As a result of significant declines in financial markets, the government has announced a reduction of 50% to the minimum pension requirements for the 2019/20 and 2020/21 financial years to assist retirees to preserve their capital and not be forced to sell more assets in the downturn.  For example, if your minimum percentage was 5%, it is now 2.5%.  This is a reduction in the minimum pensions amount only – you are still allowed to draw more!


This may mean you have already withdrawn your minimum pension for the current financial year and so can therefore cease withdrawing further funds…if you want to.  If you normally only make one withdrawal towards the end of the financial year, you are now only required to withdraw half the amount previously advised.


This link to the ATO website gives a good summary of the new measures and provides some examples to assist in understanding how it operates.

Please contact us at any time.

Calculator and money

Media Watch (general advice only…..)

You may be aware that one of the many government stimulus measures announced is to allow, in certain circumstances, the early and tax-free release of up to $10,000 of your superannuation balance in the period from now to 30 June 2020 and a further $10,000 in the period from 1 July 2020 to 24 September 2020. In what was obviously a slow news day (other than reporting on ‘you know what’) there has been some coverage of a potential ‘sizeable loophole’, ‘scam’, ‘rort’, opportunity to ‘exploit’ this concessional measure and further ‘sting’ an already wounded Treasury. Not sure which superlatives Andrew Bolt or Alan Jones are tossing around (and not sure we care either!). The ANU’s Tax and Transfer Policy Institute has even released a study on it, describing the concept as a manifestation of ‘tax arbitrage’.

While this may have some ears pricking up to spot a potential pot at the end of the rainbow, in reality this isn’t available to everyone and is aimed at a quite specific target demographic. As of 31 March, to apply for this stimulus measure according to the ATO you must:

  • Be unemployed; or
  • Be eligible to receive a JobSeeker payment (at this stage there is no mention of JobKeeper payments as such, largely because there is no legislation on this yet); or
  • On or after 1 January 2020:
    • Have had your role made redundant; or
    • Be working hours reduced by 20% or more; or
    • If a sole trader, have suspended your business or have had a reduction in turnover of 20% or more.

You are entitled to self-certify as to one or more of the above.

So, if you can step into the gift shop what do you get:

  • Tax-free withdrawal of up to $10,000 x 2, as noted above;
  • You can use these funds to make a concessional (deductible) contribution back into super, so long as the total of your employer contributions and your personal concessional contributions does not exceed $25,000 in each of the two financial years;
  • The contribution will be taxed at 15% in the hands of the fund, while you will save tax at your marginal tax rate. The maximum saving available is therefore $3,200 in each of the two financial years (being $10,000 x 47% less 15%), however, if you have had no employer super or you are unemployed then, in many cases, your marginal tax rate will be much lower.

What are you potentially risking (general advice only, and you should seek specific advice from a licensed financial planner or your super fund directly):

  • Cashing in some of your super when investment markets are low;
  • ‘Stuffing up’ and contributing too much such that you become liable for Excess Contributions Tax;
  • If the money doesn’t go back into super, you will miss the long-term future returns and growth (yes, one day…), potentially impacting on your retirement nest-egg;
  • Your life, TPD and income protection insurance cover inside the fund, as insurance may not continue to be available for accounts that are fully withdrawn or have a balance below $6,000 (check with your fund).

It’s human nature to seriously consider doing something just ‘because you can’ and it’s always worth considering all available options when some people can genuinely benefit, so if you think the above criteria might apply then let’s discuss it and see what the potential tax implications are for you. Or, speak to your financial planner about the other financial and investment considerations involved.

Please contact us at any time.

Blue Piggy Bank

As announced yesterday the Government has stepped up to the plate to announce a further major incentive to assist businesses to retain workers and, in turn, assist those workers to eat and pay the mortgage! Known as JobKeeper Payment, the key points for employers are as follows:

Timing (subject to eligibility)

  1. Commencing 30 March (yesterday!).
  2. Businesses can register their interest with the ATO now (see further below).
  3. First payments to be received by employers in the first week of May.

What is available (subject to eligibility)

  1. $1,500 per fortnight gross per ‘eligible’ employee for up to 6 months.
  2. For each employee that was on their books on 1 March 2020 and continues to be engaged by that employer, including full-time, part-time, long-term casuals and stood-down employees. Eligible casual employees are those who have been with their employer on a regular basis for at least the previous 12 months as at 1 March 2020 (ie employed before 1 March 2019 and regularly engaged).
  3. To be eligible, an employee must be an Australian citizen, holder of a permanent visa, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder.
  4. Eligible employers who have stood down their employees before the commencement of the scheme will be able to participate and employees re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
  5. Self-employed individuals will be eligible where they have suffered or expect to suffer a 30% decline in turnover relative to a comparable prior period (at least a month).
  6. Where employees have multiple employers only one employer will be eligible to receive the payment.


It is very important to note that, unlike some of the earlier measures, not all businesses will qualify for the JobKeeper Payment. In order to do so the following has to happen:

  1. The business or self-employed individual needs to demonstrate that business turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month);
  2. The business must elect to participate in the scheme by making an application to the ATO and providing supporting information demonstrating the downturn in business;
  3. The business must continue to report the number of eligible employees employed by the business on an monthly basis.

What employers need to do with the payments

  1. Eligible employers will receive the JobKeeper payments of $1,500 per fortnight per employee from the Government on behalf of their eligible employees. It is essentially a subsidy to allow employers to retain and pay staff.
  2. Employers can top-up the payment (for example, to cover the usual salary of the employee) but must pass on at least the full amount of the Jobkeeper payment, even if the employee ordinarily receives less than $1,500 per fortnight.
  3. If an employee ordinarily receives $1,500 or more per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace arrangements.
  4. If an employee has been stood down, the employer must pay at least the minimum $1,500 per fortnight before tax.
  5. PAYG Withholding will need to be deducted from the payment to the employee in the normal way.

You can access the Treasury Fact sheet here which contains some additional content and worked examples.

We are poised, safely-distanced and ready to assist you in this process. Please contact us at any time.

Piggy Bank