must have experienced downturn of greater than 50% due to COVID-19 to be an eligible employer.
  • Employees must also meet eligibility criteria
  • Businesses should register here https://www.ato.gov.au/Job-keeper-payment/ for direct updates from the ATO

Temporary relief from financial stress

  • Other business provisions may be available to eligible businesses  

For more information on the intiatives feel free to drop our accounting team a line at any time 02 9222 1422.