Stage 2 Stimulus Package
Dear valued clients and friends of Yield,
This communication is a follow up to last week’s client email, website blog and Facebook post that outlined the key measures contained in the Government’s Initial Economic Response to the Coronavirus, particularly as they related to our household and small business clients. A copy of the blog can be found here on our website.
While the full economic effects of the virus remain uncertain, the outlook has continued to deteriorate to the extent the Government announced a further round of stimulus measures yesterday 22 March 2020, that were aimed at further supporting affected workers, businesses and the broader community.
Although we have been inundated with urgent requests and have been busy deciphering the latest stimulus measures, we plan to touch base with all of our small business clients by the end of the week, to discuss how the measures announced to date will impact their businesses and to see how we can help.
We also want to assure you that we expect no major interruptions to the services that we provide to you. We have invested heavily in the latest technology over the past years so we can keep assisting you even in these difficult times, so please do not hesitate to be in touch if you need assistance.
The key measures announced yesterday are as follows and as touted in our previous communication, we anticipate further stimulus measures will be announced in the near future, which we will continue to communicate to you via the various methods mentioned above.
SUPPORT FOR BUSINESS
Measures to Boost Cashflow of Employers
These measures have been significantly enhanced from the initial package to boost cash flow and are aimed primarily at supporting business to retain employees. The potential minimum total payment for eligible business is $20,000 with a maximum of $100,000;
- A minimum $10,000 and maximum $50,000 payable via the March and June BAS (combined) for eligible businesses with employees.
- Payment calculated as 100% of PAYG on the March and June BAS for quarterly lodgers and 300% of the March BAS and 100% of the April, May and June BAS for monthly lodgers.
- Additional measures apply to eligible not for profit organisations with employees.
- The timing of the payments will depend on whether your business is on monthly or quarterly BAS cycle.
- The payments will be as a credit on the BAS and any surplus will be paid as a refund within 14 days after lodgement.
- An additional payment equivalent to the original payment will be available in the July to October period. i.e. the June and September BAS if quarterly lodger.
- These additional payments will also be applied as credits against the respective BAS and paid out as a refund if there is a surplus within 14 days.
- Note the stimulus package for apprentices remains mostly unchanged from the original Stimulus Package.
Further detail as to how the measures would apply to you, how to calculate the entitlement and some practical worked examples are contained in the Fact Sheet in the link below.
Measures to Stimulate Business Asset Purchases
These announcements are aimed at stimulating asset purchases by business;
Instant Asset Write Off
- Increasing the instant asset write off limit from $30,000 to $150,000 for business with aggregated annual turnover of less than $500M.
- Measure in place from announcement date of 12 March 2020 to 30 June 2020
- Measure applies to new and second–hand assets
Additional Business Investment Announcement
- A deduction of 50% of the cost of eligible assets on installation. This measure will affect most clients post 30 June 2020 once the $150,000 write off ceases.
- Measure applies to new assets.
- Measure in place from 12 March 2020 to 30 June 2021.
These measures are largely unchanged from the original package.
Further detail as to how the measures would apply to you and some practical worked examples are contained in the Fact Sheet in the link below.
Legal Measures for Financially Distressed Businesses
These announcements are to temporarily alleviate the threat of actions against business’s that would otherwise be profitable and viable if it wasn’t for the current threat. Temporary elements Include;
- Increases in the threshold and time on statutory demands
- Increase in the threshold and time on bankruptcy notices
- Relief for directors from personal liability while trading insolvent
- Targeted relief from application of Corporations Act to deal with unforeseen events that arise as a result of the Coronavirus
See attached Fact Sheet for more detail if you believe these measures may apply to you.
Measures to Obtain Short-term Unsecured Business Loans
Under these measures the Government will provide a 50% guarantee to businesses to support new short-term unsecured loans. The scheme will guarantee up to $40 billion of new lending.
This will provide businesses with finance to meet cash flow needs, by enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses who are facing significant challenges due to disrupted cash flow to meet existing obligations including rent, utilities and employee expenses.
The guarantee will apply 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 current cycle by taking into account the uncertainty of the current economic conditions.
We encourage you to contact your Bank Manager promptly to discuss your eligibility for this measure in the event you believe you will have a temporary shortfall in working capital requirements in the near future.
Further detail is contained in the Fact Sheet below.
SUPPORTING HOUSEHOLDS AND INDIVIDUALS
Measures to Boost Available Cash for Households receiving Centrelink Support
Announcement for boost to household cash flow for Centrelink recipients;
- Two separate $750 one off payments per person
- Requirement to be eligible between 12 March 2020 and 13 April 2020 to be eligible for first payment
- Requirement to be eligible on 10 July 2020 to be eligible for the second payment
- First payments to go out from 31 March 2020
- Second payment to go out from 13 July 2020
A fact sheet on application and eligibility of the measures is below.
Income Support for Individuals
An expansion of eligibility to income support payments and a new supplement.
- Time limited additional supplement of $550 per fortnight
- Will run 6 months
- Expanded access – especially to persons newly out of work
- Reduced means testing
- Reduced waiting times
Fact sheet on application and eligibility of measures below.
Temporary Early Release of Super and Reduction of Minimum Drawdown Rates
Temporary early release measures
- If certain criteria are met, individuals may be entitled to access up to $10,000 in superannuation benefits in 2019/20 and a further $10,000 in 2020/21.
- Can apply through myGov
- Must be unemployed
- Or eligible for certain Centrelink payments
On or after 1 Jan 2020
- You were made redundant
- Work was reduced by 20%
- Sole trader business was suspended, or income reduced by 20%
- First payment accessible prior to 30 June 2020
- Second payment available from 1 July 2020 for approximately 3 months
Reduction of 50% of the minimum drawdown percentage
- Account based pensions
- Aimed at reducing impact of market volatility
- Applies 2019-20 and 2020-21
Fact sheet on application and eligibility of measures below.
The fact sheet below summarises all of the current stimulus measures in one document