The Government’s Coronavirus stimulus package
In response to the economic impact of the Coronavirus, the Government has announced a number of initiatives to help individuals and businesses.
Below is an overview of the initiatives and changes that may help you.
During these uncertain times, we suggest you talk to your financial adviser. They will be able to look at your current circumstances and recommend the most appropriate course of action for you and your family.
Minimum pension payment changes
To help you if you’re a retiree, the minimum pension payments you are required to withdraw from your account-based pensions or similar product will be reduced by 50% as follows:
|Age||Default minimum drawdown rates (%)||Reduced by 50% in 2019/20 and 2020/21 income years (%)|
|95 and older||14||7|
Social security payments and changes
From 27 April 2020, if you are eligible (see list below) you will be automatically paid the Coronavirus Supplement. The Coronavirus Supplement was initially a taxable $550 fortnightly payment until 25 September 2020. This reduced to a $250 fortnightly payment from 25 September 2020 until 31 December 2020. From 1 January 2021, it reduced to a $150 per fortnight payment until 31 March 2021.
- Parenting Payment
- Wife Pension
- Jobseeker Payment
- Youth Allowance Jobseeker
- Partner Allowance
- Sickness Allowance
- Special Benefit
- Widow Allowance
- Farm Household Allowance
Other income support until 31 March 2021:
- Waiving the asset test for Jobseeker Payment, Youth Allowance Jobseeker, and Parenting Payment.
- The income test will continue to apply to the other payments you receive.
- The one-week ordinary waiting period, liquid assets waiting period, seasonal work preclusion period and newly arrived residents waiting period will not apply during this period. These waiting periods will also be waived if you are currently within these waiting periods.
- Income maintenance periods and compensation preclusion periods will continue to apply as payments received by an individual are treated as income.
If you wish to make an application please go online to your myGov account or phone Centrelink.
Reduced deeming rates
Since 1 May 2020, the upper deeming rate for income in excess of the income threshold reduced from 3% to 2.25%, and the lower deeming rate from 1% to 0.25%.
| Deeming rate|
(1 May 2020)
|Single||Pensioner couple (combined)|
|0.25%||First $51,800 ($129.50)||First $86,200 ($215.50)|
|2.25%||On amounts exceeding $51,800||On amounts exceeding $86,200|
These reductions reflect the low interest rate environment and its impact on the income from savings. Also, people who are currently receiving part pensions and less than the full rate of income support may receive increased entitlements.
The HomeBuilder initiative is set to end on 31 March 2021. It provides eligible owner-occupiers with a grant to build a new home or substantially renovate an existing home. This not only assists individuals, it also supports the residential construction sector by encouraging people to build new homes or spend on home renovations.
On 29 November 2020, the Government announced an extension to the HomeBuilder program with some changes.
How does it work?
- Building contracts signed between 1 January 2021 and 31 March 2021 may receive a $15,000 grant.
- The deadline for applications is 14 April 2021 for eligible contracts signed on or after 4 June 2020, including those applying for the original $25,000 grant or the new $15,000 grant.
- Construction must commence within six months for all HomeBuilder applications. Previously the timeframe was three months. This will apply to all eligible contracts signed on or after 4 June 2020.
- In New South Wales and Victoria, there is an increase to the property price cap for new build contracts from $750,000 to $950,000 and $850,000 respectively, where the contract is signed between 1 January 2021 and 31 March 2021. The existing new build property price will continue to apply in all other States and Territories.
To avoid missing out on this opportunity, make sure you apply before 14 April 2021 to your relevant State Revenue Office.
Tax benefits for small businesses
ATO relief for tax obligations
The ATO will provide relief for certain tax obligations for taxpayers impacted by the Coronavirus outbreak on a case-by-case basis. Please see your accountant for more information.
The JobMaker Hiring Credit gives employers incentives to take on additional young job seekers on a permanent, casual or fixed term basis. This incentive will help both employers and young people as the economy recovers. It is available to employers for each new job they create over 12 months, starting from 7 October 2020. Employers will be able to apply for $200 a week for each additional eligible employee they hire aged 16 to 29 years old and $100 a week for each additional eligible employee they hire aged 30 to 35 years old.
On 30 March 2020, the Federal Government announced the introduction of the JobKeeper Payment. The payment is a wage subsidy paid by the Government to businesses significantly impacted by the Coronavirus. This allows employers to continue paying their employees whether they are able to work or not.
The Government will provide $1,500 per fortnight per eligible employee for up to six months, to 27 September 2020, to eligible businesses. The JobKeeper payment reduced to $1,200 per fortnight after 27 September 2020 for full-time workers and $750 per fortnight for part-time workers. From 4 January 2021 to 31 March 2021 the payment reduced to $1,000 per fortnight for eligible employees working 20 hours or more per week and $650 per fortnight for eligible employees working less than 20 hours per weeks.
The business must pass on the payments to eligible employees.
If you are self-employed, you may also be eligible for the payments.
Deductions for expenses related to working from home
If you are working from home and incur expenses that are not reimbursed by your employer, you may be able to claim them as a tax deduction. The expenses must be directly related to working from home and you need to keep a record of your working from home hours and your expenses. There are three ways you can choose to calculate additional running expenses:
- Shortcut method - A deduction of $0.80 for each hour worked from home due to the Coronavirus, from 1 March to 30 September 2020, is allowed if you incur additional deductible running expenses as a result of working from home.
This method cannot be used for periods worked from home prior to 1 March 2020.
- Fixed rate method – allows:
- a rate of $0.52 per hour for the cost of utilities, cleaning and depreciation of office furniture
- work-related phone and internet expenses, computer consumables and stationery
- work-related depreciation of a computer, laptop or similar device.
- Actual cost method – claim the actual work-related portion of all running expenses, calculated on a reasonable basis.
For more details, please refer to the ATO website at employees working from home.
If you are working from home for the first time due to the Coronavirus this will help you to accurately complete your tax return. These methods are expenses incurred between 1 March 2020 until at least 30 June 2020.
Further information and Government resources
Information in relation to how the Government is supporting individuals, households and businesses is on the Government’s Treasury website
More information is also available on the ‘COVID19’ section of the ATO website
Additional resources, including tips and calculators, are on the Government’s MoneySmart website
We’re here for you
We believe these initiatives are well-considered by the Government and are for the wellbeing of all Australians and the Australian economy. If you are or your business is struggling during this unprecedented time or you have any questions, please contact us or your financial adviser. If you don’t have an adviser we can put you in touch with one.
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