As it stands, in terms of COVID-19*, globally, there has been a reported 1,273,990 cases, 69,444 deaths, and 260,247 recoveries. And, domestically, there has been a reported 5,687 cases, 35 deaths, and 757 recoveries.
While COVID-19 is first and foremost a public health issue, clear economic and financial issues have emerged.
In response to this, the Government has recently announced, and now legislated (where applicable), policies targeting three areas:
In this article, part one of a two-part series, we provide an overview of the major policies pertaining to supporting individuals and households, as well as aspects of supporting the flow of credit.
Supporting individuals and households
Changes to social security deeming rates
The deeming rates for social security payments will be further reduced below those announced earlier, to:
This applies from 1 May 2020.
Early Childhood Education and Care Relief Package
The Government, via the new Early Childhood Education and Care Relief Package, will make payments to early childhood education and care services in lieu of the Child Care Subsidy and the Additional Child Care Subsidy.
For early childhood education and care services to receive these payments, they must:
This applies from 6 April 2020 until the end of the 2019-20 financial year.
In addition to above:
Increased and accelerated income support
Individuals who are an eligible payment recipient, will be eligible to receive a further $550 per fortnight supplement, the Coronavirus supplement:
This applies from 27 April 2020, and will be available for an initial 6 months, however the Government may extend this period.
Please note: For all relevant payments, there will be expanded access (e.g. suspension of mutual obligation requirements for JobSeeker Payment), as well as an accelerated claim process and streamlined application process. And, for 6 months, from 25 March 2020, the following will be waived, in relation to the above payments:
JobKeeper Payment^
While the JobKeeper Payment is payable to employers, we have included it here as the employer must pass the payment on to eligible employees. Employers – businesses (not subject to the Major Bank Levy), not-for-profits (including charities), and self-employed individuals – will be eligible for a wage subsidy to continue to pay their employees, if they:
Please note: The Tax Commissioner will be able to use their discretion where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover.
The subsidy, the JobKeeper Payment, is $1,500 per fortnight, per nominated and notified eligible employee. Businesses (including sole traders) can receive the payment for multiple employees and if they have no employees, in relation to a single individual.
Employers can register their intention to apply with the ATO from 30 March 2020. Employers will receive their first payment in the first week of May (backdated to a start date of 1 March 2020), payable for up to 6 months.
An employee is deemed eligible, if they:
Please note: Employers must ensure that each eligible employee receives at least $1,500 per fortnight (before tax); however, it will be up to the employer if they want to pay super on any additional wage paid because of the JobKeeper Payment. For example, if an eligible employee:
Please note: The receipt of the JobKeeper Payment by an employee may affect their eligibility for payments from Services Australia (e.g. JobSeeker Payment) as the JobKeeper Payment must be reported as income.
It’s important to note that this is still a proposed measure at time of writing, and legislation needs to be passed to make it effective. Changes could be made.
Reduction of the cash rate
Among other announcements, such as a term funding facility for the banking system, the RBA has further eased monetary policy by reducing the cash rate to a historic low of 0.25% (down from 0.50%).
Support payments
Individuals that reside in Australia, and are a Pensioner, Commonwealth Seniors Health or Veteran Gold concession card holder, or eligible to receive one of the following payments at any time from 12 March 2020 to 13 April 2020 inclusive, will be eligible to receive a tax-free initial payment of $750:
Please note: Individuals that lodge a claim for an above payment or concession card at any time from 12 March 2020 to 13 April 2020 inclusive, and the claim is granted, they will also be eligible to receive the payment.
Furthermore, the above payment recipients or concession card holders will be eligible to receive a tax-free additional payment of $750. However, those payment recipients eligible for the Coronavirus supplement are excluded from receiving this additional payment.
The payments will not count as income for Social Security, Farm Household Allowance and Veteran payments.
The first payment will be paid automatically from 31 March 2020, and the second payment will be paid automatically from 13 July 2020.
Temporary early access to superannuation
Individuals will be eligible to access up to $10,000 of their super before 1 July 2020, and a further $10,000 from 1 July 2020 until 24 September 2020, if:
The amounts released will not incur tax, nor will the amounts affect Centrelink or Veterans’ Affairs payments.
Applications for early release of super will be able to be made online through myGov from mid-April 2020.
Temporary reduction in super minimum drawdown requirements
The minimum drawdown requirements for retirement income streams, such as account-based pensions, will be reduced by 50% for the 2019-20 and 2020-21 financial years.
Moving forward
If you would like to discuss anything mentioned above, and its relevance to your financial situation, goals and objectives, please do not hesitate to contact us.
Click here for part two of this two-part series.
*Center for Systems Science and Engineering (CSSE). GIS Dashboard: Coronavirus COVID-19 Global Cases by Johns Hopkins CSSE.
^UPDATE as at 8 April 2020. Although all reasonable efforts were made to ensure that this article reflected the most current version of the Treasury JobKeeper Payment fact sheets as at 6 April 2020, it has become apparent that Treasury made certain updates to the fact sheets just before the publication of this article. Accordingly, and for completeness, those updates are set-out below: