Small to Medium Enterprises

What is the cash flow assistance for employers?

The Cash flow assistance for employers measures will assist businesses to manage cash flow challenges and help them to retain their employees.

The support will be available in two forms:

Boosting Cash Flow for Employers
A wages subsidy for apprentices and trainees

Boosting cash flow for employers in 2019–2020 and 2020–2021

Eligibility :

Small- and medium-sized businesses (including Australian charities and Not-for-profits commissions) that employ people, and have an aggregated annual turnover of less than $50 million(based on the prior year turnover)
It had an ABN on 12 March 2020
It makes a payment from which an amount is required to be withheld

How much are the cash flow boosts?

The cash flow boost has two stages:

First boost (2019–2020)

Up to the maximum limit payment $50,000 and minimum limit payment $10,000. It will be based on 100 per cent of the PAYG withholding reported at label W2 of the activity statement

Quarterly lodgers will be eligible to receive once they lodge their March 2020 and June 2020 activity statements (up to a total of $50,000);
Monthly lodgers will be eligible to receive the first boost once they lodge their March 2020, April 2020, May 2020 and June 2020 activity statements (up to a total of $50,000);

Second boost (2020–21)

The second boost is available to all entities that received any amount of the first boost, equal to the full amount of the first boost to which the entity was entitled cap to $50,000, provided that the entity lodges an activity statement for the tax periods from June 2020 to September 2020.

Quarterly lodgers will be eligible to receive the second boost once they lodge their March 2020 and June 2020 activity statements (up to a total of $50,000)
Monthly lodgers will be eligible to the second boost in four equal payments for the months of June 2020, July 2020, August 2020 and September 2020

A wages subsidy for apprentices and trainees

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider. Employers can register for the subsidy from early April 2020 to 31 December 2020

Key points:

The wage subsidy will be 50 per cent of the apprentices or trainee’s wages for the nine months from 1 January 2020 to 30 September 2020
The maximum subsidy is $21,000, or $7,000 per quarter, per apprentice or trainee.
Employers will be eligible where it employs fewer than 20 full-time employees and retains an apprentice or trainee
The apprentice or trainee must have been in training as at 1 March 2020
There is no turnover threshold for this measure
Employers of any size and Group Training Organisations that re-engage an eligible apprentice or trainee who could not be retained by a small employer will also be eligible for the subsidy, i.e. where a small employer is not able to retain an apprentice, the subsidy will be available to the new employer of that apprentice.

SME loan guarantee scheme

The Government will establish the ‘Coronavirus SME Guarantee Scheme’ to support SMEs to get access to working capital, where it will guarantee 50 per cent of new loans issued by eligible lenders to SMEs to enhance the willingness and ability of banks to provide credit to SMEs with the Scheme able to support $40bn of lending to SMEs. The Scheme will complement announcements made by Australian banks to support SMEs with their existing loans by deferring repayments for up to 6 months as well as the Reserve Bank’s $90bn term funding facility for banks, that will reduce the cost of lending, with particular incentives to lend to SMEs.

Individuals

Supplement for job seekers

The Government will implement a new temporary Coronavirus supplement of $550 per fortnight, effectively doubling the current payment for job seekers. This Coronavirus supplement will be paid for the next 6 months to both existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. Eligible income support recipients will receive the full amount of the $550 Coronavirus supplement on top of their payment each fortnight.

Additional stimulus payments

Further to the $750 stimulus payment for pensioners announced on 12 March 2020, the Government will provide a further $750 payment to social security and veteran income support recipients and eligible concession card holders, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.

This second $750 payment will be made automatically from 13 July 2020 to income support recipients and eligible concession card holders. The first $750 payment will be made from 31 March 2020 to people who will have been on one of the eligible payments any time between 12 March 2020 and 13 April 2020.

Temporary relief for directors of distressed businesses

The Government will temporarily increase the:

threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000;
threshold at which creditors can initiate bankruptcy proceedings from $5,000 to $20,000; and
time companies have to respond to statutory demands from 21 days to 6 months.

Temporary relief will also be provided for directors from any personal liability for trading while insolvent. The Corporations Act 2001 will also be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the Coronavirus.

Superannuation

Tax-free superannuation withdrawals

Affected individuals will be able to withdraw up to $20,000 from their superannuation funds. Withdrawals will be available from April of up to $10,000 in the 30 June 2020 income year and up to $10,000 in the 30 June 2021 income year. To apply for early release a fund member must satisfy any one or more of the following requirements:

they are unemployed; or
they are eligible to receive a Jobseeker Payment, Youth Allowance for Jobseekers, Parenting Payment (which includes the single and partnered payments), a special benefit or Farm Household Allowance; or,
on or after 1 January 2020:
- they were made redundant; or
- their working hours were reduced by 20 per cent or more; or if they are a sole trader — their business was suspended or there was a reduction in their turnover of 20 per cent or more.

Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. From mid-April eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.

Changes to drawdown rates

The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years. This measure is intended to provide retirees with greater flexibility in how they manage their superannuation savings. This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements. The reduction applies for the 2019-20 and 2020-21 income years.

Age	Default minimum drawdown rates (%)	Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)
Under 65	4	2
65-74	5	2.5
75-79	6	3
80-84	7	3.5
85-89	9	4.5
90-94	11	5.5
95 or more	14	7

If you have any questions, please contact a member of our team to discuss.

Second Economic Stimulus Package