The Stimulus Package for Individuals
The government Has released several packages for individuals, and this is a summary and some of our thoughts about them.
The following is a summary of the package that is for individuals. That may become relevant if your business is severely impacted, or you may wish to pass on to Family and Friends.
We note superannuation early release that it particularly applies to sole traders where there has been a drop in turnover. We would suggest that before you considered this, if this is your circumstances, is that you have implemented a tight budget and that requesting early release isn’t just supporting a pre- March Lifestyle.
Or if you can request an early release of super, it is put aside.
Superannuation early release
The Government is granting certain individuals’ early access to their superannuation.
By way of background, before this change to the law, early access to superannuation on hardship grounds was only available where either:
The Stimulus Package for Individuals
The government Has released several packages for individuals, and this is a summary and some of our thoughts about them.
The following is a summary of the package that is for individuals. That may become relevant if your business is severely impacted, or you may wish to pass on to Family and Friends.
We note superannuation early release that it particularly applies to sole traders where there has been a drop in turnover. We would suggest that before you considered this, if this is your circumstances, is that you have implemented a tight budget and that requesting early release isn’t just supporting a pre- March Lifestyle.
Or if you can request an early release of super, it is put aside.
Superannuation early release
The Government is granting certain individuals’ early access to their superannuation.
By way of background, before this change to the law, early access to superannuation on hardship grounds was only available where either:
1. You have been receiving Commonwealth income support payments for at least 26 continuous weeks and were in receipt of this when you applied to have your benefits released), and you are unable to meet reasonable and immediate family living expenses. If this is met, the payment must be a single lump sum of no more than $10,000 and no less than $1,000 (or, if you balance is less than this, the lesser amount). Only one payment is allowed each 12 months.
2. You have reached Preservation Age (between 55 and 60 depending on when you were born – see later table), and have received Commonwealth income support payments for a cumulative period of 39 weeks after reaching Preservation Age, and you were not gainfully employed either full-time or part-time when you applied to have your benefits released. There are no cashing restrictions.
From mid-April, eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
To qualify, an individual must fall into at least one of the following categories:
• You are unemployed.
• 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.
• On or after 1 January 2020, either »you were made redundant or your working hours were reduced by 20% or more, your business was suspended or there was a reduction in your turnover of 20% or more, if you are a sole trader.
Aside from this newly introduced condition of release, you can also access your superannuation on compassionate grounds.
Your benefits may be released if all the following conditions are met
:• You do not have the financial capacity to meet an expense
• The release is allowable under the rules of your fund, and
• The Department of Human Services (DHS) approves in writing the release.
Once DHS approval is obtained, the final decision to release rests with the Trustees of your fund. If they approve, they can only release an amount limited to what is reasonably needed. This must be paid in a lump sum.
DHS GROUNDS
dHS will only approve your application if you do not have the financial capacity to:
a. Pay for medical treatment for a life-threatening illness, or to alleviate acute or chronic pain or mental disturbance, or for medical transport for you or a dependant.
b. Enable payments to prevent foreclosure by a mortgagee or the exercise of an express or statutory power of sale over the family home,
c. Pay for home and vehicle modifications to accommodate the special needs of a severely disabled person or dependant,
d. Pay for expenses associated with palliative care for you or a dependent, in the case of impending death,
e. Pay for expenses associated with, funeral or burial, or
f. To meet expenses in other cases where the release is consistent with (a) to (e).
Increase in Income Support
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.
The income support payment categories eligible to receive the Coronavirus supplement are: • Jobseeker Payment1 (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.
Payments to support households
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.
The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020.
Around half of those that benefit are pensioners.
This payment will help to support confidence and domestic demand in the economy. The second payment will not be made to those eligible for the Coronavirus supplement.
Reducing Social Security Deeming Rates
n 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates.
The Government will now reduce these rates by another 0.25 percentage points.
As of 1 May 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.
The change will benefit around 900,000 income support recipients, including around 565,000 Age Pensioners who will, on average receive around $105 more of the Age Pension in the first full year the reduced rates apply.
