Steve Thaxter- Partner and Principal Adviser
Sovereign Wealth Partners
The Australian Government has approved massive spending of $320 billion to support the economy during the COVID-19 shutdown. This spending is equivalent to 16% of Australia’s GDP or around 9 months of normal tax receipts from the Australian economy.
With a focus on individuals and families, here’s our summary of the support available and where to get more information. It is not comprehensive, but, does contain links to the full detail.
Your Sovereign Wealth Partners adviser can provide more information and advice if necessary.
If you’ve been working for a business* that’s been significantly impacted (generally, with revenue down 30%+), the new JobKeeper scheme gives your employer $1,500 for each employee every fortnight. This must be passed on to you and other co-workers and effectively keeps all employees at 1 March 2020 on the payroll for the next six months, at a rate equivalent to an annualised salary of no less than $37,107. If you’ve been stood down already, your employer is likely required to reinstate you to the payroll. Self-employed, sole traders, part time and long-term casual staff also qualify. The business must elect to register for the JobKeeper scheme, it is not compulsory. The JobKeeper scheme will cost $130bn.
If you’re a Centrelink recipient under pension age, for 6 months from 27 April Centrelink payments are increased by $550 per fortnight for recipients of income support such as JobSeeker allowances and the parenting payment. For many, this is a doubling of benefits.
If you’re looking for work and didn’t previously qualify, the eligibility criteria for Centrelink income support is loosened in many categories, in particular the Assets test is waived and the partner income test increased to $79,742pa. This will bring hundreds of thousands more into Centrelink Jobseeker eligibility with most recipients also qualifying for the new $550 fortnightly supplement. The JobSeeker scheme will cost $14bn.
If you’re receiving a Centrelink pension, income support or are a concession card holder such as the Commonwealth Seniors Health Care Card, you’ll receive two tax free payments of $750, one around now and another on July 10. Ongoing JobSeeker recipients will only get the first payment. The one-off payments will cost $8bn.
If you’re reluctant to sell investment assets to meet a minimum pension obligation in an account based pension, the Government is halving the normal drawdown minimums for the 2019/20 and 2020/21 financial years.
If you’re over age pension age and perhaps due to falls in the investment markets or the lowering of Social Security deeming rates you think you may qualify for partial age pension support for the first time, contact Centrelink or us for advice. The application and assessment process should be able to be completed on-line.
If you have savings in superannuation, you may access up to $10,000 this financial year and a further $10,000 in the next financial year. Whilst your superannuation savings are generally preserved for your retirement, the Government recognises that for some, the need to access superannuation may outweigh the benefits of waiting until retirement. Conditions apply, which in summary are that you must either be unemployed, eligible for jobseeker or, if a sole trader, have experienced a business downturn. There will be no tax on amounts released. Apply directly from the ATO. Caution should be taken as there may be potential future implications from accessing early.
If you’re experiencing difficulty with your debt obligations Australian banks are offering the option to defer home loan repayments for up to six months. Credit card, personal loan restructures and fee waivers are available too. Credit scores can be preserved if they were intact prior to the crisis. Contact your bank via its website under “Hardship”.
If you or your tenant is unable to pay rent for home or business premises, the Federal Government is enacting legislation to suspend evictions for six months for non-payment of rent due to COVID-19 impact. At the national level, a new binding code allows rent renegotiation between SME businesses eligible for JobKeeper and their commercial property landlords, including waivers and deferrals that are proportional to declines in turnover. The NSW government is finalising a $440m support package for residential and commercial rental properties requiring a negotiated process and offering land tax waivers which may be shared with tenants as part of a negotiated agreement. Note that landlords should understand their landlord insurance position before changing or making tenancy arrangements.
If you run a SME or NFP business employing staff and have PAYG obligations your business will receive a tax free cashflow boost from the Australian Tax Office of between $20,000 and $100,000, paid across two quarters’ activity statements. The cashflow boost measure will cost $32bn.
If you run a small business in NSW that’s been severely impacted, NSW Grants of up to $10,000 may be available to you in addition to payroll tax waivers and deferrals. Eligible businesses must have turnover over $75,000, payrolls under $900,000 and be highly impacted by Covid19 public movement restrictions. Grant applications close 1 June 2020.
If you run a SME business retaining apprentices or trainees, those employees will receive a 50% wage subsidy for 7 months from 1 March 2020. The wage subsidy measure will cost $1.3bn.
If you run a SME business purchasing depreciable assets, most businesses will be able to access instant tax write-offs on assets, including vehicles, costing up to $150,000 until 30 June. The instant write off measure will cost $6.7bn.
If you’re concerned your business may become insolvent you have increased protection with higher debt thresholds and longer time periods for creditor and bankruptcy protection.
If your SME business needs a loan for working capital the Government will guarantee 50% of any loan advanced by an accredited lender until September 2020 and, in conjunction with the RBA, banks have been incentivised to lend more with access to cheap funds and reduced lending restrictions.
If you’re concerned with your wealth positioning during this crisis – take advice from a reputable financial adviser. The team at Sovereign Wealth Partners stands ready to help. We understand that the services we provide are fundamental to our clients’ longer-term outcomes. We don’t run a ticking fee meter, so if there’s anything we can do to support you or help those you care about, please contact any of our team at any time.
* In this briefing, a business means a Small to Medium Enterprise business including a not-for-profit organisation or charity. There are various size cut-offs for support packages set out in the detail of the linked articles. Large businesses generally have different support criteria which may need to be individually negotiated with the Government.