What are stimulus packages and why are they used?
A stimulus package is a series of economic actions a government takes when its economy is facing a widespread struggle. Such measures typically include lump sums paid to individuals and families, reduced interest rates, and lower taxes.
Stimulus packages are commonly introduced when a country is threatened by the possiblity of a recession. The objective is to turn things around by enabling and encouraging people to spend more, which results in a higher overall employment rate.
Essentially, stimulus packages are meant to help people go about their lives as normally as possible during difficult times in order to prevent the economy from slowing down too much.
What stimulus packages have been released due to the coronavirus?
The government has introduced several economic measures to help people who have been financially impacted by the coronavirus. In particular, the COVID-19 stimulus package has focused on assisting people who have had their income reduced or lost their job entirely, businesses struggling with the restrictions, and other vulnerable groups (such as retirees).
The stimulus measures introduced at this point include:
- Support payments for households – many people who already receive social security benefits or hold a concession card will receive one or two $750 tax-free payments.
- Coronavirus supplement – people who are on relevant Centrelink programs (e.g. JobSeeker) will receive an additional $550 per fortnight.
- Early access to super – some people can apply to withdraw up to $10,000 from their superannuation account before 1 July 2020 and up to another $10,000 between July and September. More info here.
- Support for retirees – temporary reductions to the super minimum drawdown requirements.
- Cashflow assistance for businesses – allowing employers to make tax-free payments to eligible workers and provide subsidies for trainees/apprentices.
- Support for business investment – the threshold for instant asset write-offs has increased to $150,000 (from $30,000) until 30 June 2020.
On top of these specific measures, the government is also investing money to support severely impacted regions and financially distressed businesses wherever possible.
Am I eligible for these stimulus package benefits?
If you already receive a relevant Centrelink payment, you’re likely eligible for the support payments, coronavirus supplement, and/or early super access. Which of these measures apply to you will depend specifically on your income and the benefits you receive.
The good news is, you’ll automatically receive the $550 coronavirus supplement and/or $750 support payments alongside your usual payment if you’re eligible for them (no need to apply). More info here.
The support for retirees is relevant to anyone who is retired with an account-based pension.
For businesses, the instant asset write-off benefit is now available to more companies than before. Until 30 June 2020, any business with an aggregated annual turnover of less than $500M is eligible (the threshold is usually $50M). Eligibility for cashflow assistance is complex and often determined on a case-by-case basis. You should contact the ATO for advice.
How do I apply for these stimulus package benefits?
Most of these benefits do not require an application. For example, the coronavirus supplement and support payments will be automatically added to your existing payments if you’re eligible for them. If you qualify for a Centrelink benefit but haven’t yet applied for it, you’ll need to do so if you want to benefit from the stimulus package.
Similarly, businesses will receive the cashflow bonus automatically (if eligible) when they lodge activity statements for the corresponding periods.
The main exception is early super access, which you’ll need to specifically apply for. You’ll need to link your myGov account to the ATO, check your super balance, and then apply online.