In response to the economic impact of the coronavirus, the Federal Government has released a stimulus package designed to financially support millions of Australians.
“The measures that have been passed by the Parliament today represent the most significant support for the Australian economy and community since the war.” – Treasurer Josh Frydenberg
Here we review some of the key elements of the stimulus that are relevant to individuals:
The JobKeeper Payment is a wage subsidy of $1,500 per employee per fortnight. It is paid to businesses that have experienced a 30% or more drop in turnover but keep their staff employed. The payment is also available to eligible self-employed individuals.
The temporary payment is designed to support businesses and their employees. It will help to keep employers connected to their workforce and enable the business to restart rapidly when the crisis has passed. If an employee has already been stood down, they can be rehired and receive the JobKeeper Payment in accordance with legislation.
To be eligible for the payment you must meet the following criteria:
- For businesses with less than $1 billion annual turnover, they must demonstrate a loss of 30% or more in revenue in a month-long period compared with last year. For businesses greater than $1 billion, it must be a 50% loss.
- For a charity or not-for-profit organisation, they must show a 15% reduction in turnover.
- Employees can be full-time, part-time or casual, but casuals must have worked for the employer for a minimum of 12 months.
- Self-employed or sole traders must also meet the 30% loss in turnover.
The JobKeeper Payment will be paid by the ATO monthly in arrears and you must register online to receive updates about the application process.
Individuals can find out more information here
Business and sole traders can find out more information here
The Coronavirus Supplement will be a fortnightly payment of $550 commencing 27 April 2020. This is a temporary supplement that will be paid for six months and is designed to provide income support to both existing and new recipients of the following payment categories:
- JobSeeker Payment
- Youth Allowance for job seekers & students
- Austudy & Austudy for students
- Parenting Payment
- Farm Household Allowance
- Special Benefit
The supplement will be paid in addition to the current benefit amount and each eligible recipient will automatically receive the payment. If you are already receiving one of these benefits you do not need to do anything.
If you are not already receiving one of these payments but your employment has been affected, you need to submit a claim through myGov using an online Centrelink account. If your claim is approved you will automatically receive the supplement in addition to the standard payment.
The eligibility for the JobSeeker Payment and Youth Allowance for job seekers has been temporarily expanded to also include:
- a permanent employee who has been stood down or lost their job
- a sole trader, self-employed, a casual or contract worker whose income has reduced
- individuals caring for someone who’s affected by coronavirus
Family income tests still apply but asset tests will be waived for a six month period. The income tests have been temporarily increased, you can find out more here.
The one week ordinary waiting period has been waived along with the liquid asset test waiting period, newly arrived residents waiting period, and seasonal work preclusion period.
During the period you are receiving the JobSeeker Payment or Youth Allowance for job seekers, you can’t access employer entitlements, such as annual leave or sick leave, or income protection insurance. It is also noted that the income maintenance and compensation preclusion periods will still apply.
Economic Support Payments
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. This first Economic Support Payment will be automatically paid to you if you’re living in Australia and are due to receive an eligible payment between 12 March 2020 and 13 April 2020. The first payment will be made from 31 March 2020.
A second $750 Economic Support Payment may be provided to you if you are not eligible for the Coronavirus Supplement. This will be paid from 13 July 2020. It’s important to register with Centrelink before 10 July 2020 if you become eligible for any of the payments or cards noted for the first payment as you may still receive the second payment, but please note you won’t be eligible for the second payment if you’re receiving the Coronavirus Supplement.
Early access to superannuation
For people experiencing significant financial distress, the Government has approved access to some of their superannuation . Eligible individuals can apply via myGov to access up to $10,000 before 1 July 2020 and an additional $10,000 from 1 July 2020. Once approved through myGov you will be able to provide documentation to your super fund to access funds.
You are only eligible for early access if you meet one of these criteria:
- you are unemployed
- you are eligible to receive a JobSeeker Payment, Youth Allowance for jobseekers, Parenting Payment, Farm Household Allowance or Special Benefit
- on or after 1 January 2020 –
- you were made redundant
- your working hours were reduced by 20% or more
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
Your superannuation withdrawal will be tax-free and will not affect your Centrelink or Veterans’ Affairs payments. You will be able to apply for access to your superannuation from mid-April 2020.
There can be serious long-term implications to the early withdrawal of super, so I would encourage you to speak to your financial adviser if this is something you or a loved one are considering.
Deeming rate reduction
Deeming applies to Financial Assets that are assessed under Centrelink’s income test. From 1 May 2020 deeming rate changes will be implemented. When deeming rates are lowered, your Centrelink payment may increase as the level of income you’re assessed as having will decrease. This will only affect those who are income tested, not those who are asset tested to determine their entitlements.
Both the lower and higher tiers will be adjusted by 0.75%. The new deeming rates will be:
- 25% for the lower tier
- 25% for the upper tier
There is no action required, if you are assessed under the income test the new rates will be applied automatically.
Account based pensions
The Government has halved the minimum drawdown rate for account based pensions for financial years 2019-20 and 2020-21.
This change is effective immediately and for those who have already drawn down the adjusted minimum or more, you can elect not to receive any further payments from your pension this year. You will need to contact your superannuation provider to elect any changes to your payment.
Hope you’ve found this information helpful. The best source of up to date information on payments, resources and eligibility are the following sites:
Both sites have dedicated COVID-19 sections accessible from their home pages.
Moneymode is here to support you as well, if you need advice please reach out .