Since the outbreak of COVID-19 we have seen a number of both Federal and State Government announcements in relation to economic assistance.
Millions of Australian’s have been left without work and thousands of businesses have been forced to shut their doors.
So what do the stimulus packages mean for you?
What am you entitled to?
What does the instant asset write off mean?
We have compiled a list of the most commonly asked questions relating to the Government’s help packages and have provided the answers. If you have a question that you would like more information on, please comment on this blog or email firstname.lastname@example.org
I’ve lost my job … what support is available for me?
JobSeeker Payment will provide payment access for permanent employees who are stood down or lose their employment; sole traders; the self-employed; casual workers; and contract workers who meet the income tests as a result of the economic downturn due to COVID-19. This could also include a person required to care for someone who is affected by the Coronavirus
Under the JobSeeker Payment scheme – an eligible employee (assuming they are single with no children) would be expected to receive a fortnightly payment of up to $565.70 plus the $550 Coronavirus supplement (resulting in a total fortnightly payment of up to around $1,115).
I’m a sole trader … am I entitled to any of the announced government assistance measures?
Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.
Employers will be eligible for the subsidy if:
- their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month);
Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment via ato.gov.au from 30 March 2020.
I had to put some of my employees off so they could get the Job Seeker allowance, however now with the introduction of the JobKeeper payments I can afford to keep them on. How do I go about this?
To be eligible for the JobKeeper payments you must keep the employee on your records. Even if the employee has already registered with Centrelink, they can still receive the $1,500 per fortnight JobKeeper payment. They will not get both, the Centrelink system will pick up their JobKeeper payments and will override their application for JobSeeker allowance.
An example from the Government fact sheet …Employer with employees who have been stood down without pay
Zahrah runs a beauty salon in Melbourne. Ordinarily, she employs three permanent part-time beauticians, but the Government directive that beauty salons can no longer operate has required her to shut the business. As such she has been forced to stand down her three beauticians without pay.
Zahrah’s turnover will decline by more than 30 per cent, so she is eligible to apply for the JobKeeper Payment for each employee, and pass on $1,500 per fortnight before tax to each of her three beauticians for up to six months. Zahrah will maintain the connection to her employees, and be in a position to quickly resume her operations.
Zahrah is required to advise her employees that she has nominated them as eligible employees to receive the payment. It is up to Zahrah whether she wants to pay superannuation on the additional income paid because of the JobKeeper Payment.
If Zahrah’s employees have already started receiving income support payments like the JobSeeker Payment when they receive the JobKeeper Payment, they will need to advise Services Australia of their new income.
Can you explain what the increase to the instant asset write off means? How might this be of benefit to me?
The Government is increasing the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include all businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
This applies between 12 March 2020 and 30 June 2020, for both new and second-hand assets used or installed during this time period.
Example 1 — Business benefits from increased asset threshold
Owen owns a company, ON Point Farms Pty Ltd, through which he operates a farming business in the Central Wheat Belt of Western Australia. ON Point Farms Pty Ltd has an aggregated annual turnover of $25 million for the 2019-20 income year. On 1 May 2020, Owen purchases a second hand tractor for $140,000, exclusive of GST, for use in his business.
Under existing tax arrangements, ON Point Farms Pty Ltd is not able to immediately deduct assets costing more than $30,000 and instead would depreciate the tractor using an effective life of 12 years. Choosing to use the diminishing value method, ON Point Farms Pty Ltd would claim a tax deduction of $3,899 for the 2019-20 income year.
Under the new $150,000 instant asset write-off, ON Point Farms Pty Ltd would instead claim an immediate deduction of $140,000 for the purchase of the tractor in the 2019-20 income year, $136,101 more than under existing arrangements. At the company tax rate of 27.5 per cent, Owen will pay $37,427.78 less tax in 2019-20.
This will improve ON Point Farms Pty Ltd’s cash flow and help his business withstand and recover from the economic impact of the Coronavirus.
Can I get access to my some of my superannuation funds even though I’m nowhere near retirement age?
While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by COVID-19, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.
Eligible individuals will be able to apply online through myGov to access up to $10,000 tax-free of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months (exact timing will depend on the passage of the relevant legislation).
To apply for early release you must satisfy any one or more of the following requirements:
- you are unemployed; or
- you are eligible to receive a JobSeeker payment, youth allowance for job seekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020: you were made redundant; or
- your working hours were reduced by 20 per cent or more; or
- if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
I’m retired … is there be anything in the Government announcements that may help me?
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years.
The Government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders (including Commonwealth Seniors Health Card Card holders). Around half of those that benefit are pensioners. These payments will support households to manage the economic impact of the Coronavirus.
- The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.
- The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.
Has the Victorian State Government announced any support for small businesses?
As part of a $1.7 billion Economic Survival Package, The Victorian Government has announced a $10,000 Business Support Grant to support small businesses that employ staff and are subject to closure or have been highly impacted by the shutdown restrictions announces by the Victorian Government as a result of the Coronavirus.
Small businesses are eligible if they meet all these criteria:
- Employ staff
- Have been subject to closure or is highly impacted by shutdown restrictions announced by the Victorian Government to-date. For more information on affected sectors refer to the Non-Essential Activity Directions issued by the Deputy Chief Health Officer.
- Have a turnover of more than $75,000
- Have payroll of less than $650,000
Further eligibility criteria are outlined below in these guidelines.
Businesses will be required to attest to their eligibility and provide supporting documentation (including BAS statements) through the application process. Applicants will be subject to audit by the Victorian Government or its
Other State Government assistance includes;
- Payroll tax refund for the 2019/20 year where the annual taxable wages are under $3 million.
- 2020 liquor licence fees waived
- 2020 Land Tax payment deferral until after 31 December 2020 where the landowner has at least one non-residential property and the total taxable landholdings are below $1 million
All of the above information is up to date as of 3 April 2020. We are mindful that packages are continuing to be announced and updated and we working to keep up to date with these changes. If you have any specific questions relating to your personal circumstance please contact our office so we can assist you.
Contact us and let us help, click here or call
Bendigo 03 5445 4777
Melbourne 03 8621 8100