The Australian government has announced a number of measures which will be made available to support Australians and the economy in response to Covid-19 (Coronavirus), and I have summarised the key measures released across:
- Business Investment
- Social Security
I trust it will assist you in understanding the help that could be available to you.
Small business loans – relief package
Australian banks will provide support to eligible small businesses by deferring loan payments for up to six months, where assistance is required as a result of COVID-19. The intention is for banks to implement this as soon as possible.
Note: We will be speaking with the banks this week to better understand eligibility and process.
Coronavirus Guarantee Scheme
This scheme will provide a Government guarantee of 50% of the value of new loans issued by eligible lenders to small and medium sized businesses (SME). The intention of this measure is to increase access to loans by businesses impacted by the Coronavirus.
Additional lump sum payments to employers
SME and not-for-profit organisations that employ people will receive a payment of between $20,000 and $100,000 to assist with operating expenses. Previously announced payments to businesses were linked to withholding tax for employees. This measure has been amended to double the amounts that eligible employers can receive. The amount of payment depends on whether the business is required to withhold tax on salary and wages for employees.
Employers required to withhold tax on salary and wages, will be entitled to an amount equal to 100% of the amount withheld (up to a maximum of $50,000).
Employers who are not required to withhold tax will receive a minimum payment of $10,000.
The payment will be tax free and received as a credit on the business’ activity statements by the ATO from 28 April 2020. The timing of the credit will vary depending on the required frequency of lodgement of activity statements (eg monthly or quarterly).
Instant asset write-off
Broadened and will be available to businesses with an annual turnover of up to $500 million for the current financial year (an increase from $50 million). From 12 March 2020, the instant write-off threshold will increase from $30,000 to $150,000. This applies to new or second-hand assets used or installed ready for use by 30 June 2020. The increased write-off threshold will apply on a per asset basis until 30 June 2020.
This concession will be available to business with aggregated turnover of less than $500 million. Accelerated depreciation of 50% will apply to eligible assets until 30 June 2021. Eligible assets are those acquired after the announcement and are used or installed ready for use by 30 June 2020. However, it does not apply to second-hand assets, building or other capital works deductible under separate tax provisions.
Australian Taxation Office (ATO)
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
You will have the ability to access your superannuation savings should you be in financial distress because of the Coronavirus and meet certain eligibility conditions. Should you be eligible you’ll be able to access:
- up to $10,000 before 30 June 2020 and
- an additional $10,000 from 1 July for approximately three months (depending on the timing of legislation).
To be eligible, you must meet one of the following conditions:
- you are unemployed;
- you are eligible to receive Jobseeker Payment, Youth Allowance (jobseekers), Parenting Payment, Special Benefit or Farm Household Allowance; and
- on or after 1 January 2020, you were made redundant, your hours of work reduced by at least 20%, or if you’re a sole trader, your business was suspended or your turnover educed by at least 20%.
In order to access your funds all applications need to be made online via the MyGov website and you will be required to certify that you have met one of the above eligibility requirements.
Once the ATO confirms eligibility, they will issue you and your super fund with a determination and the payment will be made to you. If you have a self-managed super fund, arrangements will differ.
All payments received will be tax-free and amounts received will not impact any Centrelink or DVA entitlements.
It is expected that online claims can be made from mid-April.
Income stream drawdown rates
There will be a temporary reduction in the minimum annual amount that retirees will be required to withdraw from your super income stream. The reduction in the minimum drawdown rates will apply for the duration of this financial year and for the 2021 financial year as follows:
The Coronavirus supplement of $550 per fortnight will be paid to new and existing recipients of:
- JobSeeker Payment
- Youth Allowance (Jobseeker)
- Parenting Payment
- Farm Household Allowance, and
- Special Benefit.
The supplement will be paid over the next six months and will be paid automatically with the recipients ordinary fortnightly entitlement.
It will be paid from 27 April.
$750 Cash Payments
Two payments of $750 will be paid to eligible income support recipients and concession card holders.
The first tax-free payment will be available to eligible income support recipients as at 12 March 2020 and is expected to be automatically paid to eligible recipients from 31 March 2020.
The second payment will be available to those who aren’t eligible for the Coronavirus supplement (see above) and will be automatically paid from 13 July 2020.
Eligibility for payment one - to be eligible you must
- be residing in Australia;
- receiving one of the income support payments; or
- a holder of one of the concession cards listed in the table below.
However, in relation to the first $750 payment you must also have been receiving an income support payment on 12 March 2020. If you had applied for an eligible payment before 12 March 2020 and are subsequently granted the payment, you will also be eligible for the one-off payment.
Existing social security recipients
If you’re already receiving a particular benefit or payment and your circumstances change due to COVID-19, your benefit may remain unchanged. However, a change in circumstances that is not a result of COVID-19 will be assessed under the ordinary rules, and may impact your entitlement. All changes should be reported to Centrelink or DVA.
- Recipients of Carer Payment who are impacted will not have their benefits changed.
- Child Care Subsidy: if your child cannot attend childcare as a result of COVID-19, but you are still charged a fee from your childcare provider, you may still receive the subsidy for up to 42 days of absence. This applies also to non-COVID-19 related absences. If your activity hours change, you do not need to update your activity tests where it is due to a requirement to self isolate, or if you’re on leave.
- Newstart or Jobseeker: Recipients with mutual obligations (for example Newstart or Jobseeker recipients who usually need to be actively looking for work, volunteering, or doing some paid work) will be provided flexible options to ensure your safety. This may apply where you are unable to satisfy these requirements due to self-isolating, or you are a primary carer, caring for a child whose school has closed, or a disabled adult whose day service closes. You may receive an exemption from this requirement without a need for medical evidence.
- Youth Allowance (student): Activity requirements for study will be amended. This means that if you’re a student and you’re unable to attend studies due to the virus, you may be exempt from meeting this requirement.
- Students and trainees: If you are self isolating at home or your education provider closes or reduces your study load, your payment will not change. You must remain enrolled in study and have a plan to return and must tell Centrelink if this does not apply to you.
Applying for a benefit
If you’re unable to work, are in isolation or hospital, or you need to care for children as a result of COVID-19, you may be eligible to apply for a payment. If you apply for a social security benefit or concession card and your claim is related to COVID-19, some of the ordinary eligibility rules may be waived. Also, if you’re an employee, and you are diagnosed with COVID-19 or are in isolation, you may be eligible for an income support payment if you have no employer leave entitlements.
Waiting periods and assets testing
The ordinary one week waiting period that applies to some payments will be waived when claiming because you are impacted by COVID-19.
The Liquid Assets Waiting Period (LAWP) will also be waived if you are entitled to the Coronavirus Supplement. If you have already applied for a payment and are currently serving a LAWP, you will not need to serve the remainder of the waiting period. This applies also if you have applied for a payment which is eligible for the Coronavirus Supplement.
The Income Maintenance Period and Compensation Preclusion Periods will continue to apply.
The assets test will also not be applied when determining entitlement to JobSeeker Payment, Youth Allowance (Jobseeker) and Parenting Payment for six months. The income test will continue to apply and may reduce the amount of the payment you are eligible for.
To access these measures, recipients of JobSeeker Allowance and Youth Allowance (Jobseeker) cannot be receiving employer benefits (such as sick leave or annual leave payments) or income protection payments at the same time.
Reduction in deeming rates
A further reduction in deeming rates was announced on 22 March. The deeming rates will reduce as follows:
|Current||From 1 May 2020|
|Lower Deeming Rate||1.0%||0.25%|
|Upper Deeming Rate||3.0%||2.25%|
The deeming thresholds are unchanged at $51,800 (single) and $86,200 (couple) which are generally indexed on 1 July each year.
The rates will take effect from 1 May 2020, and any additional entitlement will be paid from 1 May 2020.
Faster claims process
New applicants are being encouraged to claim online where possible to ensure claims are processed as fast as possible.
If you are unable to go online, claims can be made over the phone. To support this process, some temporary changes are also being made to identification requirements and other evidence which is generally required to process a claim.
We are here to help
At WARR HUNT we have significant experience navigating left-field events, and we are confident that we can help you make adjustments to your plan and place you in the best position to protect you long term financial well-being.
Please contact us if you have any concerns or would like to understand what any of the above may mean for you at this time.