Posted on August 10, 2020 by Ashley Dawson
On 7 August 2020, the Government announced adjustments to JobKeeper 2.0 to expand the eligibility criteria, now referred to as ‘JobKeeper 3.0’, primarily in response to the COVID-19 restrictions recently imposed in Victoria.
As a refresher, announced in JobKeeper 2.0 on 21 July 2020 were two Extension Periods to the package, as follows:
- Extension Period 1 – which covers the seven new JobKeeper fortnights that commence on 28 September 2020 and end on 3 January 2021; and
- Extension Period 2 – which covers the six new JobKeeper fortnights that commence on 4 January 2021 and end on 28 March 2021
The adjustments contained within JobKeeper 3.0 will apply Australia wide, and the amendments include the following:
Adjustments to employee eligibility – From 3 August 2020, the relevant date of employment (which is used to determine an employee’s eligibility to JobKeeper) will move from 1 March 2020 to 1 July 2020. This is designed to increase employee eligibility for both the existing JobKeeper scheme, as well as for the new extension periods from 28 September 2020.
Casual employees will still be required to have been employed on a regular and systematic basis for a minimum of 12 months, with no changes being made to the original provisions for this.
Adjustments to the ‘Decline in Turnover Test’ – To qualify for JobKeeper in the extension periods, businesses will now only have to demonstrate that their actual GST turnovers have significantly decreased in the previous quarter under JobKeeper 3.0. For these purposes, the applicable rate of decline in turnover required to qualify for JobKeeper 3.0 is determined in accordance with the existing rules (i.e., 50% for entities with an aggregated turnover of more than $1 billion, 30% for entities with an aggregated turnover of $1 billion or less and 15% for ACNC-registered charities).
Specifically, to be eligible for the JobKeeper Extension Period 1 (i.e., from 28 September 2020 to 3 January 2021), businesses only need to demonstrate a significant decline in turnover in the September 2020 quarter (whereas under the previously announced JobKeeper 2.0, they would have been required to show that they had suffered a significant decline in turnover in both the June and September 2020 quarters).
To be eligible for JobKeeper Extension Period 2 (i.e., from 4 January 2021 to 28 March 2021) businesses only need to demonstrate a significant decline in turnover in the December 2020 quarter (whereas under the previously announced JobKeeper 2.0, they would have been required to show that they had suffered a significant decline in turnover in each of the June, September and December 2020 quarters).
The payment rate system originally proposed in JobKeeper 2.0 will remain, with the full rate of payment decreasing from $1,500 to $1,200 per fortnight from 28 September 2020 and then to $1,000 per fortnight from 4 January 2021. The proposed reduced rates (being $750 from 28 September 2020 and $650 from 4 January 2021) will also remain for employees and business participants who worked fewer than 20 hours per week in the relevant period.
If any of the new relief packages impact you or to discuss eligibility and application, please contact one of our Team on (08) 9316 7000.
We are here to help
Trying to think of everything you need to do keep your team and customers safe and healthy right now as well as run your business is tough.
We will continue to keep you informed of all government stimulus and other measures and how they apply to your business and are here at any time of the day to give you advice on your business continuity plans and cashflow.
Please call us on (08) 9316 7000 if there is anything we can do to help you.
If you need us outside of work hours, please call one of our Directors:
Andrew Sullivan on 0407 680 698
Chris Grieve on 0417 967 539
Ashley Dawson on 0438 014 318
We are here for you and together we will all get through this.
We will all come out the other side with more resilience, more compassion and more empathy. Until we do, please look out for each other.
Posted on July 15, 2020 by Helen Cooper
Recent and proposed changes in superannuation legislation have created opportunities for those looking to boost their super.
Many people tend to think of turning 65 as the “hard finish” of years of planning and saving for retirement. Age 65 does still remain a key point in retirement and superannuation planning with an automatic trigger for having full access to the funds in your super at age 65, regardless of whether you are working or not.
Superannuation legislation amendments are set to apply from 1 July 2020 increasing the age at which the work test starts to apply for making voluntary concessional and non-concessional super contributions. Currently members over the age of 65 need to meet the ‘work test’ in order to make voluntary contributions to their super fund. Once the Bill is finalised in Parliament, the age at which the work test starts to apply increase from 65 to 67. Please see the information below on the different types of contributions and criteria for meeting the work test.
The main types of super contributions are summarised below:
- Concessional (before-tax) contributions including:
- Personal concessional contributions – claimed in personal tax return
Concessional contributions are generally taxed at 15% within your super fund (unless an untaxed super fund e.g. West State Super and Gold State Super Funds)
An annual cap of $25k applies to all concessional contributions e.g. Employer contributions of $10k plus salary sacrifice amounts of $15k = cap of $25k. (Note: not applicable to untaxed, constitutionally protected super funds like West State Super and Gold State Super, a lifetime cap applies).
- Non-concessional (after-tax) or personal contributions where tax deduction not claimed
- Annual cap of $100k or up to 3 years of annual caps ($300k) using bring-forward rules
- Restrictions apply depending on age and Total Superannuation Balance held
- ATO contributions if you meet certain eligibility criteria e.g. Government do-contributions, Low Income Super Tax Offset (LISTO)
- Downsizer contributions
Voluntary contributions can currently be made into super up to age 65 regardless of whether you are working or fully retired. Once the legislation is finalised this will change to age 67 years where post age 67 you will need to meet a work test in order to make voluntary contributions into super. Voluntary contributions can include non-concessional contributions or personal concessional contributions where a tax deduction is claimed in your individual tax return.
As part of the changes in increasing the contribution rules to age 67, it is proposed that these measures will also extend to the bring-forward rules, allowing for a person with a Total Super Balance at the end of the prior financial year of:
- Less than $1,500,000 to apply a 2 year bring forward amount ($200,000); or
- Less than $1,400,000 to apply a 3 year bring forward amount $$300,000)
Once you reach age 75, you are generally ineligible to make voluntary contributions into your super fund except for downsizer contributions which relates to the sale of your family home, please refer to further information below.
Reminder on meeting the work test and the Work Test Exemption
Meeting the work Test – To meet the work test you must have been gainfully employed, that is employed or self-employed for gain or reward, for a minimum of 40 hours within 30 consecutive days during the financial year that you wish to make a voluntary contribution to your fund.
Since 1 July 2019, the rules have been tweaked to allow for a “work test exemption” for those currently over 65 to make additional super contributions. To meet or use the Work Test Exemption, you must satisfy the following conditions:
- Have satisfied the work test in the previous financial year;
- Have a total combined super balance with all your super providers of less than $300,000 at the end of the previous financial year;
- You haven’t been and don’t intend to be, gainfully employed for at least 40 hours within 30 consecutive days in the financial that the contributions are made; and
- Not have already used the work test exemption in a previous financial year.
The work test exemption applies to voluntary contributions, so it can apply for both concessional and non-concessional contributions. Furthermore, not all contributions have to be made at once — they can be made over the course of the financial year.
Once the work test exemption has been used, it cannot be used in a subsequent financial year. However, you may be able to use it the following year if you still qualify.
Another change to the work test, which has yet to be legislated, is the extension of the work test by two years — that is, removing the work test for voluntary contributions for people aged 65 and 66. It is likely that this change will be legislated in time to come into effect on 1 July 2020.
The proposal also allows super fund members aged 65 and 66 to use the bring-forward rules to make non-concessional contributions of up to $300,000 and extends the time frame for the receipt of spouse contributions to age 75.
The pre-retirement years are often a time when people decide to downsize from their primary residence. You may wish to consider the “downsizer contribution to super” initiative. This allows those who are eligible to make a one-off, non-concessional contribution to their superannuation fund, of up to $300,000 per person, or $600,000 per couple, from the sale of the family home.
You can make this downsizer contribution regardless of your work status and super balance. You must be age 65 or more when you make the contribution, there is no maximum age limit and there is no requirement to buy a new home after the family home is sold.
The downsizer contribution is a tax-free contribution into super. There is no tax deduction applicable to the contribution.
There are a number of other criteria as summarised below:
- The contract for sale must be exchanged on or after 1 July 2018
- As mentioned above, you must be 65 or more when you make the contribution
- The property that is sold needs to have been your or your spouse’s main place of residence at some point in time
- You or your spouse need to have owned the home for at least 10 years
- The property must be in Australia and excludes caravans, mobile homes and houseboats
- There is an ATO form to complete and the contribution needs to be made within 90 days of settlement
Please be aware that there aren’t any special Centrelink means test exemptions that apply to the downsizing contribution, please seek advice if this will impact you.
Indexation of Transfer balance cap
Whilst the ATO has stated that the $1.6 million transfer balance cap will be indexed periodically in $100,000 increments in line with CPI, it has not been raised since its introduction on 1 July 2017. It has now been confirmed that it will not increase on 1 July 2020, it is therefore almost guaranteed that the cap will be increased from 1 July 2021.
Please do not hesitate to contact our Superannuation Manager Helen Cooper should you have any queries regarding the above information.
Any information provided in this article is general in nature and does not take into account your personal objectives, situation or needs. The information is objectively ascertainable and was not intended to imply any recommendation or opinion about a financial product. This does not constitute financial produce advice under the Corporations Act 2001.