$66.1bn: The Second Stimulus Package


The Government has released a second, far reaching $66.1 bn stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws. 

Support for business

Tax-free payments up to
$100,000 for employers

  • From:
    28 April 2020
  • Eligibility:
    Small and medium business entity employers and not-for-profit entities, with an
    aggregated annual turnover under $50 million.

Government has increased the previously announced measures to provide cash flow
support to business.

eligible businesses with a turnover of less than $50 million will initially be
able to access tax-free cash flow support, with the minimum amount being
increased to $10,000 and the maximum amount increased to $50,000 (previously
$2,000 to $25,000). However, additional support will be provided in the July –
October 2020 period so that eligible entities will receive total minimum
support of $20,000 and up to $100,000.

In order
for a business to qualify for this support it must have been established prior
to 12 March 2020. The rules are more flexible for charities because the
Government recognises that new charities might be established in response to
the pandemic.

The cash
flow support measures will be provided in the form of a credit in the activity
statement system. The support will be provided in two phases.

  • The
    first phase ensures that eligible employers receive a credit equal to 100% of
    the PAYG amounts withheld from salary and wages paid to employees during the
    relevant period, up to the maximum amount of $50,000.
  • The
    second phase ensures that eligible employers receive another series of credits,
    equal to the credits that were received under the first phase. For example, if
    a business received $40,000 of credits in the first phase it will receive a
    further $40,000 of credits in the second phase. These additional credits will
    be spread over two or four activity statement periods, depending on whether the
    employer lodges on a quarterly or monthly basis.

If a
business pays salary and wages to employees but is not required to withhold any
tax then a minimum payment of $10,000 will be made in the first phase and a
further payment of $10,000 will be made in the second phase.

The credits
are automatically calculated by the ATO and employers will need to lodge an
activity statement to trigger the entitlement. If the credit puts the business
in a refund position the excess amount will be refunded by the ATO within 14

that lodge activity statements on a quarterly basis will be eligible to receive
credits in the first phase for the quarters ending March 2020 and June 2020.
Credits in the second phase will be available for the quarters ending June 2020
and September 2020. The minimum $10,000 payment will be applied to the first

that lodge on a monthly basis will be eligible for the credits in the first
phase for the March 2020, April 2020, May 2020 and June 2020 lodgements.
Credits in the second phase will be available for the June 2020, July 2020,
August 2020 and September lodgments. The minimum $10,000 payment will be
applied to the first lodgement.

for the measure will be based on prior year turnover. We will have to wait for
the legislation for the finer details.

employers, including charities, with an aggregated turnover under $50 million
will also be able to access the cash flow support.

Solvency safety net

A safety
net has been put in place to protect businesses in temporary financial distress
as a result of the pandemic by lessening the threat of actions that could
unnecessarily push them into insolvency and force the winding up of the
business. These include:

  • A
    temporary 6 month increase to the threshold at which creditors can issue a
    statutory demand on a company from $2,000 to $20,000.
  • The
    time a company has to respond to statutory demands will increase from 21 days
    to 6 months.
  • For
    6 months, directors will be provided with temporary relief from personal
    liability for trading while insolvent.
  • See also bankruptcy safety net below

It will be
more important than ever for business to stay on top of their debtors.

incurred will still be payable by the business. Only those debts incurred in
the ordinary course of the business will be subject to the safety net measures.

Access to working capital
for SMEs – supporting lenders

Government has announced a Coronavirus SME guarantee scheme that will guarantee 50% of new
loans to SMEs up to $20 billion. These loans are new short-term unsecured loans
to SMEs.

SMEs with a
turnover of up to $50 million will be eligible to receive these loans.

Government will provide eligible lenders with a guarantee for loans with the
following terms:

  • Maximum
    total size of loans of $250,000 per borrower.
  • The
    loans will be up to three years, with an initial six month repayment holiday.
  • The
    loans will be in the form of unsecured finance, meaning that borrowers will not
    have to provide an asset as security for the loan.

Loans will
be subject to lenders’ credit assessment processes with the expectation that
lenders will look

through the
cycle to sensibly take into account the uncertainty of the current economic

This latest
measure builds on the previous initiatives to ensure small business can access
capital, including:

traders and self-employed eligible for Jobseeker payment

eligibility criteria to access income support payments will be relaxed to
enable the self-employed and sole traders whose income has been reduced, to access


Temporary relief from Corporations

Treasurer has been given a temporary instrument-making power to amend the Corporations
to provide relief or modifications to specific compliance obligations.

ASIC has announced measures for those companies with a 31
December financial year that need to hold their AGMs by 31 May 2020, providing
a two month no action period and enabling hybrid virtual AGMs.

Support for Individuals

Early release of

mid-April, individuals in financial distress will be able to access up to
$10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21.
The withdrawals will be tax free and will not affect Centrelink or Veterans’
Affairs payments.

To be
eligible to access your superannuation you need to meet the following

  • 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% or more; or
    • if
      you are a sole trader — your business was suspended or there was a reduction in
      your turnover of 20% or more.

For those
eligible to access their superannuation, you can apply directly to the ATO
through the myGov website from mid-April.

More: Early access to superannuation

Temporary reduction in
minimum superannuation draw down rates

minimum drawdown requirements for account-based pensions and similar products will
be reduced by 50% in 2019-20 and 2020-21.

Age Default minimum
drawdown rates (%)
Reduced rates
by 50 per cent for the 2019-20 and 2020-21 income years (%)
Under 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 or more 14 7

The upper
and lower social security deeming rates will be reduced further. As of 1 May
2020, the upper deeming rate will be 2.25% and the lower deeming rate 0.25%.

More: Providing support for retirees

Time limited fortnightly
$550 ‘coronavirus supplement’

For the
next 6 months, the Government is introducing a new Coronavirus supplement to be
paid at a rate of $550 per fortnight. This supplement will be paid to both
existing and new recipients in the eligible payment categories.

The payment
will be made to those receiving:

  • Jobseeker
    payment (and those transitioning to the jobseeker payment)
  • Youth
    allowance jobseeker
  • Parenting
  • Farm
    household allowance
  • Special
    benefits recipients

addition, eligibility to income support payments will be expanded to:

  • Permanent
    employees who are stood down or lose their job
  • Casual
  • Sole
  • The
  • Contract
    workers who meet the income test

Government notes that these criteria could include those required to care for
someone affected by the Coronavirus.

testing has also been reduced and will be waived for 6 months. Income testing
will still apply.

The payment
is not available if you have access to any employer entitlements such as annual
or sick leave or income protection insurance.

More: Income support for individuals

Second $750 payment to

Government is now providing two separate $750 payments to social security,
veteran and other income support recipients and eligible concession card
holders residing in Australia (see the full list here). The payment will be exempt from taxation and
will not count as income for the purposes of Social Security, Farm Household
Allowance and Veteran payments.

  • Payment 1 from 31 March 2020 (previously announced on 12 March): Available
    to people who are eligible payment recipients and concession card holders at
    any time between 12 March 2020 to 13 April 2020;
  • Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession
    card holders on 10 July 2020.

payments will be made automatically to those that meet the criteria.

More: Payments to support households

Bankruptcy safety net

A temporary
6 month increase to the threshold for the minimum amount of debt required for a
creditor to initiate bankruptcy proceedings against a debtor will increase from
$5,000 to $20,000. In addition, the time a debtor has to respond to a
bankruptcy notice will be temporarily increased from 21 days to six months.

someone declares their intention to enter voluntary bankruptcy, the period of
protection from unsecured creditors will be extended from 21 days to 6 months.


More information:

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