Second Government Economic Response Overview to COVID 19

It is hard to believe how our lives have suddenly changed overnight, especially when we thought we have all the answers in this modern world.

As we’ all aware, the Australian economic outlook has deteriorated since the Government’s initial Economic Response announced on 12 March 2020.

In response to this, on 22 March 2020, the Government announced a second set of economic responses, which extend the Stimulus Package to a total of $189 billion across the forward estimates, representing 9.7% of annual GDP.

We hope that this 2nd stimulus package will offer clients the necessary cash assistance to keep their business running during this uncertain economic condition.

I want to encourage all clients to review their insurance policies, both business and individual (i.e. key person insurance, business interruption insurance, income protection insurance, etc.). Ensure you have coverage in the event of the Coronavirus affecting you and causing disruption resulting in loss of income.

Regards
Prathana Harris
Director – My Accounting Advantage

Where to from here

Key Points from the recent announcement:

Support for businesses – Boosting Cash Flow for Employers:

  • Employers will receive a payment equal to 100% of PAYG withholding tax (up from 50 per cent), with the maximum amount being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
  • An additional payment is also being introduced in the July — October 2020 period. Eligible entities will receive an additional payment equal to the total amount received during March and June 2020 quarters.
  • This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.

Here is the link to detailed information on the Government web-site:

Cash Flow Assistance – Fact Sheet

Temporary relief for financially distressed businesses:

  • Payment deferral and variation to tax instalments by up to 6 months
  • Interest and penalties remission incurred after 23 January 2020
  • Low-interest payment plan to pay ongoing tax liabilities

Here is the link to detailed information on the Government web-site:

Relief for financially distressed businesses – Fact Sheet

Supporting the flow of credit

  • Introduction of Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50% to SME lenders to support new short-term unsecured loans to SMEs.
  • The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.

Here is the link to detailed information on the Government web-site:

Supporting the flow of credit

 Support for individuals and households

  • Income support for individuals to assist lower-income Australians over the next six months, the Government will extend payment by $550 per fortnight. This will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
  • Payments to support households – The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession cardholders.
  • Temporary early release of superannuation – The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released, and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
  • Temporarily reducing superannuation minimum drawdown rates – The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21.

Here is the link to detailed information on the Government web-site:

Support for individuals and households

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