The news around COVID-19 continues to move fast. Governments are moving to alleviate the impact on individuals and businesses. Today’s stimulus had the following measures included.
SUPPORT FOR INDIVIDUALS
Welfare payments: $18.1bn
Welfare recipients receive an extra $550 a fortnight on top of their current benefits, essentially doubling the newstart payment.
Coronavirus supplement time-limited for next six months.
Waiting times and asset tests for JobSeeker Payment waived.
Extra one-off $750 payment for welfare recipients and veterans, on top of the $750 announced for them in the last round of stimulus measures. The 2nd $750 will arrive in July.
Unemployed, casuals and sole traders will be able to access their superannuation funds.
People can apply to access up to $10,000 in this financial year. Another $10,000 will be accessible in the next financial year.
Minimum superannuation drawdown rates for retirees and others reduced by 50 per cent until 2021.
Deeming rates: $876m
Deeming rates lowered in line with the Reserve Bank’s emergency rates cut.
Expected to benefit up to 900,000 pensioners.
SUPPORT FOR EMPLOYERS: $31.9BN
Small and medium enterprises (SMEs) to get up to $100,000 to keep staff in jobs.
Payment linked to business to 100 per cent of tax businesses withhold from staff’s wages: the more staff you have, the more money you get back.
Businesses with turnovers of up to $50m and charities eligible.
Cash flow for SMEs
Cash flow injection into small businesses from last stimulus package boosted.
Minimum payment rises from $2000 to $10,000. Maximum payment from $25,000 to $50,000.
WIDER SUPPORT FOR BUSINESSES
SME loan guarantee: $20bn
Federal government will guarantee 50 per cent of loans to small businesses.
Government guarantee will support up to $40bn of banks’ lending to SMEs.
Insolvency and bankruptcy
Threshold for creditors to take action raised from $2000 to $20,000.
Businesses will have six months, instead of 21 days to respond to creditors.
Notes: Obviously one of the biggest temptations will be the early access to superannuation. There are two points here. Removing money right now will be removing money after a decline and possibly the worst time to do so. Secondly, taking $20,000 now and assuming a 7.5% annual return over the next 20 years means potentially forgoing $85,000 down the road, or $57,000 in inflation adjusted purchasing power.
For those unemployed or having lost hours, the increased unemployment benefit, along with mortgage deferral options, may be the best first point of relief before accessing retirement savings.
For all the measures here, it is always best to take advice relating to your specific personal or business circumstances.
Further information and fact sheets are available at https://treasury.gov.au/coronavirus