30 March 2020 Update - FAQs Incolink Accounts Update & Incolink COVID-19 Payments
Posted on Mar 30, 2020
UPDATE: Effective 23 April 2020 - Genuine redundancy claims can now be made without tax taken out via our streamlined Incolink Redundancy Account. These claims are available to eligible workers and can be made via WorkerLink and the Incolink App. We have also published some additional FAQs regarding staged claims below.
Click here for questions about the single Incolink Redundancy Account
Click here for questions about staged payments
Click here for questions about Incolink COVID-19 Payments
Questions about the move to one account
Why have Incolink merged the Severance & Genuine Redundancy Accounts?
Incolink now has only one account, the Incolink Redundancy Account. Incolink is moving to one account to make it easier and fairer for workers. We had to do this as part of making the Incolink COVID-19 payments available.
Ultimately, the tax that a worker pays doesn't change; genuine redundancies are still tax-free. However, due to the system change, until the 24th April, Incolink will withhold tax of 32%. After the 24th April, all genuine redundancies will continue to have zero tax withheld. Incolink will support workers to get their tax back at tax time.
Why is there an Incolink COVID-19 payment?
The changes to enable the Incolink Covid-19 payment means that over 45,000 Victorian and Tasmanian construction workers have access to $2,000 if they are stood down due to COVID-19. Money that they wouldn’t otherwise have been able to access.
I used to have a severance account, under the new Incolink Redundancy Account, how much can I claim?
Initial Claims were capped at $5,654 this has been increased to up to $8,000. You can continue to claim up to $8,000 each month there-after until you choose to stop claiming, the balance is expired, or you return to work in the industry. Previously in a severance account you were taxed 32% on all claims. Now you’ll have the opportunity to claim tax free if you are made genuinely redundant.
Why do we have to wait until 24th April to get the genuine redundancy benefit of the new merged account?
Incolink are working around the clock to merge these accounts as quickly as possible and ensure all members get paid correctly. We will keep you notified of the process.
Do I need to reapply for the GRA with the merger of the two accounts?
No, you don’t, and you also no longer must wait 14 days. If you were in the Severance Account, there was no option to claim tax free. With the new Incolink Redundancy Account all members are eligible for a zero tax withholding if they are made genuinely redundant.
Why can’t I get my GRA tax free money now?
If you are made redundant and wish to receive your tax-free redundancy, you will need to wait a short period (until after 24 April) while the accounts are merged into a single account. The merge is taking place to make it simpler for workers and for Incolink to accommodate for all the Incolink COVID-19 hardship payments.
Why are you changing accounts/ Why are you getting rid of GRA accounts?
We have listened to member feedback; we want to make it simple for members to have one account and how your employment ends will determine what tax rate is applied.
What is the tax law I thought genuine redundancies were zero taxed?
Under Australian taxation law, genuine redundancies attract a 0% tax rate, any other reasons such as resignation, shortage of work or for casual workers a 32% tax rate applies. For these rates to apply, the member must provide a Tax File Number at the point of claim.
When Incolink withholds tax, it gets sent to the ATO and is held by them until you lodge your tax return. Until the system changeover is finalised, claims will have 32% tax withheld which will be remitted it to the ATO as we work through moving to a single account. Incolink will work with any members impacted by this short period of change with support to help them get their tax back at tax time.
I was made redundant last week before you made the changes – does this change apply to me?
Yes, all claims will be subject to the changes made.
I made a claim before Friday 27 March and it’s been cancelled. What’s going on?
In order to change our system to bring in the Incolink COVID-19 payment we had to cancel pending claims in the system. This means that for some members they would have received a notification that their claim has been cancelled. These members will be able to get their entitlements but will need to claim again. We are contacting members in this situation to help them resubmit their claims.
Why will I now have tax taken out on a genuine redundancy where that wasn't the case?
Ultimately, you won’t. However, there is a small delay while we make changes to our system. You can wait until after the 24th April to apply for a genuine redundancy payment with 0% tax withheld or claim with the 32% tax withheld and claim that tax back at tax time from the ATO.
Why will I have tax taken out on a genuine redundancy now but after 24 April I won’t.
While we make the change to our accounts, we don’t have a genuine redundancy account and therefore are required to withhold at 32% tax.
Members can hold off on making a claim until the 24th April if they are made genuinely redundant to avoid this. However, if members are made genuine redundant and tax is withheld at 32%, we strongly recommend the member seeks tax advice as this may be claimable from the ATO at the end of this financial year. Incolink will support members at tax time to get tax back on genuine redundancies.
Why is Incolink choosing the tax amount?
Incolink doesn’t tax you, or choose the amount, we are subject to ATO withholding legislation. Incolink is applying the tax rules as they stand. We are continually reviewing tax rulings as they occur and have sought expert advice to enable us to move to a single account type and make these changes for our members.
The interim withholding period until the 24th April is to ensure we are fully compliant with ATO withholding requirements until we have the single account up and running.
What stops Incolink from making further changes? Or prolonging the date to May 24th for example?
Incolink believes these changes put us in the best position to service members during the COVID-19 crisis whilst responsibly managing the fund. In the long term, it will also make the claims process much simpler for workers too. As such, we don't currently foresee a need to make additional drastic changes in this way. The COVID-19 crisis is an evolving one and we'll remain vigilant if the circumstances change.
We want the system changes to be implemented as quickly as possible to better service our members. We believe that April 24 is a realistic date for the account merge to be completed and currently do not see a need for that timeline to be pushed out. Our
Why didn’t you give members some notice?
We are responding in real time to the changes caused by COVID-19. COVID-19 has meant we needed to move forward some decisions and make changes to ensure the stability and strength of your redundancy fund continues. We are here for all our members and these changes enable us to continue to be able to do that, during these unprecedented times.
Will the creation of a single account affect my claim if I am made redundant?
No. Providing you are made genuinely redundant; you will receive your redundancy payment tax free (after the 24th of April). Those who previously were in a severance account can also now apply for a genuine redundancy payment with no tax.
Questions about staged payments
Why can’t I take out all my redundancy?
Incolink has introduced staged payments in order to responsibly manage the fund and to ensure that all workers can get the support they need, when they need it.
For members who were in a severance account previously, this increases your initial payment from $5,654 up to $8,000, enabling up to $8,000 each month there-after until you choose to stop claiming, the balance is expired, or you return to work in the industry. The tax applied is dependent on why your employment ends, as advised by your employer.
For members who were in a GRA account, this means the whole balance of your account won't be paid in a lump sum, it will be available at up to $8,000 per month.
How do staged payments work?
Eligible workers can claim an initial payment of $8,000 or the balance of funds in your account (whichever is lower). As long as funds remain in your Incolink account and you remain eligible to claim, you can continue to access payments of $8,000 or the balance of funds in your account (whichever is lower) every 28 days after the initial claim.
Will the staged payments ever be lifted?
Full worker entitlements can still be accessed for genuine redundancies via staged payments. We'll continue to assess and review staged payments and will notify members of any changes to this as they occur.
What happens if I am made genuinely redundant, I claim an initial $8,000 and then find a new job in or outside the commercial construction industry (meaning I am no longer receiving Incolink contributions from my employer)?
We've created a hypothetical case study to illustrate this scenario:
Worker A has an account balance of $20,000 and is made genuinely redundant.
Worker A makes a genuine redundancy claim and receives their first $8,000 payment. This leaves $12,000 in their Incolink account.
1 week later, Worker A finds a new job in or outside of the industry. They now have 2 options regarding their remaining Incolink account balance.
- Option 1 - 28 days after the initial claim, Worker A decides they would like to continue receiving their redundancy payout and claims an additional $8,000. This leaves $4,000 in their account which they can claim in another 28 days time.
- Option 2 - Worker A decides that because they're earning an income but not receiving Incolink contributions, they'll keep some funds in their Incolink Account for when they need it most.
Staged payments create more flexibility with these decisions than before.
Questions about the Incolink COVID-19 payment
Why have you introduced the Incolink COVID-19 payment?
Incolink is your safety net and we realise these are uncertain times. The COVID-19 payment is designed to provide access for members to some of their funds from their account while they are still employed, but stood down or unable to work due to COVID-19.
Why is it $2,000?
The Board of Incolink has determined the amount of $2,000 (or the lesser balance of an account) per month was appropriate. There is also the ability for a payment to be made every 28 days if eligibility requirements are met including an available balance.
This payment will potentially allow people to also access the other government support payments.
Can I get hardship payments if I’m forced into isolation or stood down by my employer under government direction and how much will I get?
Yes, you can receive the Incolink COVID-19 payment of $2,000 if you have to self-isolate or if you are stood down. It will be taxed at the ATO rate of 32%. You can re-apply for this every 28-days if you continue to be eligible.
Why do I have to pay tax of 32% on a hardship payment if I have to self-isolate or am stood down?
Incolink is required to abide by ATO taxation withholding rates.
Does withholding tax on Incolink COVID-19 payments or claims prior to 24 April benefit Incolink?
No, Incolink withholds and pays this tax to the ATO twice weekly as is required by federal government law. There is no financial benefit to Incolink at all.
Will my account balance be affected by any of these changes?
No, this is your money and your balance will only reduce if you make a claim (including the Incolink COVID-19 Payment claim) to withdraw any of your funds.
Can I access Government support payments if I get Incolink COVID-19 payments?
We believe that your COVID-19 payment will not be classified by Centrelink as income, because of the following:
- The federal government’s six-month waivers commencing 27 April 2020 may extend to the income text.
- The Incolink COVID-19 payment may not be classified as assessable income under taxation law.
- The Incolink COVID-19 payment may be exempt from the definition of income as this payment may be classified as an emergency relief or similar assistance payment.
We recommend you seek independent advice as it relates to your personal circumstances. Please refer to the Centrelink website for details of how the Incolink COVID-19 payment will reduce your Centrelink benefits.
Why can’t apprentices receive the Incolink COVID-19 payment?
Only eligible workers with an available balance can receive the payment. While apprentices receive credits for every day they work, they don’t have funds in their account until they complete their apprenticeship. For that reason, unfortunately apprentices are not able to access the payment.
Apprentices who are stood down should seek access to new enhanced Government Centrelink benefits.
Why are you encouraging employers to keep workers on when there’s no work?
The Premier indicated over the weekend that work could continue on sites provided social distancing requirements are met. Unions and Employer associations, along with Incolink believe that keeping the industry going is the best solution long term for all Workers and the Industry.
If work stops, a stand down is the best way to approach this unprecedented situation, to allow people to get back to work as soon as possible. Standing a worker down still gives them access to Incolink services including counselling. We encourage members to keep in touch with their union or employer association about how the industry as a whole is responding. We will also keep you updated on major developments.
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