Income support for individuals & Sole Traders
Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
Asset testing for Jobseeker Payment, Youth Allowance Jobseeker and Parenting Payment will be waived for the period of the Coronavirus supplement.
To further accelerate access to payments, the Liquid Asset test Waiting Period (LAWP) and the Seasonal Work Preclusion Period (SWPP) will also be waived for recipients eligible for the Coronavirus supplement.
People currently serving a LAWP will no longer need to serve that waiting period
Accelerated claim process:
To ensure timely access to payments, new applicants are encouraged to claim
through on-line and mobile channels. If applicants do not have internet access, they can claim over the phone.
- From April 2020, Services Australia will allow new applicants to call to verify their identity to reduce the need to visit a Services Australia office.
- To claim online, people who do not already deal with Services Australia will need to set up their myGov account, call to verify their identity and get a link to their Centrelink online account.
Example – Sole Trader
Chris is a sole trader, running an architecture practice, specialising in home renovations. Chris’ practice has been successful over the years, and he has been able to build up a reasonable amount of assets ring his career, to a level that would ordinarily make him ineligible for an income support payment.
The economic downturn due to Coronavirus has adversely affected Chris’ business, and his income has been reduced to zero.
Chris will be able to apply for the new JobSeeker / Coronavirus supplement and will not have his assets included as part of the eligibility assessment for the payment. He will also not be required to serve a Liquid Asset test Waiting Period, as that has been waived.
Chris is eligible for the Jobseeker payment and, as he is married, will receive:
• JobSeeker Payment partnered rate of $510.80 per fortnight; plus
• Energy Supplement of $7.90 per fortnight; plus
• Coronavirus supplement of $550 per fortnight
This brings Chris’ total fortnightly income support payment to $1,068.70
Temporary Early Release for Superannuation
The Government 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.
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 (exact timing will depend on the passage of the relevant legislation).
To apply for early release you must satisfy any one or more of the following requirements:
• you are unemployed,
or • 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;
or • on or after 1 January 2020:you were made redundant, or your working hours were reduced by 20 per cent or more,
or if you are a sole trader your business was suspended or there was a reduction in your turnover of 20 per cent or more
How to apply
If you are eligible for this new ground of early release, you can apply directly to the ATO through the MyGov website: www.my.gov.au. You will need to certify that you meet the above eligibility criteria.
After the ATO has processed your application, they will issue you with a determination. The ATO 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.
However, to ensure you receive your payment as soon as possible, you should contact your fund to check that they have your correct details, including your current bank account details and proof of identity documents.
Separate arrangements will apply if you are a member of a self-managed superannuation fund (SMSF).
Further guidance will be available on the ATO website: www.ato.gov.au
You will be able to apply for early release of your superannuation from mid-April 2020.
Rachel the sole trader
Rachel is a sole trader with a catering business. At the end of July 2020, Rachel seeks to apply for an early release from her superannuation for the 2020-21 financial year. Due to the economic effects of the coronavirus, Rachel’s turnover for July is $5,000 compared to $10,000 on average per month for the second half of 2019.
Rachel, therefore, determines that her turnover has reduced by more than 20 per cent compared to her average turnover over the last six months of 2019. Rachel self-certifies that she is eligible for early release and applies to have $10,000 released from her superannuation.
|2nd Wave Employer Cashflow Subsidies The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ people, with a minimum payment of $20,000.|
These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000.
In addition, the minimum payment is being increased from $2,000 to $10,000.
100% of PAYG withheld from employees to a maximum of $50,000
Minimum payment increase from $2,000 to $10,000Additional payment introduced in July-October 2020 – extra payment equal to the Payments already received, the ness will receive at least another $10,000 to $50,000, to receive a combined benefit of $20,000 to $100,000. (must be an active employer), the 100% benefit will be received at present to 50% PAYG Withhold for Monthly and 25% for Quarterly, up to $50,000.
These payments will be tax-freeThe payments will only be available to active eligible employers established before 12 March 2020. Exiting business registered for PAYG Withholding will be an eligible company that pay director fees, should be eligible if registration is before or backdate and director fees are paid via payroll. Trust, that has main beneficiaries in receipt of profits with no other staff, need to consider registering for PAYG and running payroll before the 31st March 2020.
Sarah’s Construction Business (updated example for 2nd Wave Stimulus)
Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS).
Under the Government’s changes, Sarah will be eligible to receive the payment on lodgment of her BAS.
Sarah’s business receives:
• A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.
• A credit of $4,976 for the April period, before she reaches the $50,000 cap.
• No payment for the May period, as she has now reached the $50,000 cap.
• An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000.
Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff
Download Fact Sheet
Action to Consider Now!
- Register for a personal MyGov Account, ASAP
- All personal & Superannuation benefits to be accessible via your MyGov Account.
- Sole Traders – will need a MyGov Account
- Other Business will benefit via lodging BAS’s.
- Ensure all BAS’s, Tax Returns, Payroll is up-to-date, to ensure access to all Government Stimulus. Talk to us for help!
Businesses – Consider an online delivery
- Consider moving to online delivery of products and services ASAP, the business that can adapt to an online delivery model may have the best chance to survive and thrive in the current Covid-19 business environment.
- Business moving forward that rely on crowds or high personal contact will be greatly impacted.
Takeaway Businesses, Cafes and Restaurants
- Consider online delivery if not already
- Uber Eats or the like, however, some of these providers have very high fees
- Create menus to allow for home delivery
- Market to your customers promoting online deliveries, new menus, etc.
- Customers will be looking for businesses that can deliver services and product directly to the home.
- Promote online service, video conferencing
- Create policies around staff working from home, to access systems, communicate with other staff and engage customers and clients online.
- Cloud-based systems
- Online Calendars appointments.
Online delivery has been brought to the forefront of every business deliver model during and beyond the Coronavirus business environment
Here to help
Umbrella Accountants is well-positioned to work with you during the coronavirus business environment, we have modelled our business around an online delivery model for a number of years as follows:-
- We have been 100% paperless for years
- All our systems have been cloud-based for years
- Our existing business is based from a home office, with staff able to work remotely for a number of years.
- Over 50% of our client’s meetings, appointments are already booked online for the last couple of years.
- The option to conduct meeting online via video conferencing has been available for a number of years.
- Staff workspaces meet the social distancing requirements of 4 m2 exclusive workspace.
- All our clients on monthly plans will receive extra management reports and assistance at no extra cost.
As you can see Umbrella Accountants has been built from the ground up for online delivery service model.
Businesses need help
Now is the time to work closer than ever before with us to ensure everything is done to survive and thrive if possible.
Over the next six months expect a lot more from us, as we reach out in a number of ways to help 🙂