A package of Bills to implement the Federal government’s economic response to the spread of the coronavirus/COVID-19, announced between 12 and 22 March 2020, has been introduced into Parliament.
Key tax and income support as well as superannuation measures are in the following Bills:
- Coronavirus Economic Response Package Omnibus Bill 2020 (the Omnibus Bill)
- Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020 (the Cash Flow Boost Bill)
Enhancing the instant asset write-off
Schedule 1 of the Omnibus Bill will:
- increase the cost threshold below which small business entities can access an immediate deduction for depreciating assets and certain related expenditure (the instant asset write off) from $30,000 to $150,000, from 12 March 2020 to 30 June 2020
- provides access to an instant asset write-off to entities with an aggregated turnover of $10m or more but less than $500m (up from the existing cap of $50m), and
- make the instant asset write-off available for depreciating assets and certain related expenditure costing less than $150,000, from 12 March 2020 to 30 June 2020.
These measures will take effect on or after 12 March 2020.
Accelerating depreciation deductions
Schedule 2 of the Omnibus Bill temporarily allows businesses with aggregated turnovers of less than $500m pa to deduct capital allowances for depreciating assets at an accelerated rate.
Generally, to be eligible to apply the accelerated rate of deduction, the depreciating asset must satisfy several conditions including that the asset:
- is new and has not previously been held by another entity (other than as trading stock or for testing and trialling purposes)
- is an asset for which an entity has not claimed depreciation deductions, including under the instant asset write-off rules, and
- is first held, and first used or installed ready for use, for a taxable purpose between 12 March 2020 and 30 June 2021 (inclusive).
There are different rules that apply depending on whether an entity is using the simplified rules for capital allowances for small businesses. These measures will take effect on or after 12 March 2020.
Boosting cash flow for employers
The Cash Flow Boost Bill provides for the Commissioner to make payments referred to as cash flow boost payments comprising the first cash flow boost and the second cash flow boost payments.
The Commissioner will be required to make the first cash flow boost payments to eligible entities from March 2020 to June 2020. Entities are eligible if:
- the entity makes a payment that is subject to withholding obligations under Subdiv 12-B, 12-C or 12-D of the Taxation Administration Act 1953 (broadly, a payment of wages or salary or similar remuneration), whether or not any amount is actually withheld, in the period
- the entity was a small or medium business entity, or a charity or other not-for-profit (NFP) entity of equivalent size, for the most recent income year of the entity for which an assessment of income tax has been made by the Commissioner, or
- the Commissioner is reasonably satisfied that it is likely that the entity is a small or medium business entity, or a charity or other NFP entity of equivalent size, for the income year that includes the period
- the entity has notified the Commissioner of their entitlement in the approved form
- the period is one of the following:
- the quarters ending in March 2020 or June 2020, or
- the months of March 2020, April 2020, May 2020 or June 2020
- if the entity is not an Australian Charities and Not-for-profits Commission registered charity, it both:
- held an ABN on 12 March 2020, and
- either derived assessable income from carrying on a business in the 2018/19 income year or made one or more supplies for consideration in the course of an enterprise it carried on within Australia in tax periods commencing after 1 July 2018 and ending before 12 March 2020 and notice of the income or supplies was held by the Commissioner on or before 12 March 2020 or within such further time as the Commissioner allows, and
- the entity (or an associate or agent of an entity) has not engaged in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the first cash flow boost or increase the entitlement of the entity to the first cash flow boost.
The Cash Flow Boost Bill also provides for the Commissioner to make the second cash flow boost payments upon lodgment of activity statements for periods from June to September 2020 to entities that were entitled to the first cash flow boost. Schedule 3 of the Omnibus Bill makes consequential amendments to various Acts arising from the Cash Flow Boost Bill.
The Cash Flow Boost Bill provides for the Commissioner to make payments to eligible entities in respect of periods from March 2020 and the quarter ending March 2020.
Stimulus payments to households
Schedule 4 of the Omnibus Bill provides for the payment of the first economic support payment of $750 to Social Security and Veterans’ income support recipients, Farm Household Allowance recipients, Family Tax Benefit recipients and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Commonwealth Gold Card.
Schedule 4 also provides for the payment of a second economic support payment of $750 to Social Security and Veterans’ income support recipients, Family Tax Benefit recipients and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Commonwealth Gold Card who receive a qualifying payment or hold a qualifying concession card on 10 July 2020, unless they are eligible to receive the Coronavirus Supplement.
These measures will take effect on the day after the Omnibus Bill receives assent.
Schedule 10 of the Omnibus Bill amends the SIS Regulations and RSA Regulations to reduce the minimum payment amounts for account-based pensions (and for the equivalent annuity products) by half for the 2019/20 and 2020/21 financial years.
These measures will take effect the day after the Omnibus Bill receives assent.
Additional support for income support recipients
Schedule 11 of the Omnibus Bill amends the Social Security Act 1991 to provide additional financial assistance to Australians financially impacted by the coronavirus. Australians can claim Jobseeker Payment or Youth Allowance (other) if they are an Australian resident (or exempt from the residence requirements) and satisfy the requirements outlined in a legislative instrument. If qualified, a person receives the current rate of Jobseeker Payment or Youth Allowance (other) along with a fortnightly supplement of $550 or such other amount determined by legislative instrument.
The supplement is also available to existing recipients of Jobseeker Payment, Youth Allowance (other), Parenting Payment, Special Benefit, and the Farm Household Allowance. The Minister for Families and Social Services (the Minister) may extend the supplement to other social security payments by legislative instrument.
The supplement is available for an initial six-month period, commencing on 27 April 2020. The Minister may extend the six-month period and extend the supplement to other social security payments.
Recipients of Jobseeker Payment or Youth Allowance (other) (which includes new and existing recipients) will be exempt from the assets test, liquid assets waiting period, ordinary waiting period, newly arrived resident’s waiting period and seasonal worker preclusion periods. Parenting Payment recipients will also be exempt from the assets test, ordinary waiting period, newly arrived resident’s waiting period and seasonal worker preclusion period.
The exemption from the newly arrived resident’s waiting period also applies to special benefit.
Schedule 11 also amends the Farm Household Support Act 2014 to apply the supplement and exemptions to recipients of the Farm Household Allowance.
These measures will take effect on 27 April 2020.
Schedule 11 also delays the commencement of the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act 2020 by 12 months to 1 July 2021. That Act amends the Social Security Act 1991 to ensure that employment income is assessed once it is paid to a social security recipient.
Early release of superannuation
Schedule 13 of the Omnibus Bill amends the SIS Regulations and RSA Regulations to allow individuals affected by the coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. Each person is permitted to have up to two releases — one for an application made during the 2019/20 financial year and another for an application made during the 2020/21 financial year. This means a person may have up to $20,000 released in total.
Schedule 13 also amends the Income Tax (Transitional Provisions) Act 1997 to ensure that any such amounts that are released are not subject to tax.
These measures will take effect on the day after the Omnibus Bill receives Royal Assent.
Medicare levy and Medicare levy surcharge low-income thresholds
Schedule 14 of the Omnibus Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 to increase:
- the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the consumer price index (CPI)
- the Medicare levy low-income thresholds for individuals and families eligible for the Seniors and Pensioners Tax Offset (along with the dependent child/student component of the family threshold), in line with movements in the CPI, and
- the Medicare levy surcharge low-income threshold in line with movements in the CPI.
These measures apply to the 2019/20 income year and later income years.
The legislative package also deals with the following measures:
- Delegation power for the Director of Human Biosecurity. Schedule 5 of the Omnibus Bill enables the Director of Human Biosecurity to delegate their function or powers under Pt 3 of Ch 2 (human biosecurity control orders) of the Biosecurity Act 2015.
- Environmental Management Charge. Schedule 6 of the Omnibus Bill amends the Great Barrier Reef Marine Park Regulations 2019 to temporarily waive the environmental management charge from 1 April 2020 to 31 December 2020.
- Assistance for apprentices and trainees and the aviation sector. Schedule 7 of the Omnibus Bill establishes legislative authority for government spending on new measures to assist employers to retain apprentices and trainees, and to provide financial assistance to participants in the Australian aviation sector to assist with the impact on the sector of the coronavirus.
- Providing flexibility in the Corporations Act. Schedule 8 of the Omnibus Bill establishes a temporary mechanism to provide regulatory relief to classes of persons that, due to the coronavirus, are unable to meet their obligations under the Corporations Act or the Corporations Regulations.
- Childcare. Schedule 9 of the Omnibus Bill provides limited flexibility to manage the impact of the coronavirus, as well as future disasters, on families and on business continuity for childcare services.
- Temporary relief for financially distressed individuals and businesses. Schedule 12 of the Omnibus Bill provides temporary relief for financially distressed individuals and businesses.
- Delaying the next intergenerational report to 2021. Schedule 15 of the Omnibus Bill delays the next intergenerational report from 2020 to mid-2021 to ensure there is adequate time to produce long-term projections that are based on robust budget estimates.
- Deferral of sunsetting. Schedule 16 of the Omnibus Bill allows the relevant Minister for an Act or legislative instrument that is scheduled to sunset on or before 15 October 2020 to determine a new day on which the legislation sunsets.
- Guarantee of Lending to Small and Medium Enterprises (Coronavirus Economic Response Package) Bill 2020. This Bill authorises the relevant Minister to grant guarantees to financial institutions in connection with loans made, or to be made, to small and medium enterprises (SMEs) if granting the guarantee is likely to assist in dealing with the economic impacts of the coronavirus.
- Australian Business Growth Fund (Coronavirus Economic Response Package) Bill 2020. This Bill increases the availability of patient capital for SMEs by authorising the contribution of $100m to invest in an Australian Business Growth Fund.
- Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020. This Bill allows the Government to set aside $1b to support regions, communities and industry sectors most severely affected by the coronavirus.
- Structured Finance Support (Coronavirus Economic Response Package) Bill 2020. This Bill establishes the Structured Finance Support (Coronavirus Economic Response) Fund, initially consisting of $15b.
- Appropriation Bills. The Appropriation (Coronavirus Economic Response Package) Bill (No 1) 2019–2020 and the Appropriation (Coronavirus Economic Response Package) Bill (No 2) 2019–2020 propose appropriations from the Consolidated Revenue Fund for certain services of the Government.
At the time of writing, the package of legislation was before the Senate.