COVID-19 Tax Update 24 March 2020

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With the rapid spread of Coronavirus, the government has announced increased measures to assist individuals and small to medium business.

  • Increase in the credit for PAYG Withholding
  • Early access to superannuation
  • Superannuation minimum pension amounts halved
  • Victorian Payroll Tax waived
  • Victorian Land Tax deferral

 

Boosting cash flow for employers

An increase in the credit for PAYG Withholding initially announced on 12 March.

As announced on 22 March, the government 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.

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.

For quarterly lodgers, employers will receive an initial payment equal to 100% of their salary and wages withheld (up from 50%). Monthly lodgers will receive 300% of their salary and wages withheld in March 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 additional payments equal to the first Boosting Cash Flow for Employers payment they received. This means that eligible entities will receive at least $20,000, up to a total of $100,000 under both payments.

The additional payments will be split according to when you lodge. Quarterly lodgers will receive half of the additional payment when they lodge their June BAS and half when they lodge their September BAS. Monthly lodgers will receive a quarter of the additional payment for each activity statement lodged from June to September.

The ATO 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 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.

 

Temporary early release of 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.

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. The exact timing will depend on the passage of the relevant legislation.

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 directly to the ATO through the myGov website, You will need to certify that you meet the eligibility criteria.

After they have processed your application, ATO will issue you with a determination. They 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). Please contact us for more information.

 

Temporarily reducing superannuation minimum drawdown rates

The government 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.

 

 

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

 

Victorian State Revenue Office Tax Relief

 

Payroll tax waived
Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived.

Eligible businesses must continue to lodge returns but do not need to make further payments for this financial year.

The State Revenue Office will directly contact eligible businesses in relation to reimbursement for payroll tax already paid in the financial year.

These businesses can also defer paying payroll tax for the first quarter of the 2020-21 financial year.

More information about the administration of these relief measures will be sent directly to eligible businesses.

Other states have also released various concessions for payroll tax. Please contact our office for further details.

 

Land tax deferral
Land owners due to pay 2020 land tax that have at least one non-residential property and total taxable landholdings below $1 million have the option of deferring their 2020 land tax payment until after 31 December 2020.

The State Revenue Office will contact all taxpayers who are eligible for this deferral.