What could the COVID-19 economic stimulus package do for my finances?

Money and Life
(Financial Planning Association)

In March and April 2020, a whole range of payments have been announced for Australians looking for financial relief as a result of the COVID-19 pandemic and economic crisis. Find out how you could benefit from the Federal Government’s economic stimulus package.

The global and local impact of the COVID-19 pandemic has been like nothing we’ve experienced before. As a result, there are a huge number of people in Australia without a job or facing uncertainty with their current employer. And whether you rely on income from work, savings or investments to cover your living costs, chances are you may be looking for new ways to make ends meet if one or more of your income sources has reduced, or disappeared altogether.

To offer some relief to people facing these financial struggles, the Federal Government has made a series of announcements on Centrelink payments and other financial support measures for everyday Australians. As these changes have been announced over a period of several weeks, it can be hard to know what help is available and whether you could be eligible now, or in the future if your circumstances change.

To help you make sense of financial support available from the Government at this time, here’s a quick guide to who can benefit from different payments and support measures available:

The following information is correct as of Wednesday 22 April 2020:

If you’re still working, but with reduced hours/income:

If you’re still in a position to keep working, whether from home or at your place of work, your employer may have cut your hours, and your income as a result. The business that employs you may be under enough financial pressure to be considering redundancies in the future.

The new JobKeeper payment is designed to help businesses afford to keep their employers in the workforce. It will provide a $1,500 per fortnight payment for each eligible employee to businesses who have been impacted by COVID-19. While these payments are being made to businesses, they must be passed on to eligible employees for the employer to be eligible for payments.

What this means: if you’re still in employment and your employer is eligible, they can pay you a minimum of $1,500 per fortnight before tax until 27 September 2020. Payments can be backdated to 30 March 2020 and will be paid to employers from the first week in May. Your employer may choose to pay you more than this amount if they can afford it.

Find out more: download the JobKeeper fact sheet.

If you’re still struggling to meet all your essential expenses from your JobKeeper payments or other income, early access to your super is another option. This is another measure designed to provide financial relief to Australians experiencing hardship as a result of COVID-19.

What this means: If you meet the financial hardship criteria, you can apply to withdraw up to $20,000 from your super fund $10,000 before 30 June 2020 and a further $10,000 from 1 July 2020. Early withdrawal is available to people who are unemployed, have had their working hours/business income reduced by 20% since 1 January 2020 or are receiving Centrelink payments.

Find out more:
Download the early access to superannuation fact sheet.
You can apply for early access to your superannuation with the ATO via the MyGov website.
What you should consider before withdrawing your super.

If youre out of work:

If you’re no longer earning an income, you could be eligible for a JobSeeker payment from Centrelink. Along with a number of other Centrelink payments, JobSeeker payments have been increased to include a new time-limited Coronavirus supplement of $550 per fortnight, effective from 27 April 2020 and for the next six months.

This Coronavirus supplement payment will also be made to people receiving a number of other Centrelink benefits including the Youth Allowance and Parenting Payments (Partnered and Single).

Find out more:

Download the income support for individuals fact sheet.

Visit the MyGov website to apply for the Jobseeker payment and other Centrelink benefits.

If you’re receiving the Coronavirus supplement, you’re also eligible for early access to your superannuation.

The government has also committed to one-off $750 support payments for JobSeeker recipients. To be eligible for the first payment, you must have been on JobSeeker payments anytime between 12 March and 13 April 2020. This payment will be made automatically by Services Australia from 31 March 2020.

Find out more: download the payments to support households fact sheet.

If you receive other Centrelink payments including the Age Pension:

If you hold a concession card and/or receive a number of other Centrelink payments, you will also receive the first $750 support payment from 31 March 2020. If you continue to be eligible for a concession card or benefits on 10 July 2020, you will also be eligible for a second $750 support payment. This payment will be made automatically from 13 July 2020.

If you are receiving the Coronavirus supplement, you will not be paid the second $750 support payment in July 2020.

Find out more

To see if you’re eligible for the $750 support payments download the payments to support households fact sheet.

If youre retired:

If you’re a concession card holder and/or receiving the Age Pension, you’ll benefit from these support payments. But if you’re retired and not eligible for these payments, you could still benefit from two other measures announced by the Government as part of their support for retirees.

There is a temporary reduction in minimum drawdown rates for account-based pensions and similar retirement income products. This means you can withdraw a smaller amount than would normally be required from your super assets in the 2019/20 and 2020/21 financial years. This can give you more flexibility in managing your super savings and income during this time.

The government has also announced a further reduction in the upper and lower social security deeming rates. Together with the 0.5 per cent cut announced on 12 March, this additional 0.25 per cent cut will take the upper deeming rate down to 2.25 per cent and the lower rate to 0.25 per cent. These new rates will take effect from 1 May 2020.

If you don’t currently receive income support or the Age Pension, or you’re receiving payments at a reduced rate, the deeming rate change could mean changes to your eligibility for Centrelink benefits under the income test.

Find out more:

For more details on minimum drawdown and deeming rates download the providing support for retirees fact sheet.

Summary of economic stimulus measures: 

Type of support Who is eligible? Amount Effective from
Coronavirus supplement Some Centrelink benefit recipients, including JobSeeker – see fact sheet for details Additional $550 per fortnight 27 April 2020 (only for the next 6 months)
Support payments x 2 Some Centrelink benefit recipients – see fact sheet for details. $750 one-off 31 March 2020
13 July 2020
JobKeeper payment Employees working for eligible businesses – see fact sheet for details. $1500 per fortnight Effective from 30 March 2020, payments start from 1st week in May
Early access to super People eligible for JobKeeper or the Coronavirus supplement – see fact sheet for details Up to $20,000 $10,000 until 30 June and $10,000 from 1 July 2020
Lower deeming rates People receiving income support payments, including the Age Pension – see fact sheet for details. n/a 1 May 2020
Reduction in minimum drawdown rates People drawing funds from account-based pensions and other retirement income products – see fact sheet for details. n/a Applies to 2019/20 and 2020/21 financial year

Seeking advice on how to make the most of these financial assistance measures can help you feel less stressed at this challenging time. A CFP® professional can guide you through options to make your money last longer and secure your finances to bring you peace of mind.

0

Like This