Below we have provided an outline of the Most Common Questions and Answers that are being asked concerning employment, families, pensioners, and businesses and what financial assistance is available:
If you’re no longer working or had your hours reduced…
You’re not alone. However, the government has put in place radical measures to help keep people afloat as the economic downturn takes hold.
What help is available if I’ve been made redundant?
The Australian Government introduced JobSeeker payments from March 20 as the main form of assistance for people who are unemployed. This replaces the Newstart Allowance and is currently being boosted by an additional $550 a fortnight as a temporary Coronavirus Supplement.
If you’re an Australian resident, aged over 21 and below retirement age, and earning less than $1086 a fortnight, you’re likely to be eligible for JobSeeker payments if you’re not already receiving government support. That income threshold varies depending on your circumstances, such as being a parent or part of a couple, so it’s important to check how it applies to you.
There is currently no asset test or waiting period to register for JobSeeker payments under the new temporary measures. The ‘mutual obligation’ requirements that mean people must take active steps to look for work have also been put on hold.
Is it different if I’ve been stood down from my job?
It could be, if your employer has registered for the JobKeeper scheme. If they have, and you’re a full-time, part-time or casual employee who has worked there for more than 12 months at March 1. Under the scheme, you should be paid $1500 per fortnight by your employer. This is funded by the government, and employers are required to pass on the full amount to their employees.
If you normally earn less than $1500 per fortnight and are eligible for JobKeeper, you’ll be earning more while the scheme is in place. Businesses are being encouraged to top up payments to people whose regular earnings are more than the JobKeeper subsidy, with other incentives in place.
Otherwise, you can still get JobSeeker payments. Centrelink has temporarily relaxed its documentation requirements, meaning you currently don’t need to supply an employment separation certificate.
People can either get JobKeeper or JobSeeker payments, but not both.
The Government continues to negotiate with industry groups and unions on coverage for other casual workers and has proposed changes for non-profits where the qualification threshold will be reduced for employers to 15%.
My partner’s still working, does that mean I don’t qualify for assistance?
Eligibility for JobSeeker was significantly widened from March 30, making it available to more people whose partners are still in work. You can still receive JobSeeker payments if your partner earns up to $79,762 a year.
That’s a big increase on the previous partner pay threshold of $48,100, which was approximately the median Australian annual wage.
Is there any other government support available?
Yes, depending on your income and family situation. You may now be eligible for other support, such as Rent Assistance and the Family Tax Benefit.
More information on other types of support is available from the Federal and NSW government COVID-19 websites.
Are the banks doing anything to help?
Australia’s four biggest retail banks and many other smaller banks and credit unions are allowing customers to pause their mortgage payments for up to six months if they’ve been affected financially by the virus.
Lenders will continue to charge interest and fees, which will be capitalised into the balance of the loan. Some institutions will increase the term of your loan so that repayments don’t increase after the pause ends, while others will increase repayments as a result of the additional capitalised charges, keeping the term of the loan unchanged.
A number of banks and credit unions are also offering relief for people with personal loans or credit card balances, largely on a case-by-case basis. Under consumer credit laws, hardship provisions are available for these and other types of debts to financial services providers.
What about people who rent their home?
The Australian government has declared a six-month ban on evicting residential tenants under financial distress, but with legislation yet to be passed by States and territories, how this will work and what limitations apply remains up in the air.
Discussions are ongoing at a Federal and State level concerning commercial tenants.
Fair Trading NSW has more information on renting, and many other matters, on its COVID-19 FAQs page.
Can I access my superannuation early?
The government has temporarily made it easier to access your retirement savings if you are undergoing financial hardship due to COVID-19.
Under normal conditions, accessing super before your preservation age is very difficult. Common reasons include severe financial hardship –typically defined as receiving an income support payment more than 26 weeks in a row – or being diagnosed with a terminal illness.
However, from mid-April, you can apply through the myGov website to withdraw up to $10,000 from super if you are unemployed or eligible to receive a Job Seeker payment, Youth Allowance for jobseekers, parenting payment, special benefit or farm household allowance.
You can also apply if you were made redundant or your working hours were reduced by at least 20% from January 1, 2020. Sole traders whose business has been suspended or turnover fallen by at least 20% are also included.
You can apply for an additional $10,000 to be released from your super fund between July 1 and September 24, 2020. All withdrawals are tax free and will not affect Centrelink or Veterans’ Affairs payments.
How else can I make ends meet?
If you have young children, the government is about to introduce short-term measures that will make child care free while centres remain open. This will cut costs for hundreds of thousands of families and help people who are still employed to continue working.
Organisations from private health insurers to the AFL are delaying fee increases or making refunds available. Some apply broadly, such as a six-month deferral on health insurance premiums going up, while others are on request if you’re experiencing hardship.
Make sure you’re not paying for what you can’t use. For instance, you aren’t required to pay gym membership fees while gyms are required to be closed – whatever your contract says.
The government’s Moneysmart website is a helpful source of information on managing the financial impact of COVID-19.
If you’re already retired, are studying, or were already out of the workforce
What income support is available for me?
If you already receive government assistance such as the Age Pension, Youth Allowance, or the Parenting Payment, you’ll receive a one-off Economic Support Payment of $750.
It’s made automatically the same way you already receive existing payments and will occur during April. The payments are tax exempt and won’t affect your income for other social security payments.
People who have a Pensioner Concession Card, Commonwealth Seniors Health Card or Veteran Gold card will also receive the extra payments, as will those on a range of veterans’ payments.
The Economic Support Payment applies to people receiving a wide range of other government payments – around 6.5 million Australians.
A second, additional $750 payment will be made in July to people who receive government benefits and who are eligible for the Coronavirus Supplement.
I’m drawing down on my retirement savings but I’m concerned about the fall in markets. Can I reduce my withdrawals until markets recover?
Yes, the government has cut the minimum annual payment required for most pension and annuities by 50% for the current and next financial year. So, if you are aged 60 and withdrawing a minimum of 4% for example, for this and the current financial year you are able to withdraw as little as 2%.
Your minimum annual payment is calculated on your account balance at July 1 each year or your pension’s initial start date. This will now be halved for account-based pensions and annuities, allocated pensions and annuities and market linked pensions and annuities for 2019-20 and 2020-21. More details are available from the ATO website.
I currently receive or I don’t at the moment but I am the minimum age to receive the Age Pension, how will this affect me?
For those who already receive the aged pension, your deeming rates have been lowered by the government. The upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent potentially increasing the overall amount you receive depending on how you are assessed.
If you do not currently receive the aged pension and your assets and/or income have changed as a result of changes the value of assets such as your superannuation and investments, you may now be eligible. More details are available from the Services Australia website.
If you’re still working…
What can I do if I’m still employed but reduced hours mean I’m not earning much?
If your employer has registered for the JobKeeper scheme, you should receive the $1500 per fortnight subsidy from them.
Alternatively, you can still access the JobSeeker payment if you’re employed but have income of less than $1086 a fortnight (depending on your family circumstances). Centrelink doesn’t currently require you to supply proof of your reduced work hours.
Can I claim more on my tax return?
If you’re working from home, you may be able to claim additional expenses on your personal tax return. They must be directly related to earning an income. Some expenses, such as claims for a portion of electricity costs, require you to have a separate dedicated area to work from home – sharing the dining table won’t be enough.
It’s worth keeping records of everything you spend on working from home and seeking specialist tax advice before lodging your 2019-20 return.
If you’re running a business…
How can I keep my staff when my revenue has taken a significant hit?
The government has introduced a $130 billion wage subsidy – known as the JobKeeper scheme – to help eligible businesses keep staff on their payroll. The government will pay employers $1,500 per fortnight for each eligible worker from March 30, 2020 for up to six months. This represents about 70% of the national median wage and is $400 per fortnight more than the JobSeeker (formerly Newstart) payment.
The scheme, which is also available to the self-employed and non-profit entities, should make it easier for businesses to quickly ramp up activity once the COVID-19 pandemic is more under control.
To be eligible, SMEs with annual turnover of less than $1 billion must post a drop in revenue of at least 30% for at least a month. Larger businesses with annual turnover of at least $1 billion must have experienced a drop in revenue of at least 50% for at least a month.
Over half a million businesses have already registered their interest.
The subsidy began on March 30, 2020, although the first payments will be received by employers in the first week of May. They must pass the full subsidy on to employees and are encouraged to top up payments for those who normally earn more.
The JobKeeper legislation is currently being finalised, so it’s worth keeping an eye on the government website.
Are there any other incentives to help me retain employees during this economic downturn?
Yes, the big one is the Australian government’s Boosting Cash Flow for Employers scheme. Small to medium businesses and non-profit organisations with employees (and that have annual revenue below $50 million) will get between $20,000 and $100,000.
The amount a business receives will depend on their PAYG withholding in the March and June 2020 quarters as reported on their Business Activity Statement. Eligible businesses will automatically receive a refund equal to 100% of their PAYG withholding for each quarter, up to a maximum of $50,000. The boost is bigger for small businesses, with all eligible organisations receiving at least $10,000 even if that exceeds their PAYG withholding amount.
State governments are also taking steps to lower business fees and taxes.
The NSW government has deferred payroll tax for up to six months depending on the size of the business. From 2020-21, it will also raise the payroll tax threshold to $1 million. Certain fees and charges that apply to businesses in vulnerable sectors, such as bars, cafes, restaurants and trades, have also been waived.
Meanwhile, the Victorian government will refund 2019-20 payroll tax for businesses with annual taxable wages up to $3 million while businesses in sectors directly affected by the pandemic can apply for a one-off $10,000 grant.
Some businesses may also benefit from Federal government support for employing apprentices or trainees, or in severely affected regions.
What if I can’t make my business loan repayments?
Australian banks have agreed to defer loan repayments for businesses with total loan facilities of up to $10 million, which have been affected by COVID-19, for six months. They are also offering other support such as waiving fees and restructuring loans.
The best course is to pro-actively talk to your bank and negotiate new terms.
Banks are also offering new loans, including overdrafts, with no repayments for the first six months, thanks to the government’s small and medium enterprise (SME) guarantee scheme. It guarantees 50% of the value of eligible business loans up to $250,000 for SMEs impacted by COVID-19.
If your business is in financial distress, some additional protections also currently apply. The threshold for creditors to issue a statutory demand for payment has been raised from $2000 to $20,000. Businesses will also have six months, up from the usual 21 days, to respond. These measures aim to help businesses weather the impact of the virus without facing immediate insolvency.
I’d like to still invest in my business – is there any additional help given the greater uncertainty and risk we now face?
The instant asset write-off allows eligible businesses to claim an immediate tax deduction for new or second-hand assets. The government has temporarily expanded this in two ways:
- Increased purchase threshold
Individual assets of up to $150,000 can be written off in the same financial year. This applies from March 12 until June 30, 2020, after which the threshold will go down to just $1000.
- Increased business access threshold
Businesses with annual revenue of under $500 million can claim the instant write-off. From July 1, 2020, the threshold will drop to annual revenue of $10 million.
It’s important to remember the write-off doesn’t mean you get the whole cost of the purchase back. Instead, it reduces your business’s taxable income in that financial year.
We will continue to review and communicate any new measures or initiatives as they come to hand.
Please take the time to review those questions that are or may be relevant to you and do not hesitate to contact us with any questions that you may have.
If you’d like to book a videoconference or phone call to discuss, you can do so below via the online booking system, or feel free to contact us directly on (02) 9555-8188 or team@advisewise.com.au.
Please stay safe during this difficult time and do not hesitate to ask for help or support.
This information has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before making any decision regarding to any information, strategies or products mentioned, consult us to consider whether that is appropriate having regard to your own objectives, financial situation and needs.
