With many lockdown restrictions being placed on individuals around the country, the Government has announced several measures to cushion the economic impact of COVID-19 for workers and households.
To date, the Government has committed $189 billion in stimulus. These measures were pushed through the parliament on 23 March and have received Royal Assent. Exactly what it means for you will depend on your circumstances.
Services Australia has released several fact sheets outlining the details of these measures.
The Government has announced a temporary expansion of the eligibility criteria for income support payments as well as a new, time limited Coronavirus supplement. Commencing from 27 April 2020, the $550 per fortnight Coronavirus supplement will be paid to existing as well as new recipients of certain income support payments. If you are already in receipt of Job Seeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance, Special Benefit, Youth Allowance (Student), AUSTUDY and ABSTUDY (Living allowance) this new benefit will be paid for the next 6 months and it will be on top of your income support payment.
Expanding access to certain income support payments
To ensure those in need can access income support payments, the Government has also expanded access to the above income support payments. This extension will start immediately and continue to apply while the Coronavirus supplement is in place. If you are applying for either the Job Seeker Payment or Youth Allowance you will still need to satisfy the income test and you must have lost your job as direct impact of the Coronavirus. This could be as a result of a business cutting your hours or if you need to take care of someone who is affected by Coronavirus.
Changes to means testing
The means testing will be reduced for those applying for Jobseeker Payment, Youth Allowance Jobseeker and Parenting Payment. Although the income test will apply, the asset test will be waived immediately and for the period of the Coronavirus supplement. There are also reductions to certain waiting times. The one-week Ordinary Waiting Period has already been waived; The Newly Arrived Residents Waiting Period will be temporarily waived for recipients eligible for the Coronavirus supplement, but the income maintenance periods will continue to apply as normal. This means that if you have had your employment terminated and have received an Employment Termination Payment (ETP) from your employer, you are still likely to serve out a waiting period before being eligible for an income support payment.
If you are a new applicant, you will be encouraged to apply either on-line or mobile channels. And, to reduce the need to visit a physical Services Australia office, you will be allowed to verify your identity online from 1 April 2020.
An additional $750 payment
In addition to the first $750 payment announced in early March, the Government has committed to a second $750 payment. This payment will reach around 5 million eligible social securities, veteran affairs and eligible concession card holders. The first $750 payment will be made from 31 March 2020 and the second will be paid from 13 July 2020. To be eligible for these payments, you’ll need to be residing in Australia, on one of the eligible payments and unlike the first payment, to receive the second payment you must not be eligible for the Coronavirus supplement.
Changes to deeming rates
To determine your eligibility for certain Social Security entitlements, financial assets are deemed using certain percentages and thresholds instead of looking at the actual rate of return. From 1 May 2020, the deeming rates will be reduced to 0.25% for the lower rate and 2.25% for the upper deeming rate.
Temporary early release of superannuation
If you are affected by the Coronavirus you may be able to access up to $10,000 from your super benefits this financial year as well as $10,000 next financial year. To be eligible to access your super early you’ll need to be either:
- Eligible to receive a job seeker 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:
- made redundant, or
- had your working hours reduced by 20 per cent or more; or
- if you are a sole trader — your business was suspended or there was a reduction in their turnover of 20 per cent or more.
To access your super, you’ll need apply directly with the ATO via the myGov website. If you are considering accessing your super under this measure, it’s worth ensuring your details are correct with your super fund including your bank account and proof of identity documents. Importantly, the benefits you take out of your super will not be taxable and will not affect Centrelink or Veterans’ Affairs payments.
Temporary reduction to the minimum drawdown rate from superannuation pensions
The Government will temporarily reduce superannuation minimum drawdown requirements for account-based pensions and similar products. This measure is like what was seen during the global financial crisis. For the next two financial years the minimum drawdown you’ll be required to make will be reduced by 50%.
|Age||New minimum % withdrawal|
(2019-20 & 2020-21)
|Minimum % withdrawal|
(in all other cases going forward)
|65 – 74||2.5%||5%|
|75 – 79||3.0%||6%|
|80 – 84||3.5%||7%|
|85 – 89||4.5%||9%|
|90 – 94||5.5%||11%|
|95 or more||7.0%||14%|
This will help retirees manage the impact of volatility in financial markets on their retirement savings by reducing, where possible, the need to sell investment assets to fund minimum drawdown requirements.
While the COVID-19 situation is changing rapidly, it is important to consider how you can boost your immunity to the financial impacts. A professional financial adviser can assist you in understanding what you may be eligible for now to cushion the financial impact on your situation. They can also help you take steps for financial success into the future.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
Lifestyle Financial Services and its advisers are authorised representatives of Fortnum Private Wealth Ltd, ABN 54 139 889 535, AFSL 357306.