In times of great upheaval such as now, we believe it is important to understand the options open to you in relation to assistance from the government. Below we have outlined the recent stimulus measures announced by the government over the past fortnight.
Ten days after its initial stimulus announcement, the Federal Government updated its coronavirus economic response with a second set of measures announced on Sunday. The latest announcement provides further substantial support for households and businesses impacted by the coronavirus pandemic.
On Tuesday, both houses of parliament passed the proposed measures from both stimulus packages. This article discusses the combined proposals from both of the Government’s announcements.
1. Early access to superannuation
From mid-April 2020, people significantly disadvantaged by the economic effect of the coronavirus will be able to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020.
The Government has confirmed the payments will be tax-free and will not impact a member’s Centrelink or DVA entitlements. It is important to note that the Government has confirmed that members will only be permitted to make one application each income year. For example, if a member accessed $6,000 in May 2020 they will not be permitted to make an additional application to release an extra $4,000 before the end of the year.
To be eligible for early release, you must satisfy any one or more of the following requirements:
- You are unemployed, or
- You are eligible to receive a Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance, or
- on or after 1 January 2020:
- you were made redundant, or
- you working hours were reduced by 20 per cent or more, or
- if you are a sole trader — your business was suspended or there was a reduction in turnover of 20 per cent or more.
Please contact us if you would like to find out more about this initiative or would like information on the application process for the early release.
2. $750 support payments (x2)
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.
- The first payment will be paid automatically from 31 March 2020
- The second payment will be paid automatically from 13 July 2020
An individual can be eligible to receive both the first and second payment. However, they can only receive one $750 payment in each round of payments.
The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.
Eligibility for first $750 payment
To qualify for the first payment, an individual:
- must be residing in Australia, and
- must be receiving a Centrelink or DVA benefit or hold one of the following concession cards, at any time from 12 March 2020 to 13 April 2020 including:
- Age Pension
- Disability Support Pension
- Carer Payment
- Newstart Allowance
- JobSeeker Payment
- Carer Allowance
- Pensioner Concession Card (PCC) holders
- Commonwealth Seniors Health Card holders
- Veteran Service Pension; Gold Card
- DVA PCC holders
Eligibility for second $750 payment
To qualify for the second payment, an individual must meet the following criteria on 10 July 2020:
- must be residing in Australia, and
- must be receiving one of the payments or hold one of the concession cards that were eligible for the first payment, except for those who are eligible to receive the Coronavirus supplement.
- Individuals who are eligible to receive the Coronavirus supplement are not eligible for the second $750 payment. Please refer to the ‘Coronovirus supplement of $550 per fortnight’ section in this article for more information.
3. Reduction in deeming rates for the Centrelink income test
On 12 March 2020, the Government announced a 0.5 per cent reduction in both the upper and lower social security deeming rates. On 22 March, the Government announced it will reduce these rates by another 0.25 per cent.
As of 1 May 2020, the deeming rates listed in the table below will apply:
4. Reducing account based pension minimum drawdowns
The minimum pension income requirements for pension accounts (account-based pensions (ABPs)) will be reduced by 50 per cent. That means people who are living off their pensions now have the option to reduce their income if their cashflow allows.
The reduction will apply for the current income year (2019-20) and the 2020-21 income year.
If you have already drawn the reduced minimum in the current income year, you will not be required to take any additional payments. Please contact us if you want to find out more about this initiative or would like to consider it for yourself.
5. Coronavirus supplement of $550 per fortnight
From 27 April 2020, the Government is establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
This supplement will be paid to both existing and new recipients of Jobseeker Payment, Newstart Allowance, Youth Allowance Jobseeker, Parenting Payment (Partnered and Single), Farm Household Allowance and Special Benefit recipients.
Anyone who is eligible for the Coronavirus supplement will receive the full rate of the supplement of $550 per fortnight. These changes will apply for the next six months. People who qualify for the Coronavirus supplement will not be eligible for the second $750 stimulus payment.
6. Expanded access to Centrelink income support
For the six month Coronavirus supplement period commencing on 27 April 2020, there will be expanded access to the income support payments listed above. This means Jobseeker Payment and Youth Allowance Jobseeker will be accessible to permanent employees stood down or lost employment as well as sole traders, the self-employed, casual workers, and contract workers who meet income tests as a result of the economic downturn due to Coronavirus. This could also include a person required to care for someone who is affected by the Coronavirus.
7. Other initiatives
The government has also announced initiatives to reduce the waiting time for Jobseeker and Parenting payments.
In addition, the government also announced a raft of measures to assist businesses affected by the Coronavirus outbreak including expanding the instant asset write-off, accelerated depreciation for new assets and cashflow assistance.
Please contact Wealth Connexion if you would like more information on any initiatives outlined above.