Business as usual.
In this period of uncertainty, we want to get in touch with all of our valued clients with an important message to reassure you that we will be here working with you through this challenging period.
Currently our office hours, email and phone support will not change and we are still available for face to face meetings. Like many, we will follow the guidelines and recommendations set by the Department of Health and hand sanitiser has been provided at the front desk. We understand that despite these precautions you may have reservations or be unable to conduct travel and meetings. Any paperwork can be delivered for signing over email or our portal and we offer video conferencing as an alternative to face to face meetings.
We appreciate the flow of information at the moment is a little overwhelming, we provide a synopsis of key measures below. This has been broken down into three sections; General, Business and Self-Managed Superannuation Fund Trustees.
The major bills were passed through Parliament late last night and we will continue to keep everyone up to date, and will be updating our website at http://www.hartmanncox.com.au/covid-19_stimulus with further details on how these measures apply to your business.
Centrelink are paying increased payments to a range of social security beneficiaries, including an increase to fortnightly payments and two one-off payments subject to eligibility. The wait time before payments for the Jobseeker Allowance has been reduced to help sole traders and casual employees that have been affected by loss of income or hours. Eligibility can be found on the Services Australia here and it is recommended to apply via myGov. Services Australia last advised this is to be updated and streamlined in the next 48 hours as it struggles to cope with demand.
Sole traders or casual workers who have had their income or hours reduced by 20 per cent or more, unemployed and people accessing certain social security payments will be able to access up to $10,000 of their superannuation tax-free in 2019-20 financial year and a further $10,000 in 2020-21 financial year. This is dependent on an application being made to the Australian Taxation Office and a subsequent determination being issued. At this stage, we recommend waiting for updates.
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. If you are a retiree, you should keep an eye on the above updates for deeming rates and Age Pension payment rates and/or considering whether a reduction in the legislated minimum withdrawals could translate to reducing your existing pension withdrawals. You may need to contact your fund to organise a reduced payment where desired. We do not expect funds to reduce payments unless by request.
The Federal Government has announced various measures to support the business community through this challenging period.
The main assistance is a Cash Flow Boost payment equivalent to 100% of tax withheld from staff between January to June. The minimum payment is $10,000 and a maximum payment of $50,000 applies, to be credited against your account with the ATO with lodgement of your BAS. A second instalment of your entitlement will be paid between July to October, bringing the total minimum to $20,000 and maximum up to $100,000. This applies to all employers with a turnover under $50 million. Adjustments will be applied for monthly lodgers with the March BAS to ensure no disadvantage.
The instant asset write-off is increasing from $30,000 to $150,000 until June 2020. For assets above the instant asset write-off threshold, being $150,000 pre June or $1,000 post June, businesses can claim an immediate deduction of 50% of the cost, until June 2021. Normal depreciation rates apply to the balance of the asset. This now applies to all businesses with turnover less than $500 million.
The Government has also offered incentives around Apprenticeships & Traineeships with eligible employers able to apply for a wage subsidy of 50% of each apprentice's or trainee's wage, lasting for 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Some assistance will also be available from the state government, however details are yet to be released, with each state providing their own levels of support. You can review the Queensland government's site here: http://www.qrida.qld.gov.au/current-programs/covid-19-business-support
Finally, there has been funding to the banks, backed by a 50% government guarantee on small business unsecured lending to speed the offer of financial assistance. We recommend that you discuss this with your banker.
The Government's temporary 50% reduction of minimum drawdown requirements for the 2019-20 financial year will adjust the minimum withdrawals you have been previously notified.
For trustees, we advise that pension withdrawals already taken should be processed according to the rules that applied at drawdown. If you have taken your minimums for the year, there is no recourse to reclassify any amount as a 'lump sum' or to 'refund' the pension payment. You may be able to make a new contribution to the fund, but this is subject to individual eligibility criteria (e.g. age, work test, contribution caps and total superannuation balance) which have not changed. If you have not taken your full drawdown at this stage, you will only need to ensure an amount of at least 50% of the previously notified minimum is taken.
There is also availability for eligible individuals to access tax free withdrawals of up to $10,000 of superannuation prior to 1 July 2020 and a further $10,000 from 1 July 2020. We remind trustees that all applications need to be approved and a determination issued by the Australian Taxation Office before any amount can be drawn. Trustees who are considering this measure need to watch for updates.
Eligible individuals include those that are unemployed and people accessing certain social security payments, as well as people who have been made redundant, had their hours reduced by more than 20% or had a reduction in income of more than 20% as a sole trader on or after 1 January 2020.
We acknowledge this will be a stressful and tumultuous time for everyone and we will be doing the best job to keep all our clients up to date and informed as new information comes in. During these unprecedented times, we remind clients to be aware of increased activity in scam attempts. Our usual team is available so please feel free to call us with any concerns or questions.