Detail on what the second stimulus package means to your hip pocket, Centrelink payments and staff retention.
The announcements for individuals, retirees, households and employers:
- Temporary early release of superannuation for those in need
- Reducing the minimum drawdown rates for superannuation income streams for the 2019/20 and 2020/21 years
- Reducing the deeming rates by a further 0.25%
- An additional $750 lump sum for pensioners and concession card holders
- Additional income support payments for the unemployed
- Keeping staff employed
NB: There is another article on our site that covers details of Stage 1 of the Government's Covid-19 stimulus package.
Release of super funds:
The Federal Government has decided to allow financially stressed people to access $10,000 tax free of their super fund this financial year and $10,000 next financial year.
Treasurer Josh Frydenberg made the announcement on Sunday as part of a broader $66 billion stimulus package to mitigate the fallout from the outbreak that has killed more than 13,000 people worldwide and is tipped to plunge the global economy into a recession.
“These extraordinary times demand extraordinary measures,” the treasurer said in a statement. “The government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.”
Eligibility: One of the following requirements must be satisfied for the early release of super:
- You are unemployed; or
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or
- On or after 1 January 2020:
- You were made redundant; or
- Your 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 your turnover of 20 per cent or more.
If eligible, individuals can apply directly to the ATO via MyGov (www.my.gov.au) and will be required to certify that they meet the eligibility criteria. The ATO will then issue a determination and contact the super fund directly to release the money.
It is anticipated that payments will be available from mid-April. Payments will be received tax free and will have no impact on existing income support payments.
Reduction of minimum pension drawdown requirements
As we saw in the Global Financial Crisis (GFC), a temporary reduction to the minimum payment rules will apply for superannuation income streams to assist retirees who would otherwise be forced to sell down assets to meet their minimum pension.
For the 2019/20 and 2020/21 financial years, the minimum drawdown rates will be:
Further to the recent decrease in deeming rates announced earlier this month, the Government will reduce deeming rates by another 0.25% from 1 May 2020. The new rates are provided in the table below.
Additional $750 lump sum payment
Two separate lump sum payments will now be available to eligible social security, veteran and other income support recipients and eligible concession card holders as follows:
Payment one – available to those eligible income support recipients and concession card holders at any time between 12 March 2020 and 12 April 2020.
Payment two – available to eligible payment recipients and concession card holders on 10 July 2020.
The two lump sum payments will be received tax free and will not impact existing income support payments.
The payment will be made automatically from July 13 to about 5 million Australians, including those receiving the age pension, a carers allowance or family tax benefit and Commonwealth senior card holders.
For payment one, the qualifying payments and concession cards are as follows:
To be eligible for payment two, the same list applies EXCEPT if you are entitled to the Coronavirus Supplement (explained below).
Additional income support for the unemployed and faster access
The Government will introduce the Coronavirus Supplement, a $550 per fortnight payment available for the next six months to eligible payment recipients. Additionally, access to income support will be expanded and the claims process accelerated to ensure timely payments for those in need.
Eligibility: The payment categories eligible to receive the Coronavirus Supplement are:
- Jobseeker Payment (including all the payments that are currently moving to Jobseeker Payment)
- Youth Allowance Jobseeker
- Parenting Payment
- Farm Household Allowance
- Special Benefit recipients
While the Coronavirus Supplement is available (temporary measure for approximately six months), the Government will expand access to income support (such as Jobseeker Payment) to:
- Permanent employees who are stood down/lose their job
- Sole traders/self employed
- Casual workers
- Contract workers
The standard allowance income test must be met however the assets test that normally applies to allowances (ie $1 over the asset test threshold results in no payment) will be waived for the Coronavirus Supplement period.
Some waiting periods will also be reduced or waived. The standard one week Ordinary Waiting Period, the Liquid Assets Waiting Period (LAWP) and the Seasonal Work Preclusion Period will all be waived.
How to apply: The Government is encouraging all applications to be made online or over the phone if internet access is not available. Measures have been adopted to accelerate the claims process such as removing the requirement for Employment Separation Certificates and the need to make appointments with an employment service.
The commencement date for the Coronavirus Supplement and the expanded access to income support is 27 April 2020.
Casuals and sole traders
If you've found yourself affected by the economic downturn, you'll be able to access a “coronavirus supplement” of $550 a fortnight for the next six months.
That's on top of other benefits — so if you're already receiving payments through Jobseeker (formerly known as Newstart), you can claim both.
Sole traders and casual workers who are currently making less than $1,075 a fortnight will be eligible to receive the full supplement.
In practice, that means if you're a single parent (receiving a maximum fortnightly payment of $612 through Jobseeker), for example, and you meet the criteria, you'll take home about $1,162 a fortnight.
“This means anyone eligible for the maximum Jobseeker payment will now receive more than $1,100 a fortnight, effectively doubling the Jobseeker allowance,” Treasurer Josh Frydenberg said.
Sole traders or casual workers who have had their income or hours reduced by 20 per cent or more as a result of coronavirus will also be able to access to up to $10,000 of their superannuation tax-free.
Employers who want to keep staff
Not-for-profits and small businesses with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 to help them retain staff and continue operating.
The Government expects 690,000 businesses employing 7.8 million people and 30,000 not-for-profits will be eligible for measures in the stimulus package.
It doesn't mean extra pocket money if you're an employee, but by linking the payments to staff wage tax withholdings, businesses will be given an incentive to hold on to more of their workers.
“We know that small businesses are enormously resilient but this is really hurting them,” Mr Morrison said.
“Whether it is a coffee shop or mechanic or hairdresser… by providing at a minimum $20,000 and up to $100,000 for small businesses who employ people, [it] gives them a chance to get to the other side.”
Expect more to come…
An important thing to keep in mind is that this is the second suite of measures announced by the Government in just a matter of weeks. Details about the first stimulus package can be read here.
For more information
For more information on these measures and other announcements made by the Australian Government visit treasury.gov.au/coronavirus or speak with your Financial Planner or Accountant.
Source: Several sources and the ATO.