Support for Individuals

The government has announced measures as support for individuals during the Coronavirus pandemic. Measure impact on Social Security and Superannuation.

Social security

The Government will expand and ease access to social security payments for people who have lost jobs, had hours cut, or sole traders with reduced profits.

There will be a temporary Coronavirus Supplement provided to income support payments for job seekers. This will be $550 per fortnight and will be available for 6 months.

A further $750 tax-free payment will be made in July for households receiving Government support e.g.: age pensioners and veterans.

Early Tax-Free Release of Superannuation

Certain individuals eligible for the Coronavirus supplement and sole traders with a fall in turnover of 20% will be able to access their superannuation. They can apply to access $10,000 in the 2020 financial year and a further $10,000 before September 2020 for the 2021 financial year. Any Coronavirus withdrawal will be treated as tax-free.

Care should be exercised in utilising this option.  Most super funds will have to sell shares to release these funds to you.  With the stock markets having dropped by 40% in the past few weeks, any sale of shares will almost certainly result in a considerable loss being crystalized.

Temporary Halving of Superannuation Pension Withdrawal Rate

Superannuation balances have already been reduced due to the stock market’s negative reaction to the Coronavirus crisis. The Government is helping self-funded retirees to keep their money in superannuation by halving the minimum withdrawal rate in the 2019-2020 and 2020-2021 financial years.

For example, a 70-year-old would normally be required to withdraw 5% of their fund per year. This will be reduced to 2.5% for the next 2 years.

General

The next 6-12 months will be a stressful time for businesses. We recommend you keep your financial information up to date so that you can make fast decisions based on known facts.

We expect the next few months will cause significant issues for employers. We remind employers that the Fair Work Act, Awards and Agreements impose obligations which must be complied with. Before you make any decisions on staffing as a result of this crisis, we encourage you to check their website first. www.fairwork.gov.au/

Advice
If you need advice on the tax changes, you can contact Noel May or Amanda Klye of May Klye & Associates on (03) 9585 7555 orenquiries@mktax.com.au.

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