The
Government has increased the previously announced measures to provide cash flow
support to business.
Now,
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.
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
days.
Businesses
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
lodgement.
Business
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.
Eligibility
for the measure will be based on prior year turnover. We will have to wait for
the legislation for the finer details.
Not-for-profit
employers, including charities, with an aggregated turnover under $50 million
will also be able to access the cash flow support.
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:
It will be
more important than ever for business to stay on top of their debtors.
Debts
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.
The
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.
The
Government will provide eligible lenders with a guarantee for loans with the
following terms:
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
conditions.
This latest
measure builds on the previous initiatives to ensure small business can access
capital, including:
The
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
support.
More:
The
Treasurer has been given a temporary instrument-making power to amend the Corporations
Act 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.
From
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
requirements:
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
Superannuation
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
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:
In
addition, eligibility to income support payments will be expanded to:
The
Government notes that these criteria could include those required to care for
someone affected by the Coronavirus.
Asset
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
The
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.
The
payments will be made automatically to those that meet the criteria.
More: Payments to support households
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.
Where
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:
More information: