This is a testing time for all of us, something none of us can say we have seen – the most challenging time economically since the great depression and since wartime. This crisis is having a major impact on our economy and our retirement as well as our health creating fear and anxiety from an “invisible” enemy.
Lets be clear, we will bounce back, however the message from our Government is that it will take at least six months to get the other side. Its going to be a long dark winter fighting and defeating the invisible enemy (with no footy!). During this time, hundreds of thousands of Australians will lose their jobs – forecasts of over one million, this is a tragedy.
Over the last week, there has been two major federal stimulus announcements. Over the weekend, both the Federal Government and Victorian State Government announced further stimulus package and safety net measures as a stop-gap measure for our economy.
Below we have outlined the key measures that have been announced and also attach the Australian Governments ‘Economic Response to the Coronavirus’ which provides greater detail of all the measures from both the first and second stimulus packages. We will summarise key measures below.
Federal Government Stimulus Package (22 March 2020)
The Government has announced its second economic response to the Coronavirus and the key business tax measures include cash flow assistance for employers. The key points include:
- The previously announced tax free payment of up to $25,000 for eligible small businesses will be increased to $50,000.
- The minimum payment will be increased from $2,000 to $10,000 and will include non-for-profit organisations.
- The payment will be based on 100% of the PAYG Withholding amount, instead of 50% previously stated in the first stimulus package. This relates to PAYGW amounts reported in the activity statements from January to June 2020.
- An additional payment equal to the above amount will also be available taking the total available payments to a minimum of $20,000 and a maximum of $100,000. This additional payment will be available from July to October 2020.
- The payments will be automatically credited by the ATO through the activity statement system.
- Offer businesses Government guarantees of 50% for unsecured loans of up $250,000 for a term of up to 3 years – with no payments required for 6 months.
Superannuation and Income Support
As part of the Governments second economic stimulus package, the key superannuation and income support measures include:
- Tax free early access to superannuation up to $10,000 available from mid April to 30 June 2020. Up to a further $10,000 will be available from 1 July 2020. To gain early access to superannuation an application must be made to the ATO with the following conditions applying:
- eligible for a job seeker payment; or
- on or after 1 January 2020:
– made redundant
– reduction in working hours of 20 hours or more
– if a sole trader, reduction in turnover of 20% or more
It is important to note, that everyone can withdraw from superannuation and note that the guidance states that this measure is from April 2020. Further, an application must be made to the ATO prior to withdrawal as well and meeting the requirements listed above. Please contact our office with any questions.
- Halving the minimum pension drawdown requirements for 2019-20 and 2020-21 reduced by 50%, benefiting retirees with account based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.
- A further tax-free payment of $750 to social security, veteran and other income support recipients and eligible concession card holders. This payment will be on top of the previously announced payment to be automatically made from 31 March 2020. The second payment will be made from 13 July 2020.
- There will also be a new time limited $550 per fortnight Coronavirus supplement to be paid from 27 April 2020 for 6 months.
Victorian State Government Stimulus Package (21 March 2020)
The State Premier has announced the Victorian Governments economic stimulus package. Under the package, the key measures include:
- Small and medium business with payroll of less than $3m will be eligible for full refunds of payroll tax for 2019-20.
- The same businesses will be able to defer any payroll tax for the first 3 months of 2020-21until 1 January 2021.
- Commercial tenants in Government buildings can apply for rent relief. Private landlords are encouraged to undertake the same measures.
- 2020 land tax payments will be deferred for eligible small businesses.
- The Victorian Government will pay all outstanding supplier invoices within 5 business days.
- Liquor licensing fees for 2020 will be waived for affected venues and small businesses in the hospitality sector.
As always, we encourage you to contact us to discuss any of the above issues and how these measures may be utilised to support you personally or your business. We will get through this together!
Ivan Filipovic is a leading SMSF Specialist Advisor with Redwood. Ivan is a Self Managed Superannuation Specialist with over 22 years provides a range of services across all sectors of Self Managed Superannuation, Property and Finance with an emphasis on long term wealth strategies. Ivan is a Chartered Accountant, Financial Planner, ASIC registered auditor, Mortgage Broker, Tax Agent and Licensed Property Professional.
Disclaimer – The content has been prepared by Redwood Wealth Pty Ltd & Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only.
Ivan Filipovic is an authorised representative of First Mutual (AFSL 423710). Redwood Wealth is a Corporate Authorised Representative of First Mutual (1244359)