Are you eligible for the Australian workers' and business stimulus package 22 March 2020?

Updated April 3

The cavalry is coming - are you eligible? Here's a quick guide:

Australia’s Commonwealth Government has announced a stimulus plan to help Australians economically survive the COVID-19 (Coronavirus) pandemic. Individuals will have greater access to unemployment benefits and businesses will get cash injections, tax offsets and partially-backed government loans.

In addition to measures announced earlier this month, these latest measures are to keep Australians employed and businesses alive, to cushion the economic impact of COVID-19.

This article was written on 22 March 2020 with all the publicly available information at the time. Last updated – 7.46pm 22 March 2020.

The 22 March economic package focus is on Australian workers and businesses, namely:

a) Casual workers, contractors, sole-traders and retirees

b) Businesses needing payroll support

c) Businesses needing immediate cash-flow support

d) Individuals wanting to access their own superannuation

e) Mortgage holidays

f) Bankruptcy freezes

See below for an outline of each of the above:

a) I’m a casual worker, contractor or sole-trader – how will the government help me?

Casual workers, contractors and sole-traders will be able to receive supplements similar to unemployment benefits, via Centrelink.

$550 per fortnight will be paid to both new and existing recipients of:

- JobSeeker Payments

- Youth Allowance jobseeker

- Parenting Payment and similar other benefits

This $550 per fortnight is in addition to existing payments under these programs.

New applicants are to receive expedited processing and the eligibility criteria have been temporarily expanded.

If you were not eligible before, please check again, as the rules have changed as of 22 March 2020.

Click here to view Centrelink’s JobSeeker website

Note - employees, sole-traders and contractors can also access their superannuation – see further below.

Source: The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, supporting Australian workers and business, 22 March 2020.

b) My business needs urgent payroll support

The government is trying as hard as they can to help your business if your business:

- Employs people, has staff or employees

- Pays rent

- Has bills to bay

There are two main ways the government is trying to keep your business alive.

1) $20,000 up to $100,000 is being offered to small to medium businesses stressed.

That’s a minimum payment of $20,000 for your business to help cashflow for items such as staff, rent, electricity etc.

2) Payroll Withholding Tax – temporarily removed

The Government wants you to keep your employees employed.

In addition to the cash injection described above, the government is temporarily removing PAYG (‘payroll’) withholding tax.

Normally when your business pays your employees, you pay the employee’s tax to the ATO through your BAS statement.

While you (or your accountant) will still complete the BAS statement and report on the withholding tax, the ATO will rebate that amount in full.

Note - On 22 March 2020 this stimulus was updated from those announced earlier in the month.

Example:

Your employee is paid $90,000pa including superannuation.

On a monthly basis, that’s $7,500 which includes:

- $712.50 superannuation

- $1,885.00 PAYG Tax or ‘PAYG Withholding Tax’

- $5,615.00 cash payment made to your employee’s bank account.

You will still report the $1,885.00 PAYG Withholding Tax on your BAS. Although, now, that amount will be rebated back to your business from the ATO.

This will have the greatest impact for the most highly paid employees, as their tax rates are higher.

Source: The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, supporting Australian workers and business, 22 March 2020.

c) My business needs urgent Cashflow support – NOW!

The government is guaranteeing half of any new small-medium business loan through the Coronavirus SME Guarantee Scheme.

The purpose is to get working capital, or cash-flow, into your business – now.

Red tape has been cut.

The government wants your business to get access to credit (loans) faster. It wants your business to be able to stay alive so that you’re still there on the other side of this pandemic. It wants you to get access to credit (loans) so that you can pay staff, employees, rent and ‘keep the lights on’.

These loans will be applied for through banks and non-banks.

The government will guarantee 50%/half, of the new loans issued by eligible lenders to small-medium businesses.

If you need the money quickly, I’d suggest calling your existing business banker to ask for an eligible loan today.

Often banks can take 7-10 days to ‘on-board’ a new business, despite you having all the paperwork in hand as you walk into their branch. If you think that you might need cash, start the process now.

Background: Without going into the details of how much money the government is providing, in addition to Governor Lowe of the Reserve Bank of Australia’s (RBA) announcement on Thursday 19 March 2020, the government and RBA are financially incentivising the banks to lend money to small-medium businesses. They’re not paying the banks, but making their access to money to lend to small businesses easier than ever before.

Source: The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, supporting Australian workers and business, 22 March 2020.

d) Individuals accessing their own superannuation

The government is enabling 2 x $10,000 withdrawals from superannuation for eligible individuals.

One withdrawal for the financial year 2019 (ending 30 June 2019) and the other in the first three months of the next financial year, being 1 July 2020 to 30 September 2020.

No tax is to be paid on the amounts withdrawn.

These withdrawals will not impact Centrelink payments.

You will need to be:

- Unemployed; or

- Eligible for Jobseeker payments (see above)

- On or after 1 January 2020 you were:

o Made redundant

o Working hours (shifts etc.) reduced by 20% or more

o If a sole trader – your business was suspended or there was a reduction in your turnover of 20% or more.

Applications are made through the myGov website www.my.gov.au

The ATO will process your application.

If your application is successful, the ATO will inform your superannuation fund and advise them to make the payment.

You will not have to contact your superannuation fund directly.

To ensure you receive the money as quickly as possible, it’s suggested you contact your superannuation fund to confirm your contact details including your bank account details and meet any identification requirements (note – ID requirements have increased a lot over the last few years).

Sources:

The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, supporting Australian workers and business, 22 March 2020.

Australian Government, Economic Response to the Coronavirus, Early Access to superannuation Fact Sheet, 22 March 2020.

e) Mortgage holidays

Most of Australia’s banks have already announced a pause on mortgage repayments. Other countries have referred to this move as a ‘mortgage holiday’.

Australian banks are offering homeowners a pause on their mortgage repayments for at least three months. Some of the banks have renewable options and extensions depending on personal circumstances such as job losses.

Small business loans have also received similar treatments of deferred repayments.

Contact your mortgage broker or lender directly, to discuss the options available to you.

Source: 7news.com.au, Big four banks offer homeowners a pause on their mortgage repayments, 20 March 2020, accessed 22 March 2020.

f) Bankruptcy freezes

To help stressed business owners who are on the verge of bankruptcy, the government has provided more support to keep the ‘wolves at bay’ by:

- Temporarily increasing the threshold at which creditors can issue statutory demands.

- Increasing the time companies have to respond to statutory demands

- Temporary relief for Directors for any personal liability for trading whilst insolvent

Note that statutory demands are normally letters from creditors that are the beginning of the end that trigger the start of the administration and liquidation processes.

Speak with your creditors and try have an open dialogue with your circumstances. All Australians will now be aware of the stimulus measures discussed above which should help companies move back into the black and survive the COVID-19 economic implications.

Source: The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, supporting Australian workers and business, 22 March 2020.

* Since this article was written, two more stimulus packages have been released - details still to be advised.

* Disclaimer: This is general advice only.