The Government’s Covid-19 stimulus package provides superannuation, social security and tax relief for individuals, households and businesses. We have summarised the key measures below.
Superannuation
Early access to superannuation on compassionate grounds – coronavirus
- Maximum of $20,000 ($10,000 in FY19/20 and $10,000 in FY20/21)
- must meet eligibility criteria
- Applications open mid-April via MyGov
- First application deadline is 30 June 2020
- released amount is non-assessable non-exempt income (ie tax free)
Minimum pension drawdown requirements reduced
- For FY2019/20 and FY20/21, minimum pension drawdown rules for account based pensions and similar products have halved for all age groups.
Age | Minimum Pension Payments | |
Previous | New | |
Less than 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+ | 14% | 7% |
Social Security
Up to 2 x $750 Economic Support payments for income support recipients and concession card holders
- 24 categories of income support recipients eligible including Age Pension, Newstart and Youth Allowance
- Tax-free and not deemed as income for social security purposes
- First payment to be made automatically by 13 April 2020
- Second payment to be paid automatically from 13 July 2020. Second payment not available in conjunction with the Coronavirus supplement (see below)
Coronavirus supplement of $550 per fortnight for eligible income support recipients
- Paid automatically from 27 April 2020 for an initial six-month period
- Not available in conjunction with second Economic Support payment
Relaxed access to JobSeeker / Youth Allowance and Parenting Payment
- Asset test exemption applied for six months from 24 March 2020
- Exemption from waiting periods
New category of Crisis Payment
- Individuals on income support may be eligible for a one-off, tax-free Crisis Payment, if forced to self-isolate
Reduction in deeming rates
- Deeming rates will reduce from 1 May 2020. The lower deeming rate will reduce to 0.25% and the upper deeming rate will reduce to 2.25%
- Deeming thresholds remain unchanged at $51,800 (single) and $86,200 (couple)
Delay of social security income reporting changes
- Changes to method for reporting employment income delayed to 1 July 2021 for now
Tax measures for small and medium businesses
Expanded instant asset write-off
- For businesses with a turnover under $500 million (previously $50 million), the instant asset write-off is expanded to $150,000 (previously $30,000) until 30 June 2020
- Entities with a turnover under $10 million can write off all their general small business pool if it is less than $150,000
Accelerated depreciation
- Where the instant asset write off rules do not apply, accelerate depreciation rates may apply to assets acquired and used between 12 March 2020 and 30 June 2021
- The cost of 50% of an eligible asset can be deducted. Existing rules apply for the balance
- For entities with a turnover of under $10 million, the accelerated rate of 57.5% will apply
Cash flow boost
- Eligible businesses and not-for-profit organisations employing people may be eligible for two payments
- 100% of PAYG withheld between January 2020 and June 2020 will be credited to a maximum of $50,000 for the six month period. The minimum amount an employer will be able to receive is $10,000, up to the maximum of $50,000 for this period.
- An additional payment in the July — October 2020 period equal to the total of the PAYG withheld refunded in the previous six months to provide a total refund of up to $100,000 per entity.
- The ATO will process payments based on the entity’s activity statements
- Small business owners should work with their registered tax agent to determine eligibility
Further cash flow boost for small and medium businesses
- Employers with apprentices or trainees may be eligible for a 50% wage subsidy of the employee’s wage for the period of 1 January to 30 September 2020
- The maximum payment is $21,000 per apprentice or trainee
Job Keeper Payment
- Will subsidise wages of $1,500 for each eligible employee per fortnight fpr a period of up to six months for all eligible businesses
- businesses with annual turnover below $1 billion must have experienced a reduction in turnover of more than 30% relative to a comparable period 12 months ago
- businesses with annual turnover greater than $1 billion must have experienced downturn of greater than 50% due to COVID-19 to be an eligible employer.
- Employees must also meet eligibility criteria
- Businesses should register here https://www.ato.gov.au/Job-keeper-payment/ for direct updates from the ATO
Temporary relief from financial stress
- Other business provisions may be available to eligible businesses
For more information on the intiatives feel free to drop our accounting team a line at any time 02 9222 1422.