The Government has announced a $189 billion economic package to aid businesses and households during the coronavirus pandemic.
The Federal Government has unveiled a $189 billion economic plan aimed at cushioning the economic impact of the coronavirus pandemic on Australian businesses and households.
The economic plan includes $17.6 billion from the Government’s first economic stimulus package announced on 12 March, $90 billion from the Reserve Bank of Australia, a further $15 billion from the Government to provide easier access to finance, and $66.1 billion from the Government’s economic support package.
Combined, the $189 billion economic support package is equivalent to 9.7 per cent of the nation’s GDP.
The Government’s economic plan is targeted at supporting over three million small and medium sized businesses in Australia, as well as households.
In releasing the package, Prime Minister Scott Morrison said the Government wanted to help businesses keep going for as long as they can through the coronavirus pandemic, or to pause instead of winding up their business.
“We want to ensure that when this crisis has passed, Australian businesses can bounce back,” Morrison said. “Our focus is on cushioning the blow and providing hope to every Australian that we will get through this and come out the other side together.”
Following is an overview of the economic package to support Australians.
Supporting business investment
Under the plan, the Government has set aside $700 million to increase the instant asset write off threshold from $30,000 to $150,000 and expand access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
In addition, the Government will support business investment by providing a 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short-term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
Both these measures are effective from 12 March 2020.
Small and medium-sized business assistance
Up to $100,000 will be provided to eligible small and medium sized businesses, and not‑for-profits (including charities) that employ people. These payments are designed to assist businesses with their cash flow, so they can continue operating during these challenging times. The minimum payment amount available is $20,000.
Employers can access a tax-free payment of up to $50,000, with the minimum set at $10,000. The payment is available from 28 April 2020.
To be eligible, small and medium businesses, and for-for-profits, need to have an aggregated annual turnover under $50 million and employ workers. This measure is expected to benefit approximately 690,000 businesses, employing around 7.8 million people, and around 30,000 not-for-profit organisations.
Coronavirus SME Guarantee Scheme
The Government has established the Coronavirus SME Guarantee Scheme. The scheme will support small and medium enterprises (SMEs) in gaining access to working capital to help them through the impact of the coronavirus.
Under the scheme, which is able to support $40 billion of lending to SMEs, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The scheme complements announcements made by Australian banks to support small businesses with their existing loans.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.
Providing relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent.
The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.
Assistance for severely affected sectors, regions and communities
To support sectors, regions and communities that have been adversely affected by the economic impacts of the coronavirus, such as tourism, agriculture and education, the Government has allocated $1 billion.
Coronavirus supplement
A coronavirus supplement will be paid at a rate of $550 per fortnight to existing and new recipients of the JobSeeker Payment, Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit. This payment, which will be available for the next six months, will be in addition to an eligible recipient’s income support payment.
Household stimulus payments
The Government has confirmed that the deeming rates, which previously sat at 1 per cent for investments up to $43,100 and 3 per cent for investments over $43,100, will be reduced to 0.25 per cent and 2.25 per cent respectively.
In addition to a one-off $750 payment to pensioners, social security, veterans and other income support recipients and eligible concession card holders, the Government will provide a further $750 payment to these support recipients. The payment will be tax-free and will not count as income for social security, Farm Household Allowance and veteran payments. However, the payment will not be made to those who are receiving an income support payment and who are eligible to receive the coronavirus supplement.
The first payment will be made from 31 March 2020, and the second payment will be made from 13 July 2020.
The Government is also offering administrative relief for certain tax obligations, including deferring tax payments for up to four months. This is similar to relief provided following the bushfires, and will be provided for taxpayers affected by the coronavirus, on a case-by-case basis.
Early release of super
The Government is allowing individuals who are experiencing financial stress as a result of the coronavirus, to access up to $10,000 of their super in 2019-20, and a further $10,000 in 2020-21. The Government will waive any tax on amounts released and the money withdrawn will not affect Centrelink or Veterans’ Affairs payments.
Super drawdown rates
The Government is temporarily reducing super minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. It’s expected this measure will assist retirees by providing them with greater flexibility in managing their super assets.
“These extraordinary times demand extraordinary measures,” said Treasurer Josh Frydenberg. “The Government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.”
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