24 Mar 2nd Economic Stimulus Package – For Individuals
THE FEDERAL GOVERNMENT HAS RELEASED DETAILS OF ITS SECOND STIMULUS PACKAGE IN RESPONSE TO COVID-19 (CORONAVIRUS), WITH FIVE NEW MEASURES TO PROVIDE SUPPORT PAYMENTS TO LOWER INCOME AUSTRALIANS AND INDIVIDUALS MOST AFFECTED.
Income support for individuals
There will be an expansion to the eligibility of income support payments and the establishment of a new, time-limited coronavirus supplement. The amount will be equal to $550 per fortnight, payable to existing and new recipients of Jobseeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit. For more information, the Treasury has released detailed information on this measure.
Payments to support certain concessional recipients
Social security, veteran and other income support recipients and eligible concession card holders will be eligible to receive two separate $750 payments (an increase from that announced in the first stimulus package). The payments are to be made from 31 March 2020 (first payment) and from 13 July 2020 (second payment). The second payment will not be made to those eligible for the coronavirus supplement. If there are two eligible recipients in a family, both will become eligible for the payment. Therefore, a couple may receive a total of $3,000 in payments. For more information, the Treasury has released detailed information on this measure.
Temporary early release of superannuation
Certain individuals affected by the coronavirus can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. The criteria for accessing super earlier is that you must satisfy one of the following conditions.
- You are unemployed.
- You are eligible to receive a Jobseeker payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), special benefit or Farm Household Allowance.
- You were made redundant on or after 1 January 2020.
- Your working hours were reduced by 20 per cent or more on or after 1 January 2020.
- If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20 per cent or more on or after 1 January 2020.
Individuals eligible for early release can apply directly to the ATO through the myGov website, where they will need to certify that the above eligibility criteria are satisfied.
Temporarily reducing superannuation minimum drawdown rates
There will be a temporary reduction of 50% in superannuation minimum drawdown requirements for account-based pensions and similar products for 2019-20 and 2020-21. The reduction applies for the 2019-20 and 2020-21 income years.
Age Default minimum drawdown rates (%) Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)
|AGE||Default minimum drawdown rates (%)||Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years (%)|
|95 or more||14||7|
These measures are directed to those retirees with account-based pensions and similar products and is aimed to reduce the need to sell investment assets to fund minimum drawdown requirements.
Reducing social security deeming rates
There will also be a reduction to 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 change is aimed to result, on average, in an amount of $105 more being paid to those on the Age Pension in the first full year the reduced rates apply.
What are the next steps?
It is critical that clients consider their position and how the rules apply. Clients should contact their representative to review their situation and determine what action is required.