The term ‘stimulus package’ essentially refers to the act of a government injecting money into the economy by directly giving businesses and certain individuals money in order to prevent or minimise an economic recession. The second stimulus package of $66.1 billion announced by Scott Morrison on the 22nd of March will go a long way towards doing just that. While this stimulus alone isn’t going to resolve the economic downturn being caused by the COVID-19 outbreak, it’s a bold and effective measure.

Below is a summary of the second round of stimulus:

1. Cash Flow for Employers:

• The maximum direct payment/credit for employers (in cases where the group-wide turnover is less than $50 million) has been increased to $100,000
• The above credit has now also been extended to those employers whose organisation is registered as a charity or not-for-profit
• The minimum credit/payment (referred to above) has been increased from $2,000 to $20,000
• Two stages of payments:
  – March-June Business Activity Statements: Payment/credit for 100% of PAYG withholding (up to $50,000).
  – June-September Business Activity Statements: Additional payment equal to total of above (up to $50,000).
• The goal of this section of the stimulus is to incentivise employers to retain their staff so that businesses can recover quickly when we reach the end of the COVID-19 outbreak.

2. Relief for Financially Strained Businesses:

• Directors of companies will be temporarily relieved of personal liability for trading while insolvent (with the exception of those who have found to be trading fraudulently or dishonestly)
• The threshold at which creditors can issue a statutory demand has been increased from $2,000 to $20,000 and the response deadline has been extended
• The threshold for creditor-initiated bankruptcy has been increased
• The ATO is now taking a less forceful approach to outstanding tax debts, withholding enforcement and Director Penalty Notices
• The Treasurer has been given the power to modify or provide relief from obligations under the Corporations Act.
• These measures will be in place for a minimum of 6 months

3. Supporting Credit Flow:

• The introduction of the small-to-medium enterprise (SME) business loan guarantee scheme:
  – The government will provide a guarantee of 50% to eligible lenders of unsecured loans to be used for working capital.
  – Maximum loans of $250,000 per borrower
  – Term of up to three years, with a 6 month repayment holiday.
  – This applies to businesses with a turnover of up to $50 million (not specified as group-wide turnover).
  – Loans are subject to credit assessment, with the expectation that the lender will look beyond this short-term difficult period.
  – The scheme will support $40 billion of lending (ie, $20 billion guaranteed)
• For 6 months, lenders will be exempt from following responsible lending obligations when lending to SMEs.
• The Australian Office of Financial Management will invest $15 billion in the structured finance markets that are used by smaller lenders.
• RBA’s $90 billion term funding facility for the banking industry, to put downward pressure on borrowing costs.
• APRA is temporarily easing its expectations for banks’ capital ratios.

4. Early Access to Superannuation:

• Individuals who are in financial stress due to the outbreak of COVID-19 will be able to access a one-time payment of up to $10,000 from their superannuation before July 1st, 2020.
• Individuals will again be able to access a further $10,000 from their superannuation after July 1st for another (approximately) 3 months.
• Eligibility for the above is as follows:
  – Unemployed
  – In receipt of certain welfare payments
  – Redundancy
  – Reduced hours
  – Sole trader whose business has been suspended
  – Sole trader whose turnover has been reduced by 20% or more
• Early access to superannuation will be tax-free and will not affect any Centrelink payments or Veterans’ Affairs payments
• You can apply for early access to superannuation from the middle of April through myGov where you must certify our eligibility criteria
• If approved, the ATO will inform you and provide you with access to your payment
• Alternatively, if you have self-managed superannuation, wait for further instructions and details on how to receive early access
• Unused or excess funds which you withdraw from your super can be contributed back

5. Australian Airlines:

• $715 million is support for both airports and airlines

6. Retirees:

• There will be a temporary 50% reduction in the minimum amount that retirees must be withdrawing from their account-based pensions. Eg. Those in the 75-79 age bracket usually must withdraw at least 6% of their account balance each year but this will temporarily be reduced to 3%.
• There will be more reduction in upper and lower social security deeming rates

7. Income Support for Individuals:

• For the next 6 months, those receiving jobseeker payments, youth allowance or parenting payment will get an additional $550 every two weeks
• The access to this income support will be expanded to those who are sole-traders, self-employed, etc.

8. Payments to Support Households:

• Those who received a one-off $750 payment from the first stimulus package will receive a second payment of $750 in July

At Allsafe Insurance Brokers, we are committed to supporting our clients in any way possible during the outbreak of COVID-19. For questions about your business insurance or an insurance policy, get in touch with us today!