9 April 2020

Interview with Leon Byner, FIVEaa Adelaide

Note

Topics: Economic support and JobKeeper programme, taxation deduction rules for home working.

LEON BYNER:

Michael Sukkar, Minister, thanks for joining us today. Can I start off with a question that a caller, in fact a couple of callers, asked yesterday? Let’s talk about a student that is on AusStudy and they’re living with their parents and the comment made to me by the caller was, well they can’t get Centrelink because the system doesn’t allow it. Now I rang the office of the Treasurer yesterday and what they said was, actually they get the Corona $550 payment. Can you tell us more?

MINISTER SUKKAR:

Yeah, Leon for a number of people, particularly those who fall into the category of student, so they’re either a recipient of youth allowance, AusStudy or AbStudy, they are entitled to the Coronavirus Supplement of $550 a fortnight. So, those individuals are covered and in fact one of your home state Senators, Minister Ruston, actually announced that that would benefit about 235,000 students nationwide. So, that is information that is out there but we appreciate that there’s been such a flurry of announcements and additional supports put in place by the Government that getting all this information is not that easy for people so it’s understandable that some people aren’t entirely aware of what they’re entitled to which is why what you’re doing, Leon, is so important.

BYNER:

All right, another question. What about self-funded retirees? Do they get the $750 bonus?

SUKKAR:

No, the $750 bonus is being paid to recipients of existing social welfare payments so for pensioners or part-pensioners. What we have done in relation to self-funded retirees who might be drawing a part-pension potentially, is reduce the draw-down rate that’s required for them, we’ve also dealt with deeming rates to bring them into line with the reduced interest rate environment. In all honesty, Leon – and I’ve had this conversation with a number of self-funded retirees – the best thing we can do for self-funded retirees is, essentially, by putting this floor under our economy because self-funded retirees are predominately invested in the Australian economy whether it be through property, whether it be through shares. The greatest thing we can do for them is underpin the strength of our economy which, in the end, underpins the strength of their portfolios.

BYNER:

Now, I know that the universities have lost out with many international students and they’re bleeding a lot of money which means that they may have to consider letting a lot of staff go. I would reasonably presume that they would be eligible for JobKeeper?

SUKKAR:

Leon, you are right. Obviously a university, depending on its size and you’d expect most large universities to have revenue over $1 billion, they would need to demonstrate that they’ve had a fifty per cent loss of revenue as a result of the Coronavirus pandemic which is the test that applies to every business or organisation above $1 billion in turnover. If they can demonstrate that, then yes, of course they qualify for the JobKeeper scheme.

BYNER:

Now I want to talk briefly about the fact that so many people are working from home which does change the whole issue of claiming expenses because all of a sudden, you’ve got all of these things going on. For example, if you’re working from home and you’ve got to virtually be in lock-down, then your power bill is going to probably double and there’s other expenses you will incur. So, in a nutshell, what is the advice of the tax office on this matter because people, obviously if they incur costs which they will by working from home, they want to be able to legitimately claim it?

SUKKAR:

Well Leon, this week the Commissioner announced some changes to make things a little easier for people, noting as you said, that so many more Australians will be working from home. They can do one of two things. They could apply a very straight forward and easy test which is a deduction of 80 cents per work hour for all of their running expenses. Now that might not seem like a lot but when you think about that over a period of months, that will equate to many thousands of dollars potentially. So, they can apply a straight test of, ‘I’m not going to calculate anything, I’m not going to get into my electricity bills, my lighting, my internet, my phone, I’m just going to apply an 80 cents per hour.’ So if I work 40 hours this week, I deduct 80 cents for each of those 40 hours, and the commissioner – that is the safe harbour as they call it – so you’re able to deduct that, all you have to do is prove that you were working from home for those hours but you don’t have to go into the expenses.

Alternatively, you can claim for the actual running expenses but that would require you to do some pretty complicated calculations supporting how much of your lighting, your cooling, the decline in value of your office furniture, the pens and the stationery you’re using, how much of that is related to work. You could do that quite complicated process. So, it’s one of two. You either apply the 80 cents per hour or you actually look at exactly what it’s costing you to work from home which is a much more complicated thing. And again, the commissioner often says that you know, for heating and cooling and lighting that’s about 52 cents per hour. So, we’ve been working with the commissioner and said, look, we need to make things as easy as possible for people in this very difficult time. Let’s give them the option of applying a very simple test that doesn’t require all of calculations and that is that you apply 80 cents per hour for all of your running expenses.

BYNER:

All right, I want to ask you now – and I’ve asked you this before and we still get a lot of questions – about what happens to sole traders. I’ll go through a typical scenario, where a sole trader looks at their takings and they’re quietly going under and they want to be able to survive. The advice that Centrelink has been told to give is apply for both JobSeeker and JobKeeper, you’ll get one or the other. That still stands?

SUKKAR:

Yeah, look that does still stand. I’ll be honest with you, Leon. We don’t often like telling people to apply for two different things, we like to be a little more definitive but, in this instance, I think that it’s prudent to give people that advice. Now a sole trader, all things being equal, will be entitled to the JobKeeper $1,500 a fortnight payment. We felt that it was very important to include sole traders, self-employed people in that scheme. Again, you’ve got to prove that your turnover has been reduced by at least 30 per cent, which as you say, for many will be a very easy calculation to make. If you are extraordinarily confident of that then I would say to just apply for JobKeeper because you are going to get it. If you’re a sole trader and you think, ‘well I’m on the edge, it might be twenty per cent down or it might be thirty five per cent down, I haven’t done the exact numbers yet’, then in that case apply for both and you will got one or the other that you’re entitled to. But if your business has essentially gone into hibernation, as we say, and you’re certainly down by thirty per cent, then I would just apply for the JobKeeper.

BYNER:

Now, if you are here on a work visa, what’s the situation you face in that scenario, because, again, a lot of speculation about this, can you put a little bit of meat on the bone on this one?

SUKKAR:

Well there are some specific visa classes, particularly for New Zealanders because we have reciprocal arrangements, there are people that are on a pathway to citizenship who are entitled. But we have confined this scheme predominantly to Australians and very, very limited visa classes. At this time, when we are being required to provided unprecedented support, we have, I think quite understandably, taken a decision that that support must go to Australians first or to people who are on the pathway to citizenship and we’ve obviously got a very specific arrangement with New Zealand where there is reciprocal support for Australians who are in New Zealand. But to those people, and many of those individuals, through no fault of their own have lost their jobs but in the end, they are here fulfilling a need in our economy and if that need is no longer there, then as the Prime Minister has said, as the Immigration Minister has said, if those people are unable to support themselves, then they really do need to consider going home.

BYNER:

All right, if you are in a business partnership – and many are – does that change any of the advice you’ve given, where you should apply for both and you’ll get one or the other – JobKeeper, JobSeeker?

SUKKAR:

No, I mean we’ve really tried to make sure that whether you are structured as a sole trader, as a partnership, as a trust, as a company, we’ve – to the greatest extent possible – tried to make it pretty blind regardless of your sort of legal form.

BYNER:

All right. Well Minister, thank you for coming on. I talk to your people everyday in one way or another, so we’ll certainly continue to keep you in the loop. Thank you for making things clear. That’s Michael Sukkar, the Assistant Treasurer.