2020 Covid19 Ato Stimulus Packages
In regard to the small business packages for employers and individuals, we are posting regular updates on our Facebook page https://www.facebook.com/thetaxlady1/ Fact sheets from the Treasury Department are also located under our resource tab.
All packages are designed to keep the economy moving in times of uncertainty and help keep people employed. If things really do end up as being predicted, then these packages will hopefully keep food on the table of employers and employees for a lot longer. This is about helping each other and teamwork, by showing the Australian spirit.
Individuals
- Two one-off $750 payments to the majority of Centrelink recipients including those on pensions, allowances, carers payments and family assistance recipients etc. The first payment will commence from 31 March and the second from 13 July 2020, however if you qualify for the Coronavirus Supplement of $550 a fortnight, you will not receive the second $750 payment.
- If you have lost employment due to the current situation, you can apply to Centrelink for the job seeker (Newstart) allowance. Centrelink rules have been softened for the next 6 months, to allow applications to be processed quicker. If you are entitled to this allowance, then a Coronavirus Supplement of $550 per fortnight may also be paid by Centrelink.
- At present the Supplement and payments will not commence until 27 April 2020.
- Deeming rates will be reduced for Centrelink purposes on investment earnings, which may mean some pensioners will be entitled to pension increases or some people may now qualify for a pension.
- Superannuation laws will be eased to allow people to access their superannuation savings during the period. The amount able to be accessed is a maximum of $10,000 prior to 30/6/2020 and a further $10,000 post 30 June until approximately 30 September 2020. To apply for early release, you must be unemployed and/or eligible for the jobseeker payment (Newstart) at the time of your application. If you are still employed or working, your working hours must have been reduced by 20% or more or if you are self-employed, your turnover must have reduced by 20% or more.
People that access their superannuation funds will not have to pay tax on the amounts withdrawn, provided they meet the required criteria. Applications can be made through Mygov from mid April 2020.
Small business
- Employers with apprentices will be eligible for grants of up to $21,000 per apprentice provided they have less than 20 employees. This subsidy will apply from 1 January to 30 September 2020 and will need to be assessed by their AASN provider. Where an apprentice employee was not able to be retained, a new employer would be eligible for the subsidy. Apprentices must have been registered as apprentices prior to 1 March 2020 for their employer to be eligible
- Employers will receive a tax reduction on their staffs PAYG withholding tax of a minimum $10,000 and possibly as much as $50,000 in total over the next 2 quarters. The reduction will apply when they lodge their BAS or PAYG IAS from March 2020 to June 2020. Ie If your PAYG withholding tax for your employee’s wages was to be $10,000 it will be reduced to nil thus giving you a cashflow saving of $10,000
- In addition to this as of July 2020 until October 2020 employers will receive a further tax credit equal to 100% of the above benefit received, however it will be paid out as a credit or refund over the June and September quarters. This is an automatic tax free payment and you will not need to apply for it. Conditions will apply to this and the business must continue to be active during the lodged quarters
- The immediate write off for equipment will be increased from its current level of $30,000 to $150,000. This needs to be carefully considered as for arguments sake, if your taxable income is $80,000 and you borrow to buy a truck that is worth $120,000, your income will drop to a point where you are paying no tax. Although this sounds good, if your income returns to its normal level the following year, you may have no further deductions to reduce the tax in the later year and you therefore may end up paying more tax in the big picture. Hence please speak to us about your personal case, if you need further clarification, however we would suggest you wait until after the law passed
- If an asset is purchased for more than $150k accelerated depreciation rules will apply
As you can see the above packages are a great start and have benefits for individuals and small businesses and those with employees definitely have assistance with their cashflow. We are also not financial planners and cannot provide advice in regard to where or how to invest or whether you should access your superannuation funds.
We are working around the clock to stay on top of all changes that are being announced and will keep you updated when relevant. Please bear in mind when contacting us, that we are dealing with many enquiries and each case is different, hence we may not have an immediate answer for you, but will get back to you as soon as able. For BAS clients we will speak to you regarding your individual circumstances during the preparation of your March, June and September BAS taking into account any further changes that may also come in to play.
Rest assured we are working hard to ensure that you, our clients are able to utilise any benefits that are applicable. We have taken the step of ceasing all in office appointments until later notice, as we want to ensure both your health and ours and be able to focus on the urgent needs at hand. We are still able to do over the phone appointments etc. and are more than happy to assist you and help you get through these unchartered waters.
We have also included a basic employer vs employee payment guide to assist you if staff do need time off. If you need help in understanding this please let us know.
Please know that no matter how bad things may seem, you are not alone and we are all in this together! Let’s hope the health threat passes quickly and we can get back to normality as soon as possible. Stay healthy, be happy and love thy neighbour!