To cushion the blows of coronavirus, the Australian Federal Government have provided stimulus packages for workers, households and businesses. These packages are designed to support businesses in managing short-term cash flow challenges, provide support to individuals, affected industries, regions and to ensure the continued flow of credit in the Australian economy.
The main elements of the stimulus packages are as follows:
From 4 May 2020, eligible businesses whose turnover had reduced by over 30% if they have an annual turnover of less than $1 billion or by over 50% if they have an annual turnover of more than $1 billion are entitled to claim $1,500 per fortnightly for each eligible employee, till 30 September 2020. This scheme provides funds to cover cost of wages and retains jobs for Australians.
Due to coronavirus and the need to stimulate the economy, from 27 April 2020, the government temporarily doubled the JobSeeker allowance (previously known as Newstart) to $1,100 a fortnight which used to be $550 a fortnight. This is paid to both existing and new Centrelink recipients of Jobseeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY, Living Allowance, Farm Household Allowance and Special Benefit till the end of September 2020.
Two Lump-sum Payments of $750
Social security, veteran and other income support recipients as well as eligible concession card holders will receive two separate payments of $750. The first payment was made from 31 March 2020 and the second payment will be made from 13 July 2020, to create confidence, domestic demand and employment in the Australian economy.
Early Release of Superannuation
From 20 April 2020, the Federal Government allowed eligible superannuants affected by Coronavirus to access up to $10,000 before 30 June 2020, with an additional amount of up to $10,000 available from 1 July 2020 to 24 September 2020. Only one application can be made for each financial year. These superannuants will not need to pay tax on amounts withdrawn and this will not affect their Centrelink or Veterans’ Affairs payments.
Reduced Drawdown Requirements for Superannuation
There have been significant losses in the financial markets due to Coronavirus. For the benefit of retirees, the Federal Government has reduced the annual minimum drawdown rates for account-based pensions, annuities, allocated pensions and market-linked pensions by 50% in the 2019–20 and the 2020–21 financial years. This measure will save the retirees from selling investment assets in sluggish markets to fund minimum drawdown requirements.
Reduced Social Security Deeming Rates
For social security purposes, the deeming rates are reduced through which the Government deems your income to be from your financial assets such as cash in the bank, shares, managed investments and bonds. From 1 May 2020, the upper deeming rate is 2.25% and the lower deeming rate is 0.25%, applicable to various thresholds for singles and couples. This measure will allow receiving more money from social security payments.
Instant Asset Write-off for Taxation
From 12 March 2020 until 31 December 2020, the Government has increased the instant asset write-off threshold from $30,000 to $150,000 for businesses with aggregated annual turnover of less than $500 million (increased from $50 million). This policy will support over 3.5 million businesses or over 99% of all Australian businesses, employing over 9.7 million employees.
Cash Flow Boost for Employers
From 1 March 2020 to 30 September 2020, the Government is providing temporary cash flow support to businesses and not for profit organisations with Annual turnover under $50 million. These entities will receive tax-free cash flow boosts of between $20,000 and $100,000 through the lodgement of their Business Activity Statements. These payments will be equal to 100% of their employees’ salary and wages withheld.
Supports for Apprentices/Trainees
Till 30 September 2020, Small business employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage up to a maximum of $21,000 per eligible apprentice or trainee. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. This measure will support over 70,000 small businesses, employing around 117,000 apprentices or trainees.
Support for Regional Australia
The Federal Government has set aside $1 billion to support regional communities significantly affected by the Coronavirus outbreak. These funds will be available to assist during the outbreak and the recovery.
Low Cost Credit Facility by Reserve Bank of Australia
The RBA will lend over $90 billion to banks on the proviso that they will pass on that cash to small and medium sized businesses at a fixed interest rate of 0.25%. This will reinforce the benefits of a low cash rate by reducing funding costs for banks, which in turn will help reduce interest rates for borrowers.