Government increases support for households and businesses

Government increases support for households and businesses

The Australian Government has recently announced additional support for households and businesses during the COVID-19 pandemic. These changes are summarised below and are yet to be legislated.  For more information, please visit the Treasury department’s Economic response to the Coronavirus.

Extension of JobKeeper Payment

The JobKeeper Payment has been extended by an additional six months from 28 September 2020 to 28 March 2021. It is a temporary wage subsidy designed to help businesses affected by COVID-19 to cover the costs of their employee’ wages so that more employees can retain their job and continue to earn an income.

Changes to the payment are to be phased and paid at two rates. Payment access remains available to new recipients and ongoing eligibility criteria apply. Payments made to an employer must be passed on to their employees in full.

We have summarised the JobKeeper Payment eligibility criteria in the following table:

 

Current Phase

Phase 2

Phase 3

Relevant period

30 March 2020 – 27 September 2020

28 September 2020 – 3 January 2021

4 January 2021 – 28 March 2021

 

 

Payment amount

*Amounts shown are before tax.

$1,500 per fortnight per eligible employee

  • $1,200 per fortnight for employees working 20 hours or more per week (on average)
  • $750 per fortnight for all other eligible employees
  • $1,000 per fortnight for employees working 20 hours or more per week (on average)
  • $650 per fortnight for all other eligible employees



Employee eligibility criteria

  • Aged 16 or older on 1 March 2020 (excluding full-time students aged 16 or 17 who are not financially independent)
  • A full-time or part-time employee on 1 March 2020
  • A long term casual employee (who was employed on a regular or systematic basis for at least 12 months) as at 1 March 2020 and is not a permanent employee of any other employer



Same as Phase 1.

To receive the higher payment of $1,200 per fortnight, the eligible employee must have been working in the business for 20 hours or more a week on average in the four weeks before 1 March 2020.

Same as Phase 1.

To receive the higher payment of $1,000 per fortnight, the eligible employee must have been working in the business for 20 hours or more a week on average in the four weeks before 1 March 2020.

Employer eligibility criteria

  • Carried on a business in Australia on 1 March 2020
  • Employed at least 1 eligible employee on 1 March 2020
  • Must be able to demonstrate the business satisfies the declined turnover test using projected GST turnover.
  • Must be able to demonstrate that the business’ actual GST turnover has reduced by the required amount (see declined turnover test below) in the June 2020 and September quarters (compared to comparable period generally the corresponding quarters in 2019).  
  • Business needs to reassess their turnover to be eligible and must be able to demonstrate that the business’ actual GST turnover has reduced by the required amount (see declined turnover test below) in the June 2020, September 2020 and December 2020 quarters (compared to comparable period generally the corresponding quarters in 2019).


Declined turnover test

Businesses will need to show a continued decline in turnover to be eligible.

  • 50% for business with aggregated turnover of more than $1 billion
  • 30% for businesses with aggregated turnover of $1 billion or less, or
  • 15% for Australian charities and non-for-profit commission-registered charities (excluding schools and universities)






Business participants

Sole traders, a partner in a partnership, an adult beneficiary, a shareholder or director of a company.

  • A business can be entitled to JobKeeper payment for one business participant who is actively engaged in operating the business. The same decline in turnover test applies. To qualify for the new extension, the business participant must be actively engaged in the business for 20 hours or more per week on average in the month of February 2020 to receive the higher flat rate of payment.
  • To qualify the eligible business participant cannot be employed by any other entity (other than as a casual employee).

 



Extension of Coronavirus Supplement

The temporary Coronavirus Supplement of $550 per fortnight became payable to certain income support recipients from 27 April 2020 and is scheduled to cease on 25 September 2020. The Government is now proposing to extend this payment from 25 September 2020 to 31 December 2020 at a reduced rate of $250 per fortnight during this time. Income support payments eligible for the supplement include JobSeeker Payment, Youth Allowance for job seekers, Parenting Payment, Farm Household Allowance and Special Benefit.



Changes to JobSeeker Payment arrangements

Currently, eligibility criteria and waiting periods are suspended including asset testing, the Ordinary Waiting Period, the Liquid Assets Waiting Period, Seasonal Work Preclusion Period and Newly Arrived Resident’s Waiting Period (NARWP).

To ensure income support is appropriately targeted, the following changes are proposed to commence from 25 September 2020:

 

  • Means testing – reinstatement of means testing will apply in the following ways:
    • asset testing for all payments will be reinstated, for both existing and new recipients;
    • the Liquid Assets Waiting Period for all payments will be reinstated for new recipients; and
    • the JobSeeker Payment partner income test taper rate will increase from 25 cents to 27 cents for every dollar of partner income earned over $1,165 per fortnight, ensuring that an eligible person with no income can receive the JobSeeker Payment and Coronavirus Supplement provided their partner earns less than $80,238.89 per annum, until 31 December 2020.

  • Reduced waiting times – The Ordinary Waiting Period, NAWRP and the Seasonal Work Preclusion Period will continue to be waived until 31 December 2020.
    • When the Coronavirus Supplement ceases, those people who were serving a NARWP will continue to serve the remainder of their waiting period, but the time the person was receiving the Coronavirus Supplement will count towards their NARWP. Residency requirements still apply.
    • Income Maintenance Periods and Compensation Preclusion Periods will continue to apply.

  • Expanded criteria – JobSeeker Payment and Youth Allowance (other) criteria will continue to provide payment access for permanent employees who are stood down or lose their employment and sole traders, the self-employed, casual workers and contract workers who meet the income and assets tests until 31 December 2020.


Changes to income tests for JobSeeker and Youth Allowance

To improve incentives for individuals to re-enter the workforce or take on additional work as the economy recovers, the income free area for JobSeeker Payment and Youth Allowance (other) from 25 September 2020 to 31 December 2020 increases to $300 a fortnight. Meaning, you can earn up to $300 per fortnight without it affecting your payment. However, your payment will reduce by 60 cents for every dollar earnt above this amount.
We have summarised the income free area for JobSeeker Payment and Youth Allowance (other) in the following table:



Payment

                                                       Relevant period

Current

From 25 September 2020 to 31 December 2020

JobSeeker Payment

$106 per fortnight

$300 per fortnight

Youth Allowance (other)

$143 per fortnight

 

Please contact you adviser should you have any questions.

Disclaimer

This article is a publication of Australian Unity Personal Financial Services Limited ABN 26 098 725 145 (AUPFS), AFSL 234459. Its contents are current to the date of publication only, and whilst all care has been taken in its preparation, AUPFS accepts no liability for errors or omissions. The application of its contents of specific situations (including case studies and projections) will depend upon each particular circumstance. This publication is general in nature and has been prepared without taking into account the objectives or circumstances of any particular individual or entity. It cannot be relied upon as a substitute for personal financial, taxation, or legal advice.

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