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Guidance on tax obligations and relief for individuals affected by COVID-19

17 December 2020

As measures to suppress the spread of COVID-19 continue, the economic impacts both locally and overseas continue to be felt.

For individuals, a number of economic stimulus and relief packages have been announced by the Prime Minister, State Governments and the Australian Taxation Office (ATO) to date. These cover a range of measures including:

  • Support for individuals and households in the form of stimulus payments and income support;
  • Temporary measures to allow early access to superannuation and reducing the superannuation minimum drawdown rates;
  • Assistance from State Governments in relation to taxes, fees and levies; and 
  • A series of administrative measures to assist taxpayers experiencing financial difficulty.

The measures for individuals are summarised below. Individuals in business should also refer to our guidance on tax obligations and relief for businesses affected by COVID-19.

Further measures to support individuals during the COVID-19 recovery were announced in the 2020-21 Federal Budget on 6 October 2020, including the bringing forward by two years of the second stage of the Government’s personal tax plan. For details of these measures, please see our summary of tax measures in the 2020-21 Federal Budget.

JobKeeper payments

The Federal Government’s JobKeeper program comprises a wage subsidy to help eligible businesses that have suffered a substantial decline in turnover to continue paying their eligible employees. Eligible employers were able to claim a JobKeeper payment of AUD1,500 per fortnight per eligible employee from 30 March 2020 until 27 September 2020. From 28 September 2020 to 28 March 2021, there is a lower two-tiered payment rate which, in broad terms, will depend on the hours worked by the eligible employee in broad terms during the month of February 2020 (or June 2020, for those eligible under the extended JobKeeper program). Participating eligible employers are required to ensure eligible employees will receive, at a minimum, an amount equal to the designated JobKeeper payment rate per fortnight, before tax. In addition, an affected business entity may also be eligible for JobKeeper payments in respect of certain business participants (for example, a sole trader, a partner in a partnership, one adult beneficiary of a trust, or a director or shareholder of a company) even though they are not an employee of the affected entity.

Further information on the JobKeeper program is available on our dedicated JobKeeper payments webpage.

Other income support for individuals and households

The Federal Government is also providing other income support to individuals, including:

  • Temporarily expanding eligibility of income support payments to include individuals who are stood down or lose their employment, reduced means testing and streamlining access to income support payments.
  • The Coronavirus Supplement, an additional payment of AUD550 per fortnight to individuals receiving JobSeeker Payments, Youth Allowance, Parenting Payment, Austudy, ABSTUDY, Farm Household Allowance, or are Special Benefits Recipients for periods up until 24 September 2020. For social security instalment periods that begin on or after 25 September 2020 the supplement will be paid at the rate of AUD250 per fortnight until 31 December 2020. From 1 January 2021, the payment will be AUD150 per fortnight until 31 March 2021.
  • Two separate payments of AUD750 (after 31 March and the second payment from 13 July 2020) to income support recipients and eligible concession card holders to help manage the economic impact of COVID-19. In the 2020-21 Federal Budget, the Government announced two additional AUD250 payments to such eligible persons, to be made in December 2020 and March 2021.

Early release of superannuation

Eligible individuals who have been significantly financially affected by COVID-19 may be able to access funds from their superannuation account. Under this measure, eligible Australian and New Zealand citizens and permanent residents will be able to access up to AUD10,000 of their superannuation before 1 July 2020 and up to AUD10,000 from 1 July 2020 until 31 December 2020 (original date of 24 September 2020 was extended in Government’s July 2020 Economic and Fiscal Update).

To be eligible, an individual must satisfy one or more of the following requirements:

  • they are unemployed; 
  • they are eligible to receive JobSeeker Payments, Youth Allowance, Parenting Payment, Special Benefits or Farm Household Allowance; or
  • on or after 1 January 2020 they were made redundant or had their working hours reduced by 20 per cent or more (or for a sole trader, have had their business suspended or suffer a reduction in turnover of at least 20 per cent).

Eligible temporary residents were also able to apply to access up to AUD10,000 of their super before 1 July 2020.

Applications for early release of super are made through MyGov.

We recommend that individuals seek financial advice before applying for early release of superannuation.

Support for retirees

The Federal Government has also provided temporary support for retirees by reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 20-21 income years.

This concession will reduce the need for retirees to sell investment assets to fund minimum drawdown requirements.

In addition to the reduction in minimum drawdown requirements, as of 1 May 2020 the upper and lower deeming rates have been changed to reflect the low interest rate environment and its impact on income from savings.

State and Territory relief measures 

The States and Territories have announced their own stimulus packages to support individuals that are impacted by COVID-19. This includes rental relief measures, land tax relief, and relief from other household fees and charges. For land tax relief measures, refer to our dedicated State Tax COVID-19 webpage and for all other forms of relief, please refer to the relevant State or Territory website for further details:

ATO tax relief measures 

Individuals can also reach out to the ATO for support if experiencing financial hardship as a result of the COVID-19 crisis. Many of the options available to individuals are similar to those available to businesses, including: 

  • vary PAYG instalments where income for the tax year has reduced or is expected to reduce (note that PAYG variations do not carry over to a later income year and may need to be remade if circumstances warrant); 
  • lodgment and payment deferrals; and
  • working with affected individuals to help them pay their existing and ongoing tax liabilities by allowing them to enter into payment plans.

Apart from a few automatic lodgment deferrals such as for self-managed super fund returns for the 2019 income year, relief measures are being assessed on a case-by-case basis and individuals are encouraged to contact their tax agent and/or liaise with the ATO directly.

Other tax issues for individuals

Individuals affected by COVID-19 should also consider a range of other tax issues including:

  • Personal income tax residency: With the cancellation of international flights and people movements being restricted across the globe as a result of COVID-19, some individuals need to consider the impact this has on their tax residency status. Where an individual has lived overseas and they have returned to Australia either alone or with their family for a temporary period, this may result in them resuming Australian tax residency which in turn, may impact the taxation of investment and employment income in Australia. The facts and circumstances of each case would need to be carefully considered, although the ATO has announced some discretion is likely to apply. For further information, refer to our COVID-19 Global Mobility webpage.

  • Deductions for working from home: With many individuals now carrying out their employment duties while working from home as a result of the COVID-19 pandemic, a deduction may be available for home office expenses including heating, cooling and lighting in the dedicated area you are working from, work-related phone and internet costs and the purchase of home office equipment which may qualify for an outright deduction or a deduction for decline in value (depreciation). The ATO will allow a shortcut method to be used which will allow individuals to claim a rate of 80 cents per hour for all their running expenses from 1 March 2020 to 30 June 2021There is no requirement to have a dedicated work from home area to claim deductions for work related expenses under this method. 

  • Deductions for protective items: Deductions for personal protective equipment such as gloves, face masks, sanitiser, anti-bacterial spray will generally only be available if an individual incurred the expense themselves and there is sufficient connection with the earning of their assessable salary income. For example, an individual who is exposed to the risk of illness in the course of carrying out their income earning activities (for example, medical staff or cleaner). Refer to ATO frequently asked questions for more information.

Division 7A implications of failing to meet minimum repayments: The Division 7A deemed dividend rules broadly apply to treat certain loans by private companies to their shareholders (or associates) as taxable dividends, subject to certain exceptions. Tax consequences can arise if the shareholder (or associate) fails to meet the minimum annual repayments for “Division 7A loans” made by private companies. For COVID-19 affected borrowers who are unable to make their minimum annual repayments by the end of the lender’s 2019-20 income year (generally 30 June 2020), a payment extension of up to twelve months (but no later than 30 June 2021) can be requested by completing a streamlined online application form with the ATO. Outside of this process, taxpayers may otherwise be able to access, on a case by case basis, a discretion in the law for the Commissioner of Taxation to either extend the period of time for making minimum repayments or to treat the amalgamated loans as not being dividends.

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