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COVID-19 – Summary of Economic Response from the Australian Government

By March 23, 2020 July 3rd, 2020 No Comments

In response to the ongoing COVID-19 (Coronavirus) pandemic, the government is providing a range of measures that will assist Australians, now and in the near future.

Read more about the following areas that the government have addressed, below:

Early Access to Superannuation
Reduction of superannuation minimum drawdowns
Payments to support households
Income support for individuals
Income support for SMEs and Not-for-Profits

Temporary Early Access to Superannuation

The Government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21.

While superannuation helps people save for retirement the Government recognises, that for those significantly financially affected by COVID-19, accessing some of their superannuation today may outweigh the benefits of maintaining those savings for the future.

Eligibility

To apply for early release you must satisfy any one or more of the following requirements:

  • you are unemployed; or
  • you are 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:
    • 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.

People accessing their superannuation will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

You will be able to apply for early release of your superannuation from mid-April 2020.

Temporary Reduction of Superannuation minimum drawdown 

The Government is helping retirees to manage the impact of volatility in financial markets on their retirement savings, by temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for the 2019-20 and 2020-21 income years.

This measure will benefit retirees with account-based pensions and similar products by reducing the need to sell investment assets to fund minimum drawdown requirements.

The reduction applies for the 2019-20 and 2020-21 income years.

Superannuation Reductions

Temporary Reduction of Social Security deeming rates 

The Government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.

The upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low interest rate environment and its impact on the income from savings.

Payments to Support Households 

The Government is providing two separate $750 payments that will assist lower income Australians, including pensioners, other social security and veteran income support recipients and eligible concession card holders:

  • The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.
  • The second payment will be available to people who are eligible payment recipients and concession card holders on 10 July 2020.

A person can be eligible to receive both a first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways.

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 the first payment

To be eligible for the first payment, you must be residing in Australia and be receiving one of the following payments, or hold one of the following concession cards, at any time from 12 March 2020 to 13 April 2020, inclusive:

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Parenting Payment
  • Wife Pension
  • Widow B Pension
  • ABSTUDY (Living Allowance)
  • Austudy
  • Bereavement Allowance
  • Newstart Allowance
  • JobSeeker Payment
  • Partner Allowance
  • Sickness Allowance
  • Widow Allowance
  • Family Tax Benefit, including Double Orphan Pension
  • Carer Allowance
  • Pensioner Concession Card (PCC) holders
  • Commonwealth Seniors Health Card holders
  • Veteran Service Pension; Veteran Income Support Supplement; Veteran Compensation payments, including lump sum payments; War Widow(er) Pension; and Veteran Payment.
  • DVA PCC holders; DVA Education Scheme recipients; Disability Pensioners at the temporary special rate; DVA Income support pensioners at $0 rate.
  • Veteran Gold Card holders
  • Farm Household Allowance

Eligibility for the second payment

To be eligible for the second payment, you must be residing in Australia and be receiving one of the payments or holding one of the concession cards that were eligible for the first payment, except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.

Income support recipients that are eligible to receive the Coronavirus supplement are:

  • JobSeeker Payment (and payments progressively transitioning into JobSeeker Payment
  • Youth Allowance JobSeeker
  • Parenting Payment (Partnered and Single)
  • Farm Household Allowance
  • Special Benefit

Income Support for Individuals

The Government is temporarily expanding eligibility to income support payments and 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 the eligible payment categories. These changes will apply for the next six months.

Eligibility

The income support payment categories eligible to receive the Coronavirus supplement are:

  • Jobseeker Payment (and all payments progressively transitioning to JobSeeker Payment; those currently receiving Partner Allowance, Widow Allowance, Sickness Allowance and Wife Pension)
  • Youth Allowance Jobseeker
  • Parenting Payment (Partnered and Single)
  • Farm Household Allowance
  • Special Benefit recipients

Anyone who is eligible for the Coronavirus supplement will receive the full rate of the supplement of $550 per fortnight.

The Coronavirus Supplement and expanded access for payments will commence from 27 April 2020.

Income Support for SMEs and Not-for-Profits

The Government is providing up to $100,000 to eligible small and medium sized businesses and not‑for-profits – including charities – that employ people, with a minimum payment of $20,000.

Under the scheme, which builds upon the first stimulus package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000.

In addition, the minimum payment is being increased from $2000 to $10,000. The payment will be available from April 28.

By linking the payments to business to staff wage tax withholdings, the government is hoping businesses will be encouraged to hold on to more of their workers.

The payments are tax free, there will be no new forms to fill out, and payments will flow automatically through the ATO to small to medium businesses with an annual turnover of less than $50 million that employ staff.

And from July 28, eligible businesses will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.

Another measure is the Coronavirus SME Guarantee Scheme, which will see the government guarantee 50 per cent of new loans issued by eligible lenders to SMEs.

The Government is also temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.

The package also includes temporary relief for directors from any personal liability for trading while insolvent.

The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that arise as a result of the coronavirus.

 

If you are a client of Treysta and have any questions regarding the above, please don’t hesitate to contact your adviser.
We are committed to doing everything we can to help our clients navigate through these unprecedented waters.

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