HOUSEHOLDS Government Stimulus Package in response to Coronavirus (COVID-19)
Hi Everyone, In response to the Coronavirus outbreak, the government has announced a range of measures to support individuals, couples and families during this time. To support you, and others you may know, or who are around you; whether family, neighbours, work colleagues and/or your local community, please see below a broad summary of the key aspects of the Federal Government’s stimulus package, as recently announced and enacted. This will continue to be updated if more subsidies are announced. The summary is based on information currently available on the Treasury website (refer to “Economic response to the Coronavirus”), as of 31st March 2020.
For more information visit https://treasury.gov.au/coronavirus/households
30th March 2020 Subsidy UPDATES:
JOBSEEKER PAYMENT (from Services Australia)
The Jobseeker Payment is what is used to determine access to the $550 per fortnight Cornavirus Supplement, and is subject to a partner income test.
The Government is temporarily relaxing the partner income test to ensure that an eligible person can receive the JobSeeker Payment, and associated Coronavirus Supplement, providing their partner earns less than $3,068 per fortnight, around $79,762 per annum. The personal income test for individuals on JobSeeker Payment will still apply.
JOBKEEPER PAYMENTS - ATO
JOBKEEPER PAYMENTS of a flat payment of $1,500 per fortnight will be paid to eligible employers who have experienced a significant downturn during this period. The payment will be paid to employers, for up to six months, for each eligible employee that was on their books on 1 March 2020 that is retained and continues to be engaged by that employer. Where a business has stood down employees since 1 March, the payment will help them maintain connection with their employees. The payment will also apply to those who ceased employment since 1 March and then were re-engaged by the same eligible employer. Employers will receive a payment of $1,500 per fortnight per eligible employee. Every eligible employee must receive at least $1,500 per fortnight from this business, before tax. If this is more than the normal pay, it will be up to the employer if they want to pay superannuation on any additional wage paid because of JobKeeper Payments. The $1,500 amount is a before tax amount – tax will be withheld as per normal arrangements. Employers also must notify employees that they are claiming the JobKeeper payment on their behalf. The program will commence from 30 March 2020, with the first payments to be received by eligible businesses in the first week of May as monthly arrears from the Australian Taxation Office. Eligible businesses can begin distributing the JobKeeper payment immediately and will be reimbursed from the first week of May. Eligible employers will be those with annual turnover of less than $1 billion who self-assess that have a reduction in revenue of 30 per cent or more, since 1 March 2020 over a minimum one-month period. Eligible employers include businesses structured through companies, partnerships, trusts and sole traders. Not for profit entities, including charities, will also be eligible. Full time and part time employees, including stood down employees, would be eligible to receive the JobKeeper Payment. Where a casual employee has been with their employer for at least the previous 12 months they will also be eligible for the Payment. An employee will only be eligible to receive this payment from one employer. Eligible employees include Australian residents, New Zealand citizens in Australia who hold a subclass 444 special category visa, and migrants who are eligible for JobSeeker Payment or Youth Allowance (Other). Self-employed individuals are also eligible to receive the JobKeeper Payment. Eligible businesses can apply for the payment online and are able to register their interest via ato.gov.au More information can be found at this treasury.gov.au factsheet.
THE FINER DETAILS Obligations, Eligibility & Application Process
OBLIGATIONS ON EMPLOYERS
To receive the JobKeeper Payment, employers must:
Register an intention to apply on the ATO website and assess that they have or will experience the required turnover decline.
Provide information to the ATO on eligible employees. This includes information on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or rehired). For most businesses, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). For employees that were already receiving this amount from the employer then their income will not change. For employees that have been receiving less than this amount, the employer will need to top up the payment to the employee up to $1,500, before tax. And for those employees earning more than this amount, the employer is able to provide them with a top-up.
Notify all eligible employees that they are receiving the JobKeeper Payment.
Continue to provide information to the ATO on a monthly basis, including the number of eligible
employees employed by the business.
BACKGROUND ON JOBKEEPER PAYMENT
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); or
their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month); and
the business is not subject to the Major Bank Levy. The employer must have been in an employment relationship with eligible employees as at 1 March 2020,
and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments.
Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Eligible employees are employees who:
are currently employed by the eligible employer (including those stood down or re-hired);
were employed by the employer at 1 March 2020;
are full-time, part-time, or long-term casuals (a casual employed on a regular basis for longer than 12 months as at 1 March 2020);
are at least 16 years of age;
are an Australian citizen, the holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and
are not in receipt of a JobKeeper Payment from another employer. If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.
Businesses with employees
Initially, employers can register their interest in applying for the JobKeeper Payment via ato.gov.au from 30 March 2020.
Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO.
Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Further details for businesses for employees will be provided on ato.gov.au.
Businesses without employees
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.
Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.
People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
Further details for the self-employed will be provided on ato.gov.au.
EXAMPLE OF APPLICATION OF JOBKEEPER SUBSIDY Employer with employees on different wages
Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30 per cent in in the coming months. The employees are:
Anne, who is a permanent full-time employee on a salary of $3,000 per fortnight before tax and who continues working for the business; and
Nick, who is a permanent part-time employee on a salary of $1,000 per fortnight before tax and who continues working for the business.
Adam is eligible to receive the JobKeeper Payment for each employee, which would have the following benefits for the business and its employees:
• The business continues to pay Anne her full-time salary of $3,000 per fortnight before tax, and the business will receive $1,500 per fortnight from the JobKeeper Payment to subsidise the cost of Anne’s salary and will continue paying the superannuation guarantee on Anne’s income;
• The business continues to pay Nick his $1,000 per fortnight before tax salary and an additional $500 per fortnight before tax, totalling $1,500 per fortnight before tax. The business receives $1,500 per fortnight before tax from the JobKeeper Payment which will subsidise the cost of Nick’s salary. The business must continue to pay the superannuation guarantee on the $1,000 per fortnight of wages that Nick is earning. The business has the option of choosing to pay superannuation on the additional $500 (before tax) paid to Nick under the JobKeeper Payment.
Adam can register his initial interest in the scheme from 30 March 2020, followed subsequently by an application to ATO with details about his eligible employees. In addition, Adam is required to advise his employees that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.
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.
24th March 2020 Subsidy UPDATES:
1. INCOME SUPPORT FOR INDIVIDUALS
From 27 April 2020, the Government will introduce a Coronavirus supplement of $550 per fortnight (payable to individuals currently receiving certain eligible income support payments) and will also temporarily expand access to certain income support payments, over a six-month period.
The Government will also provide two separate $750 tax-free payments to certain social security, veteran and other income support recipients, and to eligible concession card holders.
1.1 Introducing a new Coronavirus supplement:
The new Coronavirus supplement at the rate of $550 per fortnight will be paid to individuals who are currently eligible for certain income support payments, including:
Youth Allowance; and
Parenting Payment (Partnered and Single). According to the Government, anyone who is eligible for the Coronavirus supplement will receive the full rate of the supplement of $550 per fortnight.
Furthermore, it appears that this new (additional) supplement will be paid to eligible individuals as part of their existing income support payments (e.g., Jobseeker Payment and Youth Allowance).
1.2 Expanding access and eligibility to certain income support payments: For the period that the Coronavirus supplement is paid, the Government will also expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals. For example:
(a) A new category of Jobseeker Payment and Youth Allowance Jobseeker will become available for eligible individuals who are financially impacted by the Coronavirus and satisfy certain requirements.
According to the Government, this could include, for example, 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 the Coronavirus.
(b) Asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment, will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.
Also, reduced waiting times will result from the waiver of a number of traditional waiting periods. 1.3 Tax-free payments of $750 to eligible recipients: The Government will be providing two separate $750 tax-free payments (referred to as ‘economic support payments’) to social security, veteran and other income support recipients, and to eligible concession card holders, as follows:
(a) The first $750 payment will be available to individuals who are residing in Australia and are receiving an eligible Government payment, or are the holders of an eligible concession card, at any time from 12 March 2020 to 13 April 2020 (inclusive).
Also, where an individual has lodged a claim for one of the eligible payments or concession cards at any time from 12 March to 13 April 2020 (inclusive), they will also receive the payment if the claim is granted.
This payment will be made automatically to eligible individuals from 31 March 2020. For this purpose, eligible Government payments and concession cards comprise the following:
Disability Support Pension
Family Tax Benefit, including double orphan pension
Pensioner Concession Card (PCC) Holders
Widow B Pension
Commonwealth Seniors Health Card Holders
ABSTUDY (Living Allowance)
Farm Household Allowance
Veteran Gold Card Holders
Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; Veteran Payment
DVA PCC holders; DVA Education Scheme recipients; Disability Pensioners at the temporary special rate; and DVA Income support pensioners at $0 rate
(b) The second payment will be available to individuals who are residing in Australia and are receiving one of the above eligible Government payments or are the holders of one of the above eligible concession cards, on 10 July 2020 (except for those receiving an income support payment that qualifies them to receive the $550 fortnightly Coronavirus supplement).
This payment will be made automatically to eligible individuals from 13 July 2020.
Note that, an individual can be eligible to receive both the first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways.
Each of the $750 payments will be exempt from income tax and will not count as income for the purposes of Social Security, the Farm Household Allowance and Veteran payments. The following example is adapted from the fact sheet: “Payments to support households”. EXAMPLE 1 – Eligibility for first and second $750 tax-free payment
Kate and Angus are a couple and are both Age Pension recipients as at 12 March 2020.
Under the Government’s stimulus package, Kate and Angus will each receive a first payment of $750, resulting in a combined (or total) payment of $1,500. These payments to Kate and Angus will be made automatically from 31 March 2020 and will be tax-free in their hands.
As Kate and Angus remain Age Pension recipients on 10 July 2020, they will each be eligible for a further $750 payment (i.e., as part of the second payment), resulting in a further combined (or total) payment of $1,500. These payments to Kate and Angus will be made automatically from 13 July 2020 and will be tax-free in their hands.
Overall, Kate and Angus will receive a total of $3,000, from the first and second payments.
Introducing a faster and streamlined application process:
The Government will also be implementing a faster and more streamlined application process to ensure timely access to the Coronavirus supplement and expanded access to certain income support payments.
For example, applicants will be encouraged to claim through on-line and mobile channels, or over the phone where they do not have internet access. Further, certain existing requirements for accessing income support payments will be removed (e.g., the requirement for job seekers to make an appointment with an employment service provider). For more information visit https://treasury.gov.au/coronavirus/households
2. EARLY ACCESS TO SUPERANNUATION BENEFITS
Under the existing ‘compassionate grounds’ conditions of release, an individual can access their preserved superannuation benefits (as a lump sum), subject to any cashing restrictions, on a number of different (specific) grounds where certain conditions are satisfied. For example, an individual who satisfies certain conditions could access their superannuation entitlements under this condition of release in order to pay for certain medical treatment, or to enable the individual to make a repayment on a home loan in order to prevent the mortgagee selling their home.
The Government will introduce a new compassionate ground of release that will allow individuals to access their superannuation entitlements where those benefits are required to assist them to deal with the adverse economic effects of the Coronavirus, but only where one or more of the following requirements are satisfied:
(a) The individual is unemployed.
(b) The individual is eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance.
(c) On or after 1 January 2020:
the individual was made redundant; or
the individual’s working hours were reduced by at least 20%; or
if the individual is a sole trader – their business was suspended or there was a reduction in the business’s turnover of at least 20%.
Under this new compassionate ground of release, eligible individuals will be able to access as a lump sum, up to $10,000 of their superannuation entitlements before 1 July 2020, and a further $10,000 from 1 July 2020 (but subject to the six-month time frame noted below).
Eligible individuals who are looking to access their superannuation entitlements under the above new ground of release will be able to apply directly to the ATO through the myGov website (at www.my.gov.au) and certify that the above eligibility criteria is satisfied.
An individual will be able to apply for early release of their superannuation entitlements from mid- April 2020. However, note that no application may be made after the end of the period of six months from the day on which the new compassionate ground of release commences. Tax-free superannuation withdrawals:
Lump sum superannuation withdrawals under this new compassionate ground of release will not be taxable to the recipient (i.e., they will be tax-free), and, according to the Government, the amount withdrawn will not affect Centrelink or Veteran’s Affairs payments. For more information visit https://treasury.gov.au/coronavirus/households
3. REDUCING THE MINIMUM DRAWDOWN AMOUNTS FOR SUPERANNUATION PENSIONS
The Government will be temporarily reducing the superannuation minimum drawdown amounts for account-based pensions and similar products by 50% for the 2020 and 2021 income years. This basically means that the total minimum annual pension amount that a superannuation fund is otherwise required to pay to a member receiving a pension from the fund (e.g., an account-based pension) will be reduced by half for these two income years.
Under the superannuation rules, the total minimum pension amount that a superannuation fund is required to pay to a fund member receiving a pension (e.g., an account-based pension) from the fund in an income year is generally calculated by: multiplying the member’s pension account balance at the beginning of the year, by the relevant drawdown percentage.
The current minimum drawdown percentages, together with the reductions for the 2020 and 2021 income years, are outlined in the following table.
For more information visit https://treasury.gov.au/coronavirus/households
4. REDUCING THE SOCIAL SECURITY DEEMING RATES
From 1 May 2020, the Government will be 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. This will result in an overall reduction to the social security deeming rates of 0.75 percentage points.
On this basis, as of 1 May 2020, the upper deeming rate will be reduced from 3% to 2.25%, and the lower deeming rate will be reduced from 1% to 0.25%. The reductions reflect the low interest rate environment and its impact on the income from savings.
Broadly speaking, the social security deeming rates apply (for ‘income test’ purposes) to determine the amount of income that an individual is ‘deemed’ (or taken to) earn from financial investments (e.g., cash deposits and listed securities), irrespective of the actual amount of income (e.g., interest income and dividend income) earned by the individual. In most cases, the deeming rates apply for the purposes of applying the Age Pension ‘income test’.
For more information visit https://treasury.gov.au/coronavirus/households
5. LOCAL GOVERNMENT ASSISTANCE
Check your local council website for information regarding the reduction and/or waiving of council charges, rents, levies and permit fees for all businesses facing economic hardship due to the impacts of the coronavirus. For example the Brisbane City Council are offering all businesses affected by the coronavirus a waiving of council charges, rents, levies and permit fees, effective immediately. They also provide up-to-date information on the operation, closure or limited access of council services and venues such as parks. https://www.brisbane.qld.gov.au/community-and-safety/community-safety/disasters-and-emergencies/coronavirus-council-updates-and-impacts
6. STATE GOVERNMENT ASSISTANCE
Check your relevant State Government website for information on your specific state's economic stimulus package. Examples below are of Queensland and NSW's State Government packages. QUEENSLAND STATE GOVERNMENT This economic package includes:
$300 million for households
$200 rebate for all 2.1 million Queensland households (including the $50 Asset Ownership Dividend already announced) to offset the cost of water and electricity bills.
Automatically applied through household electricity bills.
7. FEDERAL GOVERNMENT ASSISTANCE
ATO ADMINISTRATIVE RELIEF
The ATO will provide administrative relief for some tax obligations for people affected by the Coronavirus outbreak, on a case-by-case basis. Businesses impacted by the coronavirus are encouraged to contact the ATO Emergency Support Info Line on 1800 806 218 to discuss relief options. For more information visit the ATO website at https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/
If you have any questions, please do not hesitate to contact Emily and/or myself at email@example.com or on mobile no. 0421 635 728 as we are here to help and support you.