Making sense of the COVID-19 Government Stimulus Packages

angelamareeCOVID-19, Financial TipsLeave a Comment

I’ve been seeing a lot of confusion in the community and I’ve had many of you reach out with questions regarding what you might be entitled to in the Government stimulus packages. I wanted to help clear up some of the confusion. 

I’ve segregated the Government stimulus packages available into various categories, to make it easier for you to make sense of all the information.

  • Contractor / Sole trader
  • Employee
  • A small business with no employees, including sole traders, partnerships, trusts and companies
  • A small business with employees, including sole traders, partnerships, trusts and companies

I’ve also included the appropriate links where you need to register for the payments and where you can find more detailed information. The Treasury website is a great resource of information on the economic response to the coronavirus.

It should be noted that the Government will continue to release more stimulus packages. They are doing a lot to ensure that you and the Australian economy will be able to survive the hibernation period. So please be patient. Breathe deeply into the financial stress. Know that you will be OK.

For Contractors (Sole Traders)

If you were working as a contractor and you have an ABN that you include on your invoices, you are considered a sole trader. You are entitled to the following:

JobKeeper Payment

  • The new JobKeeper payment is available to sole traders who have suffered, or expect to suffer, a drop in income of at least 30% compared to a similar period last year. 
  • You will need to provide your ABN for your business, and your individual TFN
  • You will need to provide supporting information to demonstrate this 30% drop in income. 
  • You will be required to provide a monthly update to continue to demonstrate this 30% drop in income.
  • The payment is $1,500 a fortnight for 6 months
  • The first payment will be made in early May and will be backdated to 30 March 2020. 
  • Payments will be paid monthly in arrears
  • You need to register your interest at the ATO 
  • You will be updated at a later date with more information on how to access the payment
  • If you receive the JobKeeper payment you will no longer be eligible for the Jobseeker allowance and the coronavirus supplement.
  • The JobKeeper payment is more beneficial financially than the Jobseeker allowance. 
  • Click here and here for more detailed information from the Treasury website

Jobseeker Allowance + Coronavirus Supplement

  • The Jobseeker allowance has been expanded to allow sole traders to access this
  • If your income is reduced to nil or less then $2,000 a month, you will be able to access it
  • The coronavirus supplement is $550 a fortnight for 6 months, paid in addition to the allowance
  • The Jobseeker allowance depends on whether you are single, have a partner or dependents. e.g. If you are single with no children, the allowance is $565.70 a fortnight. 
  • If you are a renter, you might also be entitled to rent assistance, which is a maximum of $139.60 a fortnight. 
  • There is an income test. Your payment is reduced to nil once your income reaches $1,086.50 a fortnight.
  • The partner income test has now been increased to $79,762. So if you are partnered and they earn less than this, you will be able to access this payment
  • The asset test has been waived 
  • When you make a claim you will need to declare that your business has been suspended or has had it’s income reduced significatly 
  • As a sole trader you will not have to actively be looking for a job. By continuing to develop and sustain your business you meet this requirement. 
  • If you already have a Centrelink account you can apply for this now
  • If you have a MyGov account, but don’t yet have an account registered with Centrelink, you will need to get a CRN. Given the difficulty in getting in contact with Centrelink at the moment, you can simply register your intent to claim here and Centrelink will get in touch with you.
  • If you don’t yet have a MyGov account, you will need to register for one
  • Payments will be made from 28 April 2020 and will be back-dated to the date you register
  • If you are able to access the JobKeeper payment, you will not be eligible for this
  • Click here for more detailed information from the Treasury website

Early Release of Superannuation

  • If you are severely impacted financially, you are able to access up to $20,000 from your superannuation fund
  • It should be noted that $10,000 in your superannuation fund now, is worth $130,000 when you retire, so this should be considered as a last resort
  • You can access your super as a sole trader if your business has been suspended, or there has been a reduction in income of 20% or more
  • You are able to access $10,000 before 30 June 2020
  • You can then access another $10,000 after 1 July 2020
  • You apply online through MyGov to access your super 
  • The ATO will then give you a determination, which you pass on to your superannuation fund
  • Your fund will then make the payment to you
  • Click here for more detailed information from the Treasury website

Other Measures

  • Temporary higher thresholds (now $20,000) and more time (now 6 months) to respond to demands from creditors
  • Increase in the threshold at which creditors can issue a statutory demand on the company 
  • Click here for more detailed information on these measures
  • ATO adminsitrative relief
  • The ATO will provide relief for certain tax obligations on a case-by-case basis
  • You can defer payments of certain taxes for up to 6 months
  • You can vary PAYG instalments to nil for the March 2020 quarter
  • If you choose to do this, you can also claim a refund of the PAYG instalments you already paid in the September 2019 BAS and December 2019 BAS.
  • You will need to contact the ATO to arrange this
  • Instant asset write-off increased to $150,000
  • Accelerating depreciation deductions
  • The Treasury website has a great summary of information for businesses and individuals

For Employees

If you were teaching in a studio or had a job working as an employee, where you have been stood down or your hours were cut, you are entitled to the following:

JobKeeper Payment

  • The new JobKeeper payment may be available to your employer. They receive the payment as a subsidy so that they are able to continue paying you
  • The payment is $1,500 a fortnight
  • It is available to employees who were full-time and part-time, even if you have already been stood down, as long as you were an employee as at 1 March 2020.
  • It is also available to casual employees who have been employed for 12 months. 
  • You will receive a $1,500 payment from your employer, regardless of whether you earned more or less than that amount. The minimum payment you will receive is $1,500 a fortnight.
  • Your employer will notify you if they are claiming the JobKeeper payment on your behalf. 
  • It is up to the employer whether they choose to add superannuation onto this payment or not. 
  • If you had already applied to receive the Jobseeker allowance and coronavirus supplement, you will no longer be entitled to this. You will be required to advise Services Australia of this change in circumstance.
  • Click here for more detailed information from the Treasury website

Jobseeker Allowance + Coronavirus Supplement

  • If your income is reduced to nil or less then $2,000 a month, you will be able to access this
  • The coronavirus supplement is $550 a fortnight for 6 months, paid in addition to the allowance
  • The Jobseeker allowance depends on whether you are single, have a partner or dependents. e.g. If you are single with no children, the allowance is $565.70 a fortnight. 
  • If you are a renter, you might also be entitled to rent assistance, which is a maximum of $139.60 a fortnight. 
  • There is an income test. Your payment is reduced to nil once your income reaches $1,086.50 a fortnight.
  • The partner income test has now been increased to $79,762. So if you are partnered and they earn less than this, you will be able to access this payment
  • The asset test has been waived 
  • When you make a claim you will need to declare that your business has been suspended or has had it’s income reduced significatly 
  • There is a requirement that you need to be actively looking for a job 
  • If you already have a Centrelink account you can apply for this now
  • If you have a MyGov account, but don’t yet have an account registered with Centrelink, you will need to get a CRN. Given the difficulty in getting in contact with Centrelink at the moment, you can simply register your intent to claim here and Centrelink will get in touch with you.
  • If you don’t yet have a MyGov account, you will need to register for one here
  • Payments will be made from 28 April 2020 and will be backdated to the date you register
  • If you are able to access the JobKeeper payment, you will not be eligible for this
  • Click here for more detailed information from the Treasury website

Early Release of Superannuation

  • If you are severely impacted financially, you are able to access up to $20,000 from your superannuation fund
  • It should be noted that $10,000 in your superannuation fund now, is worth $130,000 when you retire, so this should be considered as a last resort
  • You can access your super if you are unemployed, were made redundant or your working hours were reduced by 20% or more
  • You are able to access $10,000 before 30 June 2020
  • You can then access another $10,000 after 1 July 2020
  • You apply online through MyGov to access your super
  • The ATO will then give you a determination, which you pass on to your superannuation fund
  • Your fund will then make the payment to you
  • Click here for more detailed information from the Treasury website

For Small Businesses with No Employees

If you run a business as a sole trader, company, partnership or trust and you have no employees, you are effectively self-employed. You are entitled to:

JobKeeper Payment

  • The new JobKeeper payment is available to those who are self-employed and have suffered, or expect to suffer, a drop in income of at least 30% compared to a similar period last year. 
  • You will need to provide your ABN for your business, and your individual TFN
  • You will need to provide supporting information to demonstrate this 30% drop in income. 
  • You will be required to provide a monthly update to continue to demonstrate this 30% drop in income.
  • The payment is $1,500 a fortnight for 6 months
  • The first payment will be made in early May and will be backdated to 30 March 2020. 
  • Payments will be paid monthly in arrears
  • You need to register your interest at the ATO 
  • You will be updated at a later date with more information on how to access the payment
  • If you receive the JobKeeper payment you will no longer be eligible for the Jobseeker allowance and the coronavirus supplement.
  • The JobKeeper payment is more beneficial financially than the Jobseeker allowance. 
  • Click here and here for more detailed information from the Treasury website

Jobseeker Allowance + Coronavirus Supplement

  • The Jobseeker allowance has been expanded to allow the self-employed to access this
  • If your income is reduced to nil or less then $2,000 a month, you will be able to access this
  • The coronavirus supplement is $550 a fortnight for 6 months, paid in addition to the allowance
  • The Jobseeker allowance depends on whether you are single, have a partner or dependents. e.g. If you are single with no children, the allowance is $565.70 a fortnight. 
  • If you are a renter, you might also be entitled to rent assistance, which is a maximum of $139.60 a fortnight. 
  • There is an income test. Your payment is reduced to nil once your income reaches $1,086.50 a fortnight.
  • The partner income test has now been increased to $79,762. So if you are partnered and they earn less than this, you will be able to access this payment
  • The asset test has been waived 
  • When you make a claim you will need to declare that your business has been suspended or has had it’s income reduced significatly 
  • As a self-employed person you will not have to actively be looking for a job. By continuing to develop and sustain your business you meet this requirement. 
  • If you already have a Centrelink account you can apply for this now
  • If you have a MyGov account, but don’t yet have an account registered with Centrelink, you will need to get a CRN. Given the difficulty in getting in contact with Centrelink at the moment, you can simply register your intent to claim here and Centrelink will get in touch with you.
  • If you don’t yet have a MyGov account, you will need to register for one
  • Payments will be made from 28 April 2020 and will be back-dated to the date you register
  • If you are able to access the JobKeeper payment, you will not be eligible for this
  • Click here for more detailed information from the Treasury website

Other Measures

  • Temporary higher thresholds (now $20,000) and more time (now 6 months) to respond to demands from creditors
  • Relief for directors from any personal liability for trading while insolvent
  • Increase in the threshold at which creditors can issue a statutory demand on the company 
  • Click here for more detailed information from the Treasury website
  • ATO adminsitrative relief
  • The ATO will provide relief for certain tax obligations on a case-by-case basis
  • You can defer payments of certain taxes for up to 6 months
  • You can vary PAYG instalments to nil for the March 2020 quarter
  • If you choose to do this, you can also claim a refund of the PAYG instalments you already paid in the September 2019 BAS and December 2019 BAS.
  • You will need to contact the ATO to arrange this
  • Instant asset write-off increased to $150,000
  • Accelerating depreciation deductions
  • Supporting apprentices and trainees
  • The Treasury website provides a great summary of the measures available for businesses

For Small Businesses with Employees

If you run a business as a sole trader, company, partnership or trust and you have employees that you pay a salary to, withhold tax and use the single touch payroll system, you are entitled to:

JobKeeper Payment

  • As an employer you are eligible for the JobKeeper subsidy so that you can keep paying your employees, if your income has reduced by more than 30% compared to a similar period a year ago.
  • Your employees who were full-time, part-time or casuals (employed longer than 12 months) that were employed as at 1 March 2020, including those who have been stood down, are all eligible
  • You are required to advise your employees that they will be receiving this payment
  • You will receive a fortnightly payment of $1,500 for each employee, for 6 months
  • You will be required to pay each eligible employee a minimum $1,500 a fortnight. This is irrespective of  what you were previously paying them
  • You will need to identify eligible employees and provide monthly updates to the ATO
  • The first payment will be made in early May and will be backdated to 30 March 2020. 
  • Payments will be paid monthly in arrears
  • It is at your discretion whether you choose to include superannuation on these payments
  • You need to register your interest at the ATO 
  • You will be updated at a later date with more information on how to access the payment
  • Click here and here for more detailed information from the Treasury website

Boosting Cash Flow for Employers

  • You will be entitled to this if you employ workers as at 12 March 2020. This is demonstrated through registration as a PAYG withholder and you include salary and wages amounts on your Business Activity Statement
  • If you withhold tax on salary payments, you will receive a payment equal to 100% of the amount withheld, up to a maximum of $50,000
  • If you don’t withhold tax on salary payments, you will receive a minimum payment of $10,000
  • The payment is made as an automatic credit in your March 2020 Business Activity Statement. If this brings your BAS into a refund position, the refund will be deposited into your bank account.
  • Payments will be made from 28 April 2020.
  • You will also receive a payment of 50% of the payment from the March BAS, in both the June BAS and September BAS
  • So if you received the minimum payment of $10,000, you will also receive a $5,000 credit in both your June BAS and again in your September BAS.
  • So if you received the maximum payment of $50,000, yo will also receive a $25,000 credit in both your June BAS and September BAS.
  • Click here for more detailed information from the Treasury website

Other Measures

  • Temporary higher thresholds (now $20,000) and more time (now 6 months) to respond to demands from creditors
  • Relief for directors from any personal liability for trading while insolvent
  • Increase in the threshold at which creditors can issue a statutory demand on the company 
  • Click here for more detailed information on these measures
  • ATO adminsitrative relief
  • The ATO will provide relief for certain tax obligations on a case-by-case basis
  • You can defer payments of certain taxes for up to 6 months
  • You can vary PAYG instalments to nil for the March 2020 quarter
  • If you choose to do this, you can also claim a refund of the PAYG instalments you already paid in the September 2019 BAS and December 2019 BAS.
  • You will need to contact the ATO to arrange this
  • Instant asset write-off increased to $150,000
  • Accelerating depreciation deductions
  • Supporting apprentices and trainees
  • Click here for a great summary of the measures available to businesses

Leave a Reply

Your email address will not be published. Required fields are marked *