In response to the economic impact of the Coronavirus, the Government has announced a number of initiatives to help individuals and businesses at this uncertain time.
The changes include accessing some of your super if you’re in financial stress, tax concessions for small businesses and changes to social security benefits.
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.
Early access to super
If you are under financial stress due to the Coronavirus crisis, you were given the opportunity to access up to $10,000 of your super before 1 July 2020. Regardless of whether you accessed your super before 1 July 2020, you may be able to access up to $10,000 of your super after 1 July 2020 until 31 December 2020 (extended from 24 September 2020).
You may be eligible for early access to your super if you are either:
- eligible for a Jobseeker payment, Youth Allowance payment for job seekers, Parenting Payment (including the single and partnered payments), special benefit or farm household allowance.
You may also be eligible if (on or after 1 January 2020) you either:
- were made redundant
- had your working hours reduced by 20% or more
- are a sole trader and your business was suspended or you experienced a reduction in business turnover of 20% or more.
These payments are tax-free and not treated as income under the Centrelink income test.
How to apply for COVID-19 early release of your super from IOOF?
- Contact us to ensure we have your current personal details.
- Apply directly to the Australian Taxation Office (ATO) through your myGov account via the myGov website (www.my.gov.au). You’ll need to have a myGov account set up and linked to your ATO account.
- If eligible, the ATO will issue a ‘determination notice’ to you and will also provide a copy to us, authorising us to release your super and make a payment to you.
- We will then automatically pay the lump sum from your super account to your nominated bank account via Direct Credit. You do not need to inform us to do this.
Early release payments in July may experience delays
If you’re eligible for a COVID-19 early release of super payment in 2020/21, and you plan on requesting access to your super in July, please be aware that there may be delays but we are committed to paying your funds to you as quickly as possible
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:
Default minimum drawdown rates (%)
Reduced by 50% in 2019/20 and 2020/21 income years (%)
95 and older
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 is a taxable $550 fortnightly payment until 25 September 2020. This reduces to a $250 fortnightly payment from 25 September 2020 until 31 December 2020.
- Parenting Payment
- Wife Pension
- Jobseeker Payment
- Youth Allowance Jobseeker
- Partner Allowance
- Sickness Allowance
- Special Benefit
- Widow Allowance
- Farm Household Allowance
Other income support until 25 September 2020:
- 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)|
Pensioner couple (combined)
First $51,800 ($129.50)
First $86,200 ($215.50)
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.
HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home. HomeBuilder will assist the residential construction market by encouraging the commencement of new home builds and renovations.
You will be able to apply for HomeBuilder when the relevant State or Territory Government that you live in, or plan to live in, signs an agreement with the Commonwealth Government.
Tax benefits for small businesses
Increasing the instant asset write-off threshold for small businesses
From 23 March 2020 until 31 December 2020 (extended from 30 June 2020), if you own a small business with aggregated annual turnover of less than $500 million (increased from $50 million) you may be eligible for an instant asset write-off on assets of up to the value of $150,000.
The measure applies to new or second-hand assets first used, or installed ready for use, between 12 March 2020 until 31 December 2020 (inclusive). Certain assets are excluded, for example, horticultural plants and capital works deductions. There are also limits to deductions for certain cars.
The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
If you think the instant asset write-off may benefit you, please speak to your accountant for more information.
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.
Boosting cash flow for employers
If you own an eligible small or medium business and employ staff, the Government has announced a maximum payment of $100,000 and a minimum payment of $20,000, to help with cash flow in order to keep operating, pay bills and retain employees. Not-for-profit organisations and charities are also included. The payments are generally equal to the amount withheld for tax from employees wages, subject to the limit.
The ATO will pay this as an automatic credit to the business upon lodgement of your activity statement. If this means you are eligible for a tax refund, the ATO will pay the refund within 14 days. You don’t need to fill out any new forms and the payments are tax free.
Supporting apprentices and trainees
From 1 January 2020 to 30 September 2020, if you are an eligible small business employer you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
From 1 July 2020 to 31 March 2021, the subsidy will be available to support small and medium businesses with fewer than 200 employees.
Temporary relief for financially distressed businesses
For owners or directors of a business who are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
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 is proposed to reduce to $1,200 per fortnight after 27 September 2020 for full-time workers and $750 per fortnight for part-time workers. A further reduction is likely to be made after 4 January 2021.
The business must pass on the payments to eligible employees.
The first payments started in the first week of May. If you are self-employed, you may also be eligible for the payments.
For more information read our JobKeeper summary
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.
Important information: This document is issued by IOOF Investment Services Ltd (IISL) ABN 80 007 350 405, AFSL 230703. IISL is a company within the IOOF group which consists of IOOF Holdings Ltd ABN 49 100 103 722 and its related bodies corporate. This document contains general advice only and does not take into account your taxation and financial circumstances, needs and objectives. Before making any investment decisions, you should assess your own circumstances or seek advice from a financial adviser. Before you acquire a financial product, you should obtain and consider the Product Disclosure Statement available from us at www.ioof.com.au, by calling 1800 002 217 or from your financial adviser. While this information is believed to be accurate and reliable at the time of publication, to the extent permitted by law, no liability is accepted for any loss or damage as a result of reliance upon it. Neither IISL nor any company in the IOOF group guarantees the performance of any fund or the return of an investor’s capital. Examples are for illustrative purposes only and are subject to the assumptions and qualifications disclosed. Past performance is not a reliable indicator of future performance.