O'Donnell Kerr Financial Planners
  • 22 July, 2020

An overview of the latest changes to the COVID-19 Stimulus

When the coronavirus pandemic made its presence felt in Australia, the Government introduced a multi-billion-dollar package of stimulus measures designed to assist individuals and households, and businesses, affected by the resultant economic downturn.

Two key measures:

  1. JobKeeper (a wage subsidy to be paid to businesses to support them to retain their employees), and

  2. the Cornonavirus Supplement (paid to eligible individuals in receipt of certain government income support payments),

were only to last for a six-month period.

On 21 July 2020, the Government announced as extension of both the JobKeeper payment, and Coronavirus Supplement, along with other changes to income support benefits in general.

Just to recap, the JobKeeper payment is a flat payment (originally for $1,500 per fortnight) paid to employers with full time, part-time and long-term casual employees on the books as at 1 March 2020, and who retained those employees.
To be eligible for JobKeeper, employers had to have experienced a reduction in turnover (for most businesses) of 30% or more. Different turnover reduction limits applied to very large businesses and to charities and not-for-profit organisations. A condition of JobKeeker was that the employer passed on the full payment to their eligible employees.

The Coronavirus Supplement is an amount of $550 per fortnight paid to people receiving a range of income support benefits from the government including JobSeeker Payment (the renamed NewStart Allowance), Youth Allowance, Parenting Payment, and a number of other benefits.

In addition to the Coronavirus supplement, a number of further concessions were allowed including a temporary suspension of the assets test, waiver of some waiting periods, the deferral of mutual obligation (the requirement for recipients to be actively looking for work, or participate in other activities such as voluntary work or undertake training), and relaxation of the income test assessment of a partner’s income

Both the JobKeeper Payment of Coronavirus Supplement came at a time when many Australians needed help most.

However, these concessions were only to have a limited life of six months – through until the end of September 2020.

With the economy moving into recession, and the emergence of a “second wave” of COVID-19 in parts of Australia, the Government has announced an extension of the current arrangements, with some changes.

So, what are these changes?

JobKeeper payment changes

The JobKeeper Payment will continue for a further six months, taking it through until 28 March 2021. However, there will be changes:

  • Businesses will need to demonstrate that their reduced turnover continues to be below the threshold amount – generally a reduction of 30% or more for most businesses. Continued entitlement will be based on their turnover for the June, September, and December 2020 quarters. Previously, a reduction in turnover only had to be demonstrated at the time of applying for the JobKeeper Payment.

  • The rate of payment will be reduced from the current $1,500 per fortnight for each eligible employee. The rate will be reduced in two steps – from 28 September 2020 and from 4 January 2021. Also, payment rate will depend on whether a person was working an average of 20 hours per week or more, or less than 20 hours per week. This will be based on the average weekly working hours for the four-week period prior to 1 March 2020. The reduced payment rates are:

Period >20 hours per week <20 hours per week
28/09/20 to 3/01/21 $1,200 per fortnight $750 per fortnight
4/01/21 to 28/03/21 $1,000 per fortnight $600 per fortnight

Coronavirus supplement changes

The Coronavirus Supplement is extended and will continue to be paid to eligible recipients until the end of December 2020.

However, the current rate of payment ($550 per fortnight) will be reduced to $250 per fortnight for the period September to December 2020.

Other changes

When the Coronavirus Supplement was first introduced, the Government announced a range of other concessions and the relaxation of certain requirements for entitlement to income support benefits.

From the end of September 2020:

  • The income test threshold will be increased from $106 per fortnight for JobKeeper recipients, and $143 per fortnight for those in receipt of Youth Allowance, to $300 per fortnight for both.This applies until 31 December 2020 and will allow recipients of those benefits to earn up to $300 per fortnight without it reducing their income support payments.The income test taper rate will be 60 cents per dollar for each dollar of income above $300 per fortnight.

  • The assets testing of all payments, will be reinstated from 25 September 2020.

  • The Liquid Assets Waiting Period will be reinstated from 25 September 2020.

  • There will be some changes to Partner Income Testing from 25 September for JobSeeker recipients however no one will be worse off under this temporary change.

  • The Ordinary Waiting Period, Newly Arrived Residents Waiting Period, and Seasonal Work Preclusion Period will continue to be waived until 31 December 2020.

  • Mutual obligation, the requirement to be seeking work or participating in other approved activities, was suspended from 24 March until 8 June 2020. These requirements are progressively being reintroduced. Complying with mutual obligations will be a requirement to continued entitlement to benefits.

The Government’s stimulus package continues to provide income support to individuals and businesses alike. The extension of the JobKeeper and Coronavirus Supplement initiatives are welcome news. However, it cannot last forever. Time will tell if these initiatives will help keep the economy healthy, as we all work together to manage the impact of the pandemic.

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