Australian Government’s Economic Response to Coronavirus

Át vTax we’re trying to help people understand the Australian Government’s Economic Response to Coronavirus. If you need clarity on any of the provisions below please contact us.

As part of the Australian Government’s Economic Response to Coronavirus, it has provided for the ATO to give administrative relief for some tax obligations for people affected by the coronavirus outbreak, on a case-by-case basis (see more here).

Economic Response to Coronavirus

The Australian Government’s economic response to Coronavirus

On 30 March 2020, the government announced its Economic Response to Coronavirus and intention to provide businesses affected by COVID-19 with a subsidy to continue paying their employees.

The JobKeeper Payment is not yet law.

Find out more:

  • Information about the JobKeeper Payment
  • Register your interest in the JobKeeper Payment
  • Treasury information – Economic response to coronavirus

On 12 and 22 March 2020, the government announced measures to help the economy withstand and recover from the economic impact of COVID-19 (coronavirus). The following measures will be administered by the ATO.

The following measures are now law.

  • Enhancing the instant asset write-off
  • Backing business incentive
  • Boosting cash flow for employers
  • Temporary early release of superannuation
  • Temporarily reducing superannuation minimum drawdown rates

JobKeeper Payment

Another Australian Government’s Economic Response to Coronavirus is the temporary JobKeeper Payment, businesses significantly impacted by the COVID-19 (novel coronavirus) outbreak will be able to access a subsidy from the government of $1,500 per fortnight per employee for up to 6 months. This will allow them to keep paying their employees.

Eligibility

Employers
Self-employed individuals
Employees

Employers

Employers (including not-for-profits) will be eligible for the subsidy if:

their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30% compared to a similar period (of at least a month) last year
their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50% compared to a similar period (of at least a month).
Businesses subject to the Major Bank LevyExternal Link are not eligible for the subsidy.

Employers will need to:

  • To Register your interest so that the ATO will contact you when it is enacted, we can register you for a small fee of $5. Register with vTax now
  • apply to us
  • provide supporting information demonstrating a downturn in their business
  • report the number of eligible employees employed by the business on a monthly basis.

Eligible employers will receive the payment for each eligible employee that:

  • was on their books on 1 March 2020
  • continues to be engaged by that employer.

Self-employed individuals

Self-employed individuals will be eligible to receive the JobKeeper Payment if their turnover has reduced (or is expected to reduce) by 30% compared to a similar period (of at least a month)

Self-employed individuals will need to:

  • To Register your interest so that the ATO will contact you when it is enacted, we can register you for a small fee of $5. Register with vTax now
  • apply to us
  • provide supporting information demonstrating a downturn in their business

Employees
Eligible employees include:

  • full-time, part-time or long-term casuals (with their employer on a regular basis for at least 12 months) as at 1 March 2020
  • stood down employees of eligible employers on 1 March 2020
  • stood down employees re-engaged by a business that was their employer on 1 March 2020

Where employees have multiple employers:

  • Only one employer will be eligible to receive the payment.
  • The employee will need to notify their primary employer to claim the JobSeeker Payment on their behalf.
  • The employee’s claiming of the tax-free threshold will, in most cases, be sufficient evidence that the employer is the employee’s primary employer.

To be eligible, employees must be either an:

  • an Australian citizen
  • the holder of a permanent visa
  • a Protected Special Category Visa Holder
  • a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more
  • a Special Category (Subclass 444) Visa Holder.

If an employee has applied for support though Services Australia and the employer will be eligible for the JobKeeper Payment, the employee will need to advise Services Australia of their new income.

Payment process

The JobKeeper Payment will assist employers to continue operating by subsidising all or part of the employee’s income. We will make the payments to the employer on a monthly basis (in arrears).

Eligible employers will be paid $1,500 per fortnight per eligible employee.

Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax. Employers are able to top-up the payment.

  • Employees will receive $1,500 per fortnight (before tax) if they were
    • employed on 1 March 2020
    • ceased employment with their employer due to the effects of COVID-19
    • re-engaged by the same eligible employer.

Where employers participate in the scheme, their employees will receive the payment as follows:

  • If an employee’s income is normally $1,500 or more per fortnight (before tax) they will continue to receive their regular income according to their usual workplace arrangements.
  • If an employee’s income is less than $1,500 per fortnight (before tax), their employer must pay their employee $1,500 per fortnight (before tax).
  • If an employee has been stood down, their employer must pay their employee $1,500 per fortnight (before tax).

It will be up to the employer to decide whether to pay superannuation on any additional wage paid because of the JobKeeper Payment.

Timing

The subsidy will apply from 30 March 2020.

Businesses will be able to register their interest in participating in the scheme from 30 March 2020.

The first payments will be received by employers in the first week of May.

Enhancing the instant asset write-off

Australian Government’s Economic Response to Coronavirus has  increased the instant asset write-off (IAWO) threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).

Timing

This proposal applies from 12 March 2020 until 30 June 2020, for new or second-hand assets first used, or installed ready for use in this time frame.

Enhancing the IAWO will require legislative changes before it can take effect.

Backing business incentive

Australian Government’s Economic Response to Coronavirus is introducing a time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions.

A deduction of 50% of the cost of an eligible asset on installation will apply, with existing depreciation rules applying to the balance of the asset’s cost.

Eligibility

Eligible businesses are businesses with aggregated turnover below $500 million.

Eligible assets are new assets 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.

Timing

This applies to assets acquired after announcement and first used or installed by 30 June 2021.

Boosting cash flow for employers

As announced on 22 March, the Australian Government’s Economic Response to Coronavirus is providing up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help business and not-for-profit cash flow so they can keep operating, pay their bills and retain staff.

Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. Not-for-profit entities (NFPs), including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services.

Under the enhanced scheme, employers will receive a payment equal to 100% of their salary and wages withheld (up from 50%), with a:

  • minimum payment of $10,000
  • maximum payment of $50,000.

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000, up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period:

  • increasing confidence
  • helping employers to retain staff
  • helping entities to keep operating.

The cash flow boost provides a tax-free payment to employers. We will automatically calculate it.

Eligibility for Boosting Cash Flow for Employers payments

Australian Government’s Economic Response to Coronavirus allows small and medium sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.

We will deliver the payment as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.

Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $50,000.

Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

The payments will only be available to active eligible employers established before 12 March 2020. However, charities that are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to COVID-19.

The first payments are within 14 days of the due date for lodgement of the activity statement. So March BAS’s are due 28th Apirl, and therefor you can expect the first payments no later than the 12th of May.

Eligibility for additional payment

To qualify for the additional payment, the entity must continue to be active.

Monthly activity statement lodgers

For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).

Quarterly activity statement lodgers

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 half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).

Timing of Boosting Cash Flow for Employers payments

The Boosting Cash Flow for Employers payment will be applied to a limited number of activity statement lodgments. We will deliver the payment as a credit to the entity upon lodgment of their activity statements. If this places the entity in a refund position, we will deliver the refund within 14 days.

Quarterly lodgers
Eligible period Lodgment due date
Quarter 3 (January, February and March 2020) 28 April 2020
Quarter 4 (April, May and June 2020) 28 July 2020
March 2020 21 April 2020
April 2020 21 May 2020
May 2020 22 June 2020
June 2020 21 July 2020
Monthly lodgers
Eligible period Lodgment due date
March 2020 21 April 2020
April 2020 21 May 2020
May 2020 22 June 2020
June 2020 21 July 2020

Quarterly lodgers will be eligible to receive the first payments for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the first payments for the March 2020, April 2020, May 2020 and June 2020 lodgments. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300%) in the March 2020 activity statement.

The minimum payment will be applied to the entities’ first lodgment.

Timing of additional payment

The additional payment will be applied to a limited number of activity statement lodgments. We will deliver the payment as a credit to the entity upon lodgment of their activity statements. If this places the entity in a refund position, we will deliver the refund within 14 days.

Quarterly lodgers
Eligible period Lodgment due date
Quarter 4 (April, May and June 2020) 28 July 2020
Quarter 1 July, August and September 2020) 28 October 2020
Monthly lodgers
Eligible period Lodgment due date
June 2020 21 July 2020
July 2020 21 August 2020
August 2020 21 September 2020
September 2020 21 October 2020

Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).

Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 lodgments. Each additional payment will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000).

Temporary early release of superannuation

Another Australian Government’s Economic Response to Coronavirus is allowing individuals affected by the coronavirus to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

From mid-April 2020, eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months.

Eligibility

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 (which includes the single and partnered payments), special benefit or farm household allowance.
  • On or after 1 January 2020, either
    • you were made redundant
    • your working hours were reduced by 20% or more
    • if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

How to apply

If you are eligible for this new ground of early release, you can apply from mid-April directly to the ATO through the myGov website: my.gov.auExternal Link. You will need to certify that you meet the eligibility criteria.

If you are a member of an APRA fund, after we have processed your application we will issue you with a determination. We will also provide a copy of this determination to your superannuation fund, which will advise them to release your superannuation payment. Your fund will then make the payment to you, without you needing to apply to them directly.

If you are a member of a self-managed superannuation fund (SMSF) who is eligible, you can apply through myGov from mid-April. We will then issue you with a determination advising of your eligibility to release an amount. When your SMSF receives the determination from you, they will be authorised to make the payment.

Timing

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

Temporarily reducing superannuation minimum drawdown rates

The Australian Government’s Economic Response to Coronavirus is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019–20 and 2020–21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.

The government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.

Superannuation changes

Age Default minimum drawdown rates (%) Reduced rates by 50% for the 2019–20 and 2020–21 income years (%)
Under 65

4

2

65 to 74

5

2.5

75 to 79

6

3

80 to 84

7

3.5

85 to 89

9

4.5

90 to 94

11

5.5

95 or more

14

7