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On Sunday 22 March 2020 the Australian Government released their second stimulus package.

Some of Stimulus 2 relief overlaps with Stimulus 1. Where necessary we will highlight those overlaps and how they work.

The package consists of several components. Following is a summary of Stimulus 2 with two primary categories: Business and Individuals. Details on relevant categories and components will be available in separate posts (see links). It will take some time for us to put the information together so we will focus on the more pressing information first.

Business
• Tax-free payments up to $100,000 for small business and not-for-profit employers. This is tied to and modifies Stimulus 1 to arrive at a total package over six months – ie. paid on lodgment of Mar 2020 BAS and Jun 2020 BAS. It will involve an increase in the Stimulus 1 caps from $2000 minimum TAX FREE relief payment, now $10000, and increase in the cap from $25000 to $50000. The second round of the payment  basically duplicates the first round payment.

• Solvency safety net debt requirements – temporary 6 month increase to the demand threshold for a company from $2,000 to $20,000. It also increases the time directors have  to respond from 21 days to 6 months.

• Solvency safety net other – There is a relief from personal liability for company directors trading whilst insolvent to 6 months.

• Access to working capital – Introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.

• Sole traders and self-employed eligible for Jobseeker entitlements – the eligibility criteria to access income support is relaxed for self-employed business operators and sole traders.

• Temporary relief from some Corporations Act requirements.

Individuals
• Early release of superannuation – Individuals in financial distress may claim up to $10,000 tax free from their superannuation in 2019-20, and a further $10,000 in 2020-21. These withdrawals will not affect Centrelink or Veterans’ Affairs payments. Conditions apply.

• Temporary reduction in minimum superannuation draw down rates – The original 4% minimum drawdown for account based pensions has been lowered to 2% for 2019-20 and 2020-21.

• Deeming rates reduced – from 1 May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.

• Supplements increased, access extended and eased – for 6 months from 27 April 2020:

  • Existing income support recipients may claim and additional $550 per fortnight for 6 months
  • A second one-off stimulus payment of $750 will be paid automatically from 13 June 2020 to certain income support recipients. This is in addition to the Stimulus 1 announcement.
  • Eligibility for access to income support eased to include sole traders and the self-employed, and to those caring for someone infected or in isolation.
  • Waiting periods and assets tests temporarily waived.

• Bankruptcy safety net – For initiation of bankruptcy, a temporary 6 month increase to the threshold for the minimum amount of debt is increasded from $5000 to $20,000.

The Government has flagged that additional stimulus packages will be required.

 

 

 

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