The coronavirus known as COVID-19 has turned into a pandemic, affecting the world, including Australia. On 1 April, there were already 4,860 confirmed cases in the country and 20 deaths. More than 250,000 people have been tested during this time. New South Wales remains the epicentre with over 2,100 fatalities, followed by Victoria with 968. The situation rapidly changes, and there could be more people affected by this virus.
- Monitoring and investigating all outbreaks occurring in the country
- Identifying the nature of the virus
- Studying more strategies to manage respiratory diseases
- Undertaking methods to lower the risk of disease transmission
Travel restrictions have been imposed. People arriving in the country are screened and ensured to self-isolate before heading to their destination. Border surveillance continues as well. Many efforts of the government are publicised, including the delivery of a $17.6 billion support package. With this monetary assistance, Australian individuals and businesses can continue investing and operating.
As a taxpayer, you may be interested in learning about any relief plan concerning taxes. What will the government do to ensure a stable economy?
What Individuals Should Know
One of the announced plans of the government is to release superannuation for individuals earlier than usual. By the end of March 2020, it was confirmed that eligible people could withdraw their super early through the Coronavirus Economic Response Package Omnibus Bill 2020.
The changes still have to be put in effect but are expected to be accessible by mid-April. Early withdrawals are not new, though. They have been in place in case of emergencies, such as this pandemic.
The bill is a temporary measure that lets super account holders withdraw up to $10,000 from their funds this financial year. Another $10,000 can be accessed after 1 July 2020 to 30 June 2021.
Super account holders who can withdraw the money will not be taxed for it. If you believe that you need to obtain these funds during the crisis, you should lodge an application first starting 20 April. If approved, the money withdrawn will not affect any payments for Centrelink and Veterans’ Affairs.
Who are eligible for early super access? According to the Australian Taxation Office, those who can apply for the early release of their superannuation funds should meet at least one of the following requirements:
- Can receive parenting payments, special benefits, JobSeeker payments, or Youth Allowance
- Made redundant on or after the beginning of 2020
- With working hours reduced by at least 20%
- Sole traders with suspended businesses or reduced turnovers by 20% and up
You will need to provide proof that you do meet any of the criteria mentioned.
While the funds may be ready, an important question is whether or not you should access it. Making this decision can affect your financial future. For instance, it could potentially lower the money you get for your retirement.
Over the past few months, super balances have reduced significantly. By claiming the available money, you could realise those losses. If you are facing any financial hardship because of coronavirus, you can wait for this new measure to be implemented in mid-April.
In line with this early access, superannuation minimum drawdown rates will also be reduced. All requirements for pensions based on the accounts will be lowered by 50%. It is useful for retirees, so they no longer have to sell their investment assets to afford the lowest possible drawdown requirements.
Additionally, there are more government assistance packages to know about:
- JobKeeper Payments
With the JobKeeper, employers can pay their workers even with operations shut down. JobKeeper can help cover the costs of wages to ensure that many Australians do not have to suffer from job loss. Employees can earn an income while in quarantine. If eligible, your employer may claim $1,500 fortnightly on your behalf.
- Income Support
The government has expanded income support payments temporarily for the next six months. It means that individuals, particularly those who need to stop working because of coronavirus, will get $550 every fortnight. Eligible people are those who receive JobSeeker Payment, Parenting Payment, Farm Household Allowance, Special Benefit, and Youth Allowance JobSeeker.
- Household Support
Two $750 payments dispersed separately will be given to specific recipients, including social security and veteran income support beneficiaries. Some concession cardholders can also obtain payments to support their households.
The first payment was provided at the end of March while the second one will be on 13 July. Most of those who will receive the benefit are pensioners. Note, however, that if you get the coronavirus supplement from the government, you will not be eligible for the second payment.
- Lower Social Security Deeming Rates
A 0.5% point reduction was announced on 12 March applicable to both upper and lower social security deeming rates. An additional 0.25% point reduction will be imposed as well.
On 1 May, the confirmed upper deeming rate is 2.25%, while the lower rate is 0.25%. The mentioned additional reductions will be applied to about 900,000 recipients, which include approximately 565,000 Age Pensioners. They will receive $324 (on average) for their Age Pension once the reduced rates are applied.
Other Things You Can Do
If you are eligible for a Goods and Services Tax (GST) refund, the government urges you to change your reporting cycle – at least until this pandemic is over. For instance, those who report quarterly may opt to move to monthly reporting. This way, they can access their refunds quicker and easier. Before attempting to change your reporting cycle, however, be aware of the following points:
- Changes are only allowed at the beginning of a quarter.
- PAYG withholding reporting cycles are not affected.
- Monthly reporting should be done for the next 12 months before you can get back to quarterly reporting.
- Fuel tax credits can be claimed monthly once GST reporting has been changed.
For pay-as-you-go (PAYG) payers, changes in instalments can be varied depending on the activity statement. It may also be possible to claim a refund for any instalment made during the 2019-20 financial year. Penalties and interest charges will not apply even if you choose to change your PAYG instalments.
What Businesses Should Know
A considerable challenge for companies during the pandemic is retaining employees and managing their cash flow. Both are not easy, especially with quarantines and lockdowns imposed. Thankfully, the government has reassured everyone, including employers and business owners, that Australia is ready. The economy will remain secure with the help of the government’s support and other temporary measures in place, including:
- JobKeeper Payment
Businesses that are heavily impacted by the novel coronavirus, COVID-19, may access a subsidy on wages. This way, they can keep paying their employees despite the ongoing economic crisis. JobKeeper is a program that allows businesses to claim a fortnightly payment of up to $1,500 per employee. The assistance began at the end of March and will go on for up to six months.
With the JobKeeper payment, employees get paid, and many businesses are protected. If they need to restart once the crisis is over, the funds can help.
- Cash Flow Boost
A measure called Boosting Cash Flow for Employers was announced last 12 March, where the government assured companies it would provide up to $100,000 to businesses. Small to medium-sized companies will benefit from this measure, along with not-for-profits with employees. The minimum cash payment is $20,000, which will allow businesses and organisations to stabilise their cash flow. It is expected that with this funding assistance, more firms will stay afloat and pay bills or rent while keeping their staff.
According to the government, this measure may be provided to about 690,000 businesses and 30,000 not-for-profits in the country. Over 7.8 million employees will benefit from it. Australian statistics show that small and medium-sized firms have a collective annual turnover of less than $50 million.
The enhanced scheme lets employers get about 100% of the salary and wages for their workers. When it was first announced, the Boosting Cash Flow for Employers could only cover $25,000. However, as the pandemic crisis grows, the government has stepped up and increased the assistance to $50,000. The minimum payment is no longer $2,000 since it has been increased to $10,000.
Additionally, businesses will receive an additional payment, which will be implemented from July to October.
- Temporarily Relief
Because of the pandemic, many companies that were thriving suddenly face a dramatic turn of events. Most businesses reduce the number of people entering and leaving the premises to prevent the spread of the virus. Others have to temporarily stop operating, which is causing them great financial distress.
When the crisis is over, many companies may struggle to get back on their feet. It is why the government will provide temporary relief. This way, they have a safety net so that they can resume their normal operations. One solution from the government is to prevent or at least lessen activities that might result in insolvency.
The government is increasing the threshold for the time being so companies can respond to the statutory demands of their creditors. The temporary relief package also offers directors freedom from any liability in case of insolvency. Additionally, they will be covered by the Corporations Act 2001, where providing targeted and provisional relief during unforeseen events.
Although most businesses will benefit from this scheme, the ATO will decide on the best solutions for a specific firm. The decision will be based on a tailored outcome for the owners, managers, or directors. If your business is having a hard time due to the coronavirus, you can get the financial help you need. Actions include temporary payment reductions, deferrals, and silencing Director Penalty Notices and other enforcement actions.
- Increased Instant Asset Write-Off
It has been recently announced that the government will increase the instant asset write-off. Initially, the threshold was only $30,000. However, the pandemic crisis called for the government to take extra steps to expand the limit to $150,000. Also, access is extended to businesses with turnovers lower than $500 million annually. The regular access was only for those with annual turnovers of $50 million. These changes are only temporary and will take effect until 30 June.
More than 360,000 companies in the country benefited from instant asset write-off during the 2017-18 financial years. They were able to claim approximately $4 billion in deductions.
With the recent changes, the new yet temporary measure will support more businesses. It is estimated there would be more than 3.5 million businesses this time or more than 99% of all the firms in the country. At the same time, it will benefit more than 9.7 million workers.
- Investment Incentive
Aside from the mentioned schemes above, the government is also offering an investment incentive for 15 months or until 30 June 2021. This incentive will help businesses in their investments while supporting the country’s economic growth for a short period by speeding deductions on depreciation.
About 50% deductions will be applied to businesses with turnovers lower than $500 million on the installation cost of a particular asset. Depreciation rules still exist, though, which will be imposed on the asset’s value.
With this measure, investments made will be reinforced and maintained. Also, it may assist in lowering taxes that Australian businesses pay. According to estimates, the investment incentive is estimated to reduce taxes by up to $6.7 billion for the next couple of years.
- JobKeeper Payment
Additional support will be given to businesses that decide to hire and retain trainees and apprentices. Employers who are qualified for the benefit can immediately apply for a wage subsidy. If granted, they can get a 50% reduction of the trainees’ wages for up to nine months starting from the beginning of the year until 30 September 2020.
The government does have plenty of methods and plans lined up to ensure the citizens and businesses get the financial assistance they need in these trying times.
If you want to know more about how you could benefit from the Government’s economic packages, get in contact with TaxReturn.com.au today.