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 $84 billion stimulus passed through both the House of Representatives and the Senate and includes the first round of measures announced on 12th March, partnered with the additional package announced on 22nd March.
Treasurer Josh Frydenberg said,
“The measures that have been passed by the Parliament today represent the most significant support for the Australian economy and community since the war.”
Here we review key elements of the stimulus that are relevant to our clients or their loved ones.
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
- Youth Allowance for students
- Austudy for students
- ABSTUDY 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 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. Speak to your adviser if you would like clarification on how waiting periods may apply to you.
Economic Support Payments
A $750 one-off tax-free payment will be provided to eligible recipients of these payments:
- Age Pension
- Disability Support Pension
- Carer Payment
- Carer Allowance
- Parenting Payment
- Wife Pension
- Widow B Pension
- ABSTUDY (Living Allowance)
- Bereavement Allowance
- Newstart Allowance
- Youth Allowance
- Partner Allowance
- Sickness Allowance
- Special Benefit
- Widow Allowance
- Farm Household Allowance
- Family Tax Benefit A
- Family Tax Benefit B
- Double Orphan Pension
You are also eligible for this one-off payment if you hold one of these concession cards:
- Pensioner Concession Card
- Commonwealth Seniors Health Card
- Veteran Gold Card.
you receive one of the Department of Veterans’ Affairs payments:
- Veteran Service Pension
- Veteran Income Support Supplement
- Veteran Compensation payments, including lump sum payments
- War Widow(er) Pension.
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 $750 will be paid automatically, however you will only receive one payment, even if you qualify for more than one of the payments or cards listed above.
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.
Deeming rate reduction
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:
- 0.25% for the lower tier
- 2.25% for the upper tier
The Treasurer estimates this will support around 900,000 income support recipients, including many Age Pensioners. 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. As per the First Financial Investment Philosophy, this will ensure you are able to maintain your defensive reserves in buckets one and two while riding out the volatility we are currently experiencing in the growth bucket three.
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.
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. While we will discuss this in more detail in a future communication, please speak to your adviser if this is something you or a loved one are considering.
To find out more about these stimulus packages and how they affect you, please contact our team today.