Financial support during COVID-19 (Australia)
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The Australian Government has announced a range of measures to support the economy, businesses and employment in response to the Coronavirus health crisis. These measures will be relevant to many RANZCP members, including those in private practice, and are summarised in this document.
Boosting cash flow for employers
Small- to medium-sized employers that employ staff during the economic downturn associated with COVID-19, and with an aggregated annual turnover of under $50 million (based on 2018/19 financial year turnover), will receive tax-free cash flow boost payments of between $20,000 to $100,000 from the government.
There will be two components to the payment. The first stage of this measure will be for the March and June activity statement quarters. The payments will be delivered as credits on your Business Activity Statement (BAS) when eligible businesses lodge their activity statement. Employers will receive a payment equal to 100 per cent of the taxes withheld on salary and wages, up to a maximum payment of $50,000. Where an employer (both for-profit businesses and not-for-profits) is not required to withhold any tax on salary and wages, the minimum payment a business will receive as a credit on their BAS will be $10,000. If the credit puts the BAS in a refund position, the Australian Taxation Office (ATO) will process a refund within 14 days.
The second component will be for the July to September activity statement quarter. Eligible entities will receive an additional payment equal to the total payment received under the first stage. This means that eligible businesses will receive another payment of between $10,000 to $50,000 as credits on their BAS.
The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities that are registered with the Australian Charities and Not-for-profits Commission (ACNC) will be eligible regardless of when they were registered. To qualify for the additional payment, the entity must continue to be active.
► More information on boosting cash flow for employers
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Under the JobKeeper Payment, businesses significantly impacted by COVID-19 will be able to access a government wage subsidy of $1,500 per fortnight per employee for up to 6 months. It is a flat $1,500 regardless of what the employee is paid.
Employers (both for-profit and not-for-profits) will be eligible for the subsidy if their business has an annual turnover of less than $1 billion, and they estimate that their turnover has been or will likely be reduced by 30 per cent or more compared to the same period a year ago.
To establish that this has occurred or is likely to occur, an employer would be expected to establish that their turnover has or will likely fall in the relevant month or quarter (depending on their BAS reporting period) relative to their turnover in a corresponding period a year earlier. Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements. It includes all taxable supplies and all GST-free supplies but not input taxed supplies.
To receive the JobKeeper Payment, employers must:
- Assess that they have already, or will experience, the required turnover decline
- Register an intention to apply for the payment at ato.gov.au
- Provide information to the ATO on the number of eligible employees engaged as at 1 March 2020 and those currently employed by the business (including those stood down or re-hired). For most employers, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
- Ensure each eligible employee receives at least $1,500 per fortnight before tax. Employees earning more than $1,500 before tax per fortnight will continue to receive their regular income, with the employer receiving $1,500 per fortnight as a subsidy. Employees ordinarily receiving less than $1,500 per fortnight before tax must be paid $1,500 per fortnight by their employer irrespective of what they normally receive.
- 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.
Eligible employees are people who:
- are currently employed by the eligible employer (including those stood down or re-hired)
- were employed by the employer as 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)
- were at least 16 years of age as at 1 March 2020
- are an Australian citizen, the holder of a permanent visa, or a Special Category Visa Holder (Subclass 444) at 1 March 2020
- were a resident for Australian tax purposes on 1 March 2020
- are not in receipt of a JobKeeper Payment from another employer (only the primary employer nominated by the employee can claim the JobSeeker Payment).
It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment for employees normally earning less than $1,500 per fortnight.
Businesses without employees, such as the self-employed, can also register their interest in applying for the JobKeeper Payment with the ATO at ato.gov.au. Such businesses will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number as well as 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.
The subsidy starts from 30 March 2020 and the first payment is expected to be made to employers in the first week of May. Payments will be backdated to 30 March 2020 and made to the employer monthly in arrears by the ATO.
► More information on the JobKeeper Payment
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Increasing the instant asset write off
The government is delivering an additional measure to support businesses, by encouraging investment in business assets to help stimulate the economy in the short term and promote a stronger economic recovery from COVID-19.
This measure provides an increase to the threshold for the instant asset write off from $30,000 to $150,000, and expands access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million). The increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use in your business by 30 June 2020. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
► More information on increasing the instant asset write off
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Backing Business Investment (BBI) - Accelerated depreciation
The government is introducing an accelerated depreciation deduction for eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021. For the 2020/21 financial year eligible businesses will receive a deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance.
Eligible businesses are those with an aggregated turnover up to $500 million. Eligible assets are new assets, acquired after 12 March 2020, that can be depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is plant, equipment and specified intangible assets, such as patents). This does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.
► More information on backing Business Investment (BBI) - Accelerated depreciation
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Commercial and residential tenancies
The National Cabinet has agreed to a moratorium on evictions over the next six months for commercial and residential tenancies that are in financial distress and are unable to meet their commitments due to COVID-19. Landlords and renters are encouraged to talk about short-term agreements.
► More information on commercial and residential tenancies
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Coronavirus SME Guarantee Scheme
The Government will provide support for small and medium sized enterprises (SMEs) whereby it will provide a guarantee to SME lenders of 50 per cent for new unsecured loans to be used for working capital. SMEs with a turnover of up to $50 million will be eligible to receive these loans.
The Government will provide eligible lenders with a guarantee for loans, with the following terms:
- the maximum total size of loans will be $250,000 per borrower
- the loans will be up to three years, with an initial six month repayment holiday
- the loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Loans will be subject to lenders’ credit assessment processes. The Government states that lenders will be expected to look through the cycle to sensibly consider the uncertainty of the current economic conditions.
The Government will encourage lenders to provide facilities to SMEs that only have to be drawn if needed by the SME. If offered, this will mean that the SME will only incur interest on the amount they draw down.
The Scheme will commence by early April 2020 and be available for new loans made by participating lenders until 30 September 2020.
► More information on the Coronavirus SME Guarantee Scheme
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Quick and efficient access to credit for small businesses
The Government will exempt lenders from the responsible lending obligations for a period of six months in relation to the credit they extend to their existing small business customers, provided there is an existing borrowing relationship and some proportion of that credit is used for business purposes.
The exemption will apply to new credit, credit limit increases and credit variations and restructures. The government anticipates that this reform should help small businesses get access to credit quickly and efficiently. It may however depend on the lender and the small business.
Businesses should contact their lenders directly for further information.
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Temporary early access to superannuation
The Government is allowing eligible individuals affected by the coronavirus to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. Subject to the passage of further legislation, they may also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.
To apply for early release, you must satisfy any one or more of the following requirements:
- you are unemployed
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance (access to such support payments will be fast-tracked under the Coronavirus supplement)
- on or after 1 January 2020:
a) you were made redundant; or
b) your working hours were reduced by 20 per cent or more; or
c) if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
People will need to apply directly to the ATO through the myGov website and will be able to apply for early release of their superannuation from 20 April 2020. Applicants will need to certify that they meet the above eligibility criteria. The ATO will make a determination as to their eligibility, and if eligible, they will advise the relevant super fund to make the payment direct to the recipient.
Separate arrangements will apply for members of a self-managed superannuation fund. Further guidance will be available on the ATO website: www.ato.gov.au
► More information on temporary early access to superannuation
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Temporary reduction in superannuation minimum drawdown requirements
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 financial years. This will reduce the need for retirees and account-based pensioners to sell investments to fund minimum drawdown requirements.
||Current default minimum
|Proposed drawdown rates for
2019-20 and 2020-21
|65 to 74
|75 to 79
|80 to 84
|85 to 89
|90 to 94
|95 and over
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ATO Support Measures
The ATO has implemented a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.
Businesses impacted by the coronavirus are encouraged to get in touch with the ATO to discuss relief options. Tax agents can assist businesses on their behalf.
Administrative measures to assist businesses impacted by the coronavirus include:
- If you report quarterly for BAS, and you expect to receive a refund it is worth considering temporarily changing your reporting cycle to monthly in order to get quicker access to GST refunds. Before you make the change, you should be aware that:
- you can only change from the start of a quarter, so a change now will take effect from 1 April 2020
- changing your GST reporting cycle doesn't mean you have to change your Pay As You Go (PAYG) withholding reporting cycle – you can manage this by specifying the roles you are changing
- once you choose to report and pay GST monthly, you must keep reporting monthly for 12 months before you can elect to revert to quarterly reporting.
- Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
- Deferring the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise.
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter low interest payment plans.
Employers will however still need to meet their ongoing super guarantee obligations for their employees.
Unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented. Anyone impacted by COVID-19 should therefore contact the ATO (or ask their tax agent to contact the ATO) on its Emergency Support Infoline 1800 806 218.
► More information on the ATO’s support measures
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Disclaimer – This summary is not intended to provide financial advice and should not be construed or relied upon. Please seek professional advice from a licenced advisor to determine if the above measures are accessible taking into account your individual circumstances.