Skip to main content

“COVID-19” – a new name of presumably a new virus, has brought a new pandemic to this world.  It has also brought new (and previously inconceivable) experiences to us like social distancing, lockdowns, face masks, Zoom fatigue and many more.  For some others, COVID-19 has also brought along recession or financial distress, for the first time in their living memory.

The COVID-19 pandemic has also brought along some new broken records.  The Australian Taxation Office (ATO) has reported more than $1.08 billion in tax refunds were issued in the first two weeks of July 2020, a rise of 12 percent compared to same time last year.

As at 7 July 2020, more than 2.4 million people have applied for early withdrawal of part of their superannuation with around $25 billion approved by the ATO.  The ATO suffered system meltdown on the first day of the new financial year (1 July 2020), reportedly due to taxpayers applying for super withdrawal under COVID-19.

For those who may have taken advantage of one or more COVID-19 assistance measures provided by the Federal Government, it is probably time to start planning for your cash flow after the current assistance period runs out.  Let’s have a quick look:


If you have been getting JobKeeper payments, the good news is that the existing scheme (JobKeeper 1.0) is set to continue until 28 September 2020 meaning you are quite likely to continue qualifying for the payment irrespective of your ongoing income.

The Government has announced JobKeeper 2.0 that extends the scheme to March 2021 albeit at a less generous scale.  That said, we are expecting many GPs and specialists would not qualify for JobKeeper 2.0 (as it is currently announced) after September 2020 unless their actual billing for the June quarter and September quarter are both at least 30% lower than the same periods last year.

Super Withdrawal

The second round of the $10,000 early super withdrawal is currently available. Taxpayers who have been made redundant, or if their working hours were reduced by at least 20% or if their sole trader business income has fallen by at least 20% have until 31 December 2020 to apply for withdrawal of up to $10,000 from their super fund tax free.

Our experience is that some clients are contemplating a withdrawal even if they are not in financial hardship.  The main reason is to have some money handy or even pay off the home loan earlier due to the uncertainty times ahead.

If you are contemplating an early withdrawal from super there are a few questions you may want to think about.

  1. Do you have sufficient funds for withdrawal – apart from the possibility that the fund investments may have taken a hammering as a result of the stock market movement, you should also ensure the balance after withdrawal is enough to pay for the routine expenses including premiums for your life insurance. in some cases drawing money out from super may mean forcing the fund to sell down some investments even when the market is down. 
  2. If you have a self managed super fund (SMSF), liquidity would be an even bigger issue if your fund is likely to suffer a reduction in cash inflow due to having less income from investment or rental income. You should check if the fund will have enough money to pay the expenses including routine outgoings, bank loan repayment, fund expenses, pension payment.  Also, consider how the withdrawal would impact on the fund’s investments strategy? Paperwork and documentation are key to keep the auditor happy.

If the members have difficulty making additional contribution into the fund during these difficult times, the fund may be forced to sell some investments to generate cash, worse case the fund may become insolvent.

Cashflow Boost ending

The final payment for the Government’s Cashflow Boost is due to be made in October 2020 for the month or quarter of September 2020. After that payment, employers will have to resume funding PAYG withholding amounts for their employees. This will create additional stress on the cash flow required for those employers to sustain the recovery period.


All up the key takeaway message is that most of the Government’s current COVID-19 subsidies would practically run out around end of September / early October.  It is therefore time to start planning for the cashflow of your practice after this time.  The old cliché “Cash is King” is perhaps even more true in these uncertain times.  If you need a hand crunching some numbers or working out some forecasts, reach out to your accountant now may save you some headache down the track.

*     *     *     *     *

About Alan Leung:  A Registered Tax Agent, Alan has over 25 years experience in providing complex tax advice to corporate and high net worth taxpayers in Australian and overseas.  Alan is a Fellow of Chartered Accountants Australia and New Zealand (CA ANZ) and a Fellow and Chartered Tax Adviser with The Tax Institute.  Holding a Master of Taxation from the University of Melbourne, Alan also holds the position of Senior Tax Trainer with CA ANZ and regularly presents at tax training sessions to a number of professional services firms. Alan may be contacted at [email protected]

Disclaimer:  The comments above have been prepared for informational and general purposes only and are not intended to provide, and should not be relied upon for tax, legal or financial, or accounting advice.  You should consult your own tax, legal, financial or accounting advisors before engaging in any transaction or making a claim on a tax return.