Hi All,
As accountants we are currently being inundated with queries relating to the government stimulus package and how it will work for people. I thought it was best to break down into a 2 part series. Part 1 involving Individuals and superfunds. The second part involving business and Fair Work.
Needless to say this information is purely factual and that any tailored info should be sought from a qualified accountant or tax professional. It is also to understand this info rapidly changes and is NOT law as yet! This mean changes can occur from date of posting.
Happy to take questions where I can.
GOVERNMENT SUPPORT FOR INDIVIDUALS
The government has announced an increase in income support payments for a limited-time. This will come into effect from the 27th April, 2020.
These payments that are eligible:
• Jobseeker payment (formally Newstart) – This includes all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension
• Youth Allowance Jobseeker
• Parenting Payment (Partnered or Single)
• Farm Household Allowance
• Special Benefit Recipients (for those in severe financial hardship)
The majority of people will be looking for Jobseeker payments during the downturn. You may be eligible for Jobseeker payments if you are:
• Stood down or lose employment
• A sole trader or self-employed
• Casual employee
• Contract workers
To be eligible for the Jobseeker payments you are still required to meet the ‘Income Test’ set out by Services Australia (formally Centrelink). However the assets test will be temporarily suspended giving greater access to those who weren’t previously eligible for such payments.
Please note that the income test will vary depending on each individuals set of circumstances. To determine whether you qualify simply visit www.servicesaustralia.gov.au and search ‘Payment Finder’ which will further determine your eligibility.
How do I apply?
The quickest way to apply is Online or via mobile. In order to claim you will need to:
• Setup a myGov account (if you haven’t done so already)
• If you haven’t claimed a government benefit in the past you will also be required to verify your identity. From April 2020 you will be able to do this over the phone to reduce the need to visit a Services Australia Office
I am a sole trader, can I apply?
If you have a significant downturn of income which falls within the income test set out by Services Australia then you will be eligible. You will be required to make a declaration that your business has been suspended or your turnover has reduced significantly also.
Will I be eligible for the $750 payment?
There are now two payments of $750 which are available. Providing you are on some sort of benefit or hold certain concession cards you may be eligible for these payments.
It’s important to note that this expanded access of payments will only come into effect from 27 April 2020. If you plan on applying for the Jobseeker payment prior to this date then the normal rules will apply.
SUPERANNUATION CHANGES AND EARLY ACCESS TO SUPER
The government is allowing individuals in certain circumstances to access their super early. There is also another measure that reduces the minimum drawdown from a superannuation fund for those who are self-funded retirees.
Early Access to Super
Early access to super will enable individuals to access up to $10,000 prior to 30 June 2020 and up to another $10,000 after 1 July 2020. The second opportunity from 1 July will most likely have a three month window to access these funds.
To be eligible you must be one or more of the following:
• Unemployed; or
• On a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
• On or after 1 January 2020:
o Made redundant; or
o Work hours were reduced by 20% or more; or
o If you’re a sole trader, your business was suspended or turnover was reduced by 20% or more
How do I apply?
Applications must be made through the ATO via myGov at www.my.gov.au. You will need to certify that you meet the above eligibility criteria.
If you have an SMSF there will be a different application process which has yet to be announced. Advice so far if you have an SMSF is to keep an eye on the ATO website until that process has been released.
When can I apply?
Application process will be available from mid-April 2020.
For more details and examples please see the attached worksheet.
Reduced Superannuation Minimum Drawdowns
The government will reduced minimum drawdown requirements for account-based pensions and similar products by half for the rest of the 2020 financial year and also for the 2021 financial year.
For example, if you are under 65 you are currently required to drawdown 4% of your super balance if you are in pension mode. This will now become 2%.
Merged from Stimulus Explained Part 2 - Business & Fair Work
Hi All,
As accountants we are currently being inundated with queries relating to the government stimulus package and how it will work for people. I thought it was best to break down into a 2 part series. Part 1 involving Individuals and superfunds. The second part involving business and Fair Work.
Needless to say this information is purely factual and that any tailored info should be sought from a qualified accountant or tax professional. It is also to understand this info rapidly changes and is NOT law as yet! This mean changes can occur from date of posting.
Put a lot of time into this info so if you have found it useful then would love for you to check us out at www.anytimeprofessionals.com.au
Happy to take questions where I can.
SUPPORT FOR BUSINESS
Both the Federal and State Government have offered different support packages for businesses. There are also concessions and benefits which banks are also offering separate to that of the government.
Assistance from the ATO
The ATO is offering assistance for small business owners which includes the following:
• Payment deferrals of income tax, BAS or PAYG payments for up to six months.
o If you require assistance deferring payment you can contact the ATO or alternatively we can do so on your behalf.
• Varying PAYG Quarterly Instalments
o For those who have PAYG instalments the ATO is allowing March quarters to be varied to Nil as well as obtaining refunds on
instalments paid for September and December quarters. Should you require assistance to action this please contact the ATO or your
tax advisor.
The ATO has specifically emphasised that employer super guarantee payments for employees must continue to be made and are not part of the government’s concessions.
If you find yourself struggling to meet ATO requirements please do not hesitate to contact us.
Assistance from the Victorian Government
The state government has also implemented its own response to helping small business. This includes the following:
• Business with annual wages <$3m will have their payroll tax for the 2019-20 financial year waived. You are still required to lodge your payroll tax statements as per normal however.
• Payment deferral for the first quarter of the 2020-21 financial year for payroll tax.
• Liquor licence fees waived – if you haven’t paid your fee then you won’t be required to for 2020. If you have then you will be reimbursed.
• Land tax deferral – if you have at least one non-residential property and total taxable landholdings <$1m then you will be given the option to defer payment until the end of the calendar year. The SRO will contact those who are eligible.
Assistance from the Banks
The Government is providing an exemption from responsible lending obligations for lenders providing credit to existing small business customers. This exemption is for six months, and applies to any credit for business purposes, including new credit, credit limit increases and credit variations and restructures.
Responsible lending obligations do not currently apply to lending which is predominantly for a business purpose, but it can take time and effort for lenders to be satisfied that the money borrowed meets this test. By providing a temporary exemption from responsible lending obligations, this reform will help small businesses get access to credit quickly and efficiently.
For those who are wondering if they are eligible for a loan repayment holiday or what benefits are available for those with loans, you are encouraged to contact your bank or broker to discuss what will be available for you and to understand all the facts and implications before proceeding.
Assistance from the Federal Government
The original government measures announced in the past has now been enhanced to include further cash payments to businesses.
Will I be eligible for the cash boost?
The cash boost payments will only be available to active eligible employers established prior to 12 March 2020. This effectively means you will need to be employing prior to this date.
If I am self-employed will I be eligible for the cash boost?
Providing you are in a structure which allows you to be an employee (for example, a trust) and have a wage being reported to the ATO then you will be eligible for the cash boost. Unfortunately if you are a sole trader or a partnership then you are not eligible for yourself.
Will I be given this cash boost for each lodgment period? How does this all work?
There are now 2 payments to the cash boost which is comprised of the Boosting Cash Flow for Employers Payment and a follow up Additional Payment.
Boosting Cash Flow for Employers Payment – The government will pay 100% (previously 50%) of all PAYG Withholding for employers who withhold payments between March and June. These payments will be capped at $50,000 (previously $25,000) with a minimum of $10,000 (previously $2,000) payable to all employers.
Additional Payment – If employers continue to be active then additional payments will be matched against what was originally paid to them for the Boosting Cash Flow for Employers Payment. This means that your minimum benefit of $10,000 would now be $20,000 and your maximum could potentially be $100,000
For example, if you were entitled to receive $50,000 for the Boosting Cash Flow for Employers Payment then you will receive an additional $50,000 for the Additional Payment.
How will I receive the cash boost?
The ATO will provide an automatic credit on your Integrated Client Account after you lodge each Activity Statement (BAS). This account is where you pay your BAS. If this account becomes in credit then it can be refunded to your nominated bank account.
Can I increase my wage in order to gain more benefit?
No. There are integrity measures built into the law which prohibit such activity.
Can I backdate registering for PAYG Withholding for employees so I can put myself on a wage to get the benefit?
No. There are integrity measures built into the law which prohibit such activity.
Fair Work and employee relations
We have received questions about how to handle employee/employer situations when it comes to the Coronavirus. Whilst we are not able to advise on workplace matters there is a press release from Fair Work which gives you a good guide on how to handle most situations.
You can find that press release here - https://www.fairwork.gov.au/about-us/news-and-media-releases…