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Afford Accounting > COVID-19 Tax Updates

COVID-19 Tax Updates

Jobkeeper for Individuals Update

After the 28th of September, the JobKeeper eligibility criteria will change for Employers and if they are still eligible the Jobkeeper Allowance will be reduced to $1,200 and for those working less then 20 hours a week the allowance will be reduced to $750

[If you are a Sole Trader, you would need to re-assess your eligibility via your BAS for Q1 2020 compared to Q1 2019].

JobSeeker Update

After the 24th of September 2020, the Coronavirus Supplement to JobSeeker will be reduced from $550 to $250 a fortnight, bringing the payment to $815.70 per fortnight until the 31st of December 2020. If you are working you can earn up to $300 per fortnight and still receive the full amount, and for every dollar above $300 JobSeeker payment will be reduced by 60c.

First Support Payment

The first payment of $750 (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020.

What you need to do

If you received or are receiving an eligible payment or have concession card as of the 12 of March 2020 you need to do nothing as the payment will be made directly to the account you receive your current payment.

If your circumstances have changed from the 12 March 2020 and you were not in receipt of an eligible payment, or hold one of the following concession cards (below) at any time from the 12 March 2020 till the 13 April 2020 you will need to go to servicesaustralia.gov.au and create and verify your eligibility.

Eligible Government Payments / Concession Cards

Age Pension • Disability Support Pension • Carer Payment • Parenting Payment • Wife Pension • Widow B Pension • ABSTUDY (Living Allowance) • Austudy • Bereavement Allowance • Newstart Allowance • JobSeeker Payment • Youth Allowance • Partner Allowance • Sickness Allowance • Special Benefit • Widow Allowance • Family Tax Benefit, including Double Orphan Pension • Carer Allowance • Pensioner Concession Card (PCC) holders • Commonwealth Seniors Health Card holders • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment. • DVA PCC holders; DVA EducationScheme recipients; Disability Pensioners at the temporary special rate; DVA Income support pensioners at $0 rate. • Veteran Gold Card holders • Farm Household Allowance

Second Support Payment

The second support payment of $750 is only for eligible recipients who do not qualify for Coronavirus supplement of $550 per fortnight (further detail below). Though if you receive the additional $550 on top of your income support payment then you will not qualify.

What you need to do

If you are an eligible payment recipient or concession card holder after 13 April 2020 and not receiving the Coronavirus supplement this will be paid automatically from the 13 July 2020.

If your circumstances have changed from 13 April 2020 and you were not in receipt of an eligible payment or concession card you will need to go to servicesaustralia.gov.au and create and verify your eligibility.

Coronavirus supplement

The Coronavirus supplement is an additional fortnightly payment of $550 on top of your eligible income support payment.

Jobseeker Payment (and all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension) • Youth Allowance Jobseeker • Parenting Payment (Partnered and Single) • Farm Household Allowance • Special Benefit recipients

What you need to do

If you are an eligible payment recipient or concession card holder before 27 April 2020 this will be paid automatically from the 27 April 2020.

If your circumstances have changed from 27 April 2020 and you were not in receipt of an eligible payment or concession card you will need to go to servicesaustralia.gov.au and create and verify your eligibility.

Early Access to Superannuation

The Government is allowing individuals affected by the Coronavirus to access upto $10,000 of their superannuation before 1st July 2020 and another $10,000 after 1st July 2020, for approximately 3 months.

What you need to do

You must satisfy any one or more of the following requirements to access your super early:

  • You are unemployed; or
  • You are eligible to receive a:
    Job seeker payment, or Parenting payment (Partnered or Single), or Special benefit or Farm household allowance; or
  • On or after 1 January 2020:
    You were made redundant; or Your working hours were reduced by 20 per cent ormore; Or if you are a sole trader and your business was suspended or there was a reduction in your turnover of 20 per cent or more.

You can apply directly to the ATO through the myGov website: https://my.gov.au/mygov and certify that you meet the above eligibility criteria.

After the ATO has processed your application, they will issue your superannuation fund and you with a determination. Your superannuation fund will then make the payment to you without you having to do anything. However, you should contact your fund to check that they have your correct bank details to transfer the funds to.

You will be able to apply for early release of your superannuation from mid-April 2020.

Jobkeeper for Sole Traders Update

If you are a Sole Trader, you will need to re-assess your eligibility via your BAS for Q1 2020 compared to Q1 2019.

Additionally after the 28th of September, the JobKeeper eligibility criteria will change for Employers and if they are still eligible the Jobkeeper Allowance will be reduced to $1,200 and for those working less then 20 hours a week the allowance will be reduced to $750.

Cash Flow Assistance for Businesses

What is it?

The Government is providing up to $100,000 (in two payments of up to a maximum of $50,000 for each payment) which we have provided a breakdown below.

Boosting Cash Flow for Employers payments (first payment)

 

Eligibility

Available to SMEs and NFPs with annual turnover under $50 million that have/had employees in Q3 BAS. Turnover will generally be calculated on prior Financial Year turnover.

The payment will be made by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging Q3 activity statements.

The payments will only be available to active eligible employers established prior to 12 March 2020.

How is it calculated?

We have created a calculator (located below) so you can work this out specifically for your business.

Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a minimum payment of $10,000 or 100 per cent of theamount withheld whichever is greater, to a maximum of $50,000.

Eligible employers that pay salary and wages though aren’t required to withhold tax will receive a payment of $10,000 regardless.

There is a cap of $50,000 though if you don’t exceed this in Q3 then you will be eligible to receive the payment again in Q4 2020, as calculated above up to the maximum $50,000 cap.

Additional payment (second payment)

 

Eligibility

To qualify for the additional payment, the entity must continue to be active and lodge a Q4 BAS.

For quarterly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to 50% of their total initial Boosting Cash Flow for Employers payment (first payment) and follow the lodgement of their Q4 BAS 2020 and Q1 BAS 2021 (and payment is capped at $50,000 over the 2 quarters $50,000).

Timing of payments

The ATO will deliver the payment as a credit to the entity upon lodgment of the activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.

How does it work in real life?

Example 1 – Marc’s Construction Business

Marc owns and runs a building business in Western Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Marc reports withholding of $45,024 for his employees on his quarterly Business Activity Statements (BAS). Under the Government’s Cash Flow assistance for businesses, Marc will be eligible to receive the payment on lodgment of his BAS. Marc’s business will receive:

Boosting Cash Flow for Employers payments – (First Payment)

  • A credit of $45,024 for the Q3 2020 period, equal to 100% of his total withholding
  • A credit of $4,976 for the Q4 2020 period, (the remainder of the $50,000 cap).

Additional payment – (Second Payment)

  • An additional payment of $25,000 for Q4 2020, equal to 50% of his total (Q3 and Q4 Boosting Cash Flow for Employers payments – First Payment).
  • An additional payment of $25,000 for the Q1 2021, equal to 50% of his total (Q3 and Q4 Boosting Cash Flow for Employers payments – First Payment).

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Marc’s business will receive $100,000.

Example 2 – Ryan’s Food Truck Business

Ryan owns and runs a Food Truck business in New South Wales and employs 2 Chefs on an average full-time wage of $60,000 each per annum. Ryan reports withholding of $15,000 for his employees on his quarterly Business Activity Statements (BAS). Under the Government’s changes, Ryan will be eligible to receive:

Boosting Cash Flow for Employers payments – (First Payment)

  • A credit of $15,000 for the Q3 2020 period, equal to 100% of his total withholding
  • A credit of $15,000 for the Q4 2020 period, equal to 100% of his total withholding, as he has not exceeded the $50,000 cap.

Additional payment – (Second Payment)

  • An additional payment of $15,000 for Q4 2020, equal to 50% of his total (Q3 and Q4 Boosting Cash Flow for Employers payments – First Payment).
  • An additional payment of $15,000 for Q1 2021, equal to 50% of his total (Q3 and Q4 Boosting Cash Flow for Employers payments – First Payment).

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Marc’s business will receive $60,000.

For more info, please see fact sheet links below:

https://treasury.gov.au/coronavirus/businesses
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf

Business planning & strategy

For full details on Economic Response to the Coronavirus click on the links below :

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