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Government Stimulus Package and Job Keeper Payments Explained

The two Federal Government stimulus packages announced last week to assist businesses affected by COVID-19 have now become legislation.

We also include details of the Job Keeper Payment announcements by the Federal Government.

In summary;

  1. The incentives to keep employing your employees are credits for the PAYG withholding tax in your March 2020, June 2020 BAS and September 2020 BAS

  2. Job Keeper payments will be $1,500 per fortnight per eligible employee. This also applies to eligible self employed people.

  3. Access to an interest only unsecured business loan up to $250,000 for three years and no loan repayments for the first six months. Interest payable only on drawn down balances of the loan. Interest rate of about 4% to be confirmed.

  4. Eligible persons can access $10,000 as a tax free withdrawal from their superfund before 30 June 2020 and another $10,000 after 1 July 2020.

  5. SMSF owned consulting rooms can give rent relief to their related party tenant without contravention of market value rent rules.

  6. Retirees can reduce their superfund pension drawdowns by 50%.

  7. Access to other government support for people you may know who don’t qualify for the $550 per fortnight Coronavirus supplement payment.

  8. Extra tax deductions if buying equipment for your practice.

  9. Deferral of payroll tax payments.

  10. Apply for six months of loan repayment relief for all business loans.

Please contact me to discuss how these measures can assist you in this uncertain time.

More detail of Federal Government Stimulus measures are below;

1. Cash flow assistance for employers – Cash Flow boost

The payments will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 for employers lodging eligible upcoming activity statements.

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2. Job Keeper Payment (JKP)

Employers for employees

Under the JobKeeper Payment, businesses significantly impacted by the Coronavirus outbreak will be able to access a temporary JKP from the Government to continue paying their employees.

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3. Loans for working capital – (Coronavirus SME Guarantee Scheme)

The Government is providing an exemption from responsible lending obligations for six months, for lenders providing loans to existing small business customers.

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4. Superannuation measures

Early release of superannuation

Individuals in financial distress may be able to access up to $10,000 of their superannuation by 30 June 2020, and a further $10,000 in the 2021 financial year.

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5. Self-Managed Superannuation Funds - ownership of consulting rooms

Some landlords are giving their tenants a reduction in or waiver of rent because of the financial impacts of the COVID-19 and the ATO understands that you may wish to do so as well.

The ATO's compliance approach for the 2019–20 and 2020–21 financial years is they will not take action where an SMSF gives a tenant – who is also a related party – a temporary rent reduction during this period.

6. Support for Retirees – reduced minimum pension drawdowns

The Government is temporarily reducing the 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 will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.  If a pensioner has already drawn more than their reduced amount, they cannot return the surplus to the fund.  They can recontribute the surplus, if they are eligible and within their contribution caps.

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7. Income Support for individuals

The government will also provide two $750 tax free payments to social security, veteran and other income support recipients and eligible concession card holders as follows:

  1. the first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive;

  2. the second payment (announced on 22 March 2020) will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.

You will get this payment if you are not eligible for the Coronavirus supplement of $550 per fortnight.

8. Tax incentives for business equipment investment

Business investment support

Businesses with turnover of less than $500 million can deduct depreciation at an accelerated rate.  This only applies to new assets purchased between 12 March 2020 and 30 June 2021. 

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9. NSW Government Payroll Tax and rent relief measures

  • Deferral of payroll tax payments for business for six months

  • Deferral of rents for six months for commercial tenants with less than 20 employees in all Government-owned properties.

10. Australian Banking Association

The business relief package is available to business customers of participating banks, with total business loan facilities of up to $10 million where you advise your bank your business is affected by COVID-19.

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