Investor InsightsNews > Coronavirus: The Government’s stimulus package

Coronavirus: The Government’s stimulus package

March 2020

UPDATE: Coronavirus early access processing

In line with Government expectations, we will process withdrawal payments as quickly as possible. While we expect significant demand for these new payments, we have been busy preparing since the government announced the change a few weeks ago. Given the high volume of requests it may take us a few extra days to process your payment, particularly as our staff are largely working from home. However, please bear with us and rest assured that we are working as hard as possible to get money to our members in need as quickly as possible.

 

In response to the economic impact of the Coronavirus, the Government has announced a number of initiatives to help individuals and businesses at this uncertain time.

The changes include accessing some of your super if you’re in financial stress, tax concessions for small businesses and changes to social security benefits.

Below is an overview of the initiatives and changes that may help you.

During these uncertain times, we suggest you talk to your financial adviser. They will be able to look at your current circumstances and recommend the most appropriate course of action for you and your family.

1. Superannuation initiatives  2. Social security payments and changes  3. Tax benefits for small businesses 4. Other initiatives

Superannuation initiatives

Early access to super

If you are under financial stress, you may be able to access up to $10,000 of your super before 1 July 2020 and another $10,000 from 1 July 2020 until 24 September 2020. The ATO is likely to start accepting applications from mid to late-April.
You may be eligible for early access to your super if you are either:

  • unemployed
  • eligible for a Jobseeker payment, Youth Allowance payment for job seekers, Parenting Payment (including the single and partnered payments), special benefit or Farm Household allowance.

You may also be eligible if (on or after 1 January 2020) you:

  • were made redundant
  • had your working hours reduced by 20% or more
  • are a sole trader and your business was suspended or you experienced a reduction in business turnover of 20% or more.

These payments are tax-free and not treated as income under the Centrelink or Veteran’s Affairs income test.

How to apply for a lump sum compassionate payment from super (from mid-April)

  1. Apply directly to the Australian Taxation Office (ATO) through your myGov account via the myGov website (www.mygov.au). This application is expected to be available from mid to late-April. You’ll need to have a myGov account set up and linked to your ATO account.

Note: many Australians are trying to access the myGov website, so you may experience delays. We suggest you try again later in the week and refer to the Government’s website (treasury.gov.au/coronavirus/households) for further details.

  1. If eligible, the ATO will issue a ‘determination notice’ to you and will also provide a copy to us, authorising us to release your super and make a payment to you.
  2.  We will then automatically pay the lump sum from your super account to your nominated bank account via Direct Credit. You do not need to inform us to do this.

For more information, please refer to the Government’s website at treasury.gov.au/coronavirus/households

Application to retirees

To help you if you’re a retiree, the minimum pension payments you are required to withdraw from your account-based pensions or similar product haven reduced by 50% as follows:

Age Default minimum drawdown rates (% Reduced by 50% in 2019/20 and 2020/21 income years (%)

Under 65

4

2

65-74

5

2.5

75-79

6

3

80-84

7

3.5

85-89

9

4.5

90-94

11

5.5

95 and older

14

7

 

Social security payments and changes

Tax-free lump sum payments

You may be eligible to receive up to two, separate, tax-free $750 lump sum payments from 13 July 2020 if you receive one or more Centrelink payments or concession cards as shown in the table below on 10 July 2020.
A single person may receive up to $1,500 and couples may receive up to $3,000 from the first and second payments.You do not need to apply for these payments, Centrelink will automatically allocate this to you depending on your eligibility.

Eligible for up to 2 x $750 lump sums If you receive one of the payments below you are likely to receive the first lump sum and receive the Coronavirus Supplement rather than the second lump sum
  • Age pension
  • Disability support pension
  • Carer Payment
  • Widow B Pension
  • Bereavement Allowance
  • Newstart Allowance
  • Family Tax Benefit (includes Double Orphan Pension)
  • Carer Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Veterans Service Pension; Veteran Income Support Supplement
  • Veteran Compensation Payments (includes lump sum payments)
  • War Widow pension, and Veteran Payment
  • DVA PCC holders
  • Disability Pensioners at the temporary special rate
  • DVA income support pensioners at $0 rate
  • DVA Gold Card holders

 

  • Parenting Payment
  • Wife Pension
  • Jobseeker Payment
  • Youth Allowance
  • Partner Allowance
  • Sickness Allowance
  • Special Benefit
  • Widow Allowance
  • Farm Household Allowance
  • Austudy
  • ABSTUDY (Living Allowance)

Coronavirus Supplement

From 27 April 2020, if you are eligible (see column two in the table above) you will be automatically paid the Coronavirus Supplement. The Coronavirus Supplement is a $550 fortnightly payment for up to six months.

Other income support during the six-month period:

  • Waiving the asset test for Jobseeker Payment, Youth Allowance Jobseeker, and Parenting Payment.
  • The income test will continue to apply to the other payments you receive.
  • The one-week ordinary waiting period, liquid assets waiting period, seasonal work preclusion period and newly arrived residents waiting period will not apply during this period. These waiting periods will also be waived if you are currently within these waiting periods.
  • Income maintenance periods and compensation preclusion periods will continue to apply as payments received by an individual are treated as income.

If you wish to make an application please go online to your myGov account or phone Centrelink (please note waiting periods are currently high).


Reduced deeming rates

From 1 May 2020, the upper deeming rate for income in excess of the income threshold will reduce from 3% to 2.25%, and the lower deeming rate from 1% to 0.25%.

Deeming rate (1 May 2020) Single Pensioner couple (combined)

0.25%

First $51,800 ($129.50)

First $86,200 ($215.50)

2.25%

On amounts exceeding $51,800

On amounts exceeding $86,200

These reductions reflect the low interest rate environment and its impact on the income from savings. Also, people who are currently receiving part pensions and less than the full rate of income support may receive increased entitlements.

Tax benefits for small businesses

Increasing the instant asset write-off threshold for small businesses

From 12 March 2020 until 30 June 2020, if you own a small business with aggregated annual turnover of less than $500 million (increased from $50 million) you may be eligible for an instant asset write-off on assets of up to the value of $150,000 (from $30,000).

From 1 July 2020, this threshold reduces to $1,000 (for businesses with less than $10 million turnover).

The measure applies to new or second-hand assets first used, or installed ready for use, between 12 March 2020 until 30 June 2020 (inclusive). Certain assets are excluded, for example, horticultural plants and capital works deductions.
The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

This initiative will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access this concession for the first time.

ATO relief for tax obligations

The ATO will provide relief for certain tax obligations for taxpayers impacted by the coronavirus outbreak on a case-by-case basis. Please see your accountant for more information.

Other initiatives

Boosting cash flow for employers

If you own an eligible small or medium business, the Government has announced a maximum payment of $100,000 and a minimum payment of $20,000, to help with cash flow in order to keep operating, pay bills and retain employees. Not -for-profit organisations and charities are also included.

The ATO will pay this as an automatic credit to the business upon lodgement of your business activity statement. If this means you are eligible for a tax refund, the ATO will pay the refund within 14 days. You don’t need to fill out any new forms and the payments are tax free.

Supporting apprentices and trainees

From 1 January 2020 to 30 September 2020, if you are an eligible employer you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).

You can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Temporary relief for financially distressed businesses

For owners or directors of a business who are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.

More information

For more information, please refer to the Government’s website at treasury.gov.au/coronavirus/households.

 


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Taxation law is complex and this information has been prepared as a guide only and does not represent taxation advice. Please see your tax adviser for independent taxation advice.

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