The next phase of economic stimulus

03 August 2020

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

The Federal Government has announced an extension of several economic stimulus measures to support individuals, households and small businesses during the COVID-19 pandemic. Find out more about these changes and what they could mean for your financial planning business and clients.

Support for your business

A number of initiatives have already been introduced to help businesses like yours manage a drop in revenue and cash flow due to the impact of COVID-19. You can find out more about these in our earlier article support for your financial planning business.

The following information is correct as of Wednesday 5 August 2020:

JobKeeper extended to March 2021

JobKeeper has been an important safety net for many businesses experiencing a drop in revenue due to the economic impacts of COVID-19. Without these fortnightly payments they would struggle to keep their employees on the pay roll.

In their announcement on 21 July 2020, the Federal Government extended JobKeeper payments to 28 March 2021. Payments to eligible employers/employees will be made at the reduced rate of $1,200 per fortnight from 28 September 2020 to 3 January 2021. Payments for eligible employees working less than 20 hours a week will be $750 per fortnight for this period.

From 4 January 2021 to 28 March 2021, the payment rates change to $1,000 per fortnight for eligible employees working 20 hours or more a week and $650 per fortnight for those working less than 20 hours a week.

As well as meeting other eligibility criteria, businesses and not-for-profits will need to demonstrate they have met the decline in turnover tests for the September and December quarters.

For more information about rates and eligibility visit the Australian Government Business Website.

Business Victoria Support Package

In response to the reintroduction of Stage 3 restrictions in Victoria, the state government has announced $534 million in support for businesses. This includes a new $5,000 grant to support more than 80,000 eligible business in all areas under Stage 3 restrictions.

If your financial planning business is located in one of these areas and you have been restricted in your operations or can no longer operate, you may be eligible to apply for a one-off $5,000 grant.

The package also includes a $10 million mentoring program to give small business owners access to experienced professionals to help them manage during this crisis.

Applications are open until 19 August 2020. Visit the Business Victoria website for more information.

Support for people in self-isolation

If your employees or clients in Victoria are required to self-isolate and do not have enough sick leave, they will be eligible for a $1500 pandemic leave payment from the Federal government. Applications for the payment are open from Wednesday 5 August.

The prime minister Scott Morrison has announced that the payment will also be made available to any other state that declares a state of disaster as Victoria has.

People self-isolating while awaiting a COVID-19 test result may be eligible for a $300 Coronavirus (COVID-19) Test Isolation Payment.

Find out more: Visit the Victoria State Government Health and Human Services website

Support for your clients

In the months since the first economic stimulus payments to businesses, individuals and households were announced, many people have been able to continue to meet their financial commitments thanks to this extra income. Our Making sense of the Economic Stimulus Package article from April 2020, explains these payments and who is eligible in more detail.

Along with the JobKeeper extension, the Federal Government has announced some of these payments will be extended until the end of 2020. Here’s an overview of what you need to know to keep your clients up-to-date on their Centrelink payments for the next six months.

Coronavirus supplement

All those who continue to be eligible for the Coronavirus supplement, in addition to their income support payments, will receive the supplement at a reduced rate of $250 per fortnight from 25 September to 31 December 2020.

If you have a client who has recently lost their job, they will need to register with Centrelink for income support.

Find out more: Check the latest on the Treasury website on increased income support.

Early withdrawal of super

Eligible Australia and New Zealand citizens and permanent residents were able to apply for an early withdrawal of up to $10,000 in the financial year ending 30 June 2020. Eligible individuals can now apply for $10,000 for the financial year ending 30 June 2021. The closing date for applications via the MyGov website has been extended from 24 September 2020 to 31 December 2020.

Successful applicants do not have to pay tax on their early super access payments and it will not affect any Centrelink, Veterans’ Affairs or JobKeeper payments they receive.

To be eligible for early release of super you must meet one of the following criteria:

  • you are unemployed; or
  • 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; or
  • on or after 1 January 2020:
    you were made redundant; or
    your working hours were reduced by 20 per cent or more; or
  • if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Find out more: check the Early Access to Super Fact Sheet for more information

The FPA has created a ROA template to assist members with requests for advice around early access to super. The template is built from ASIC’s RG 90 SOA template and tailored ROA for the purposes of supporting clients in making decisions about accessing their super under the COVID-19 stimulus package.

For financial planners who may be experiencing impacts from increased workload and greater uncertainty, as well the challenges of working from home, FPA Wellbeing offers practical advice and support, including access to one-on-one counselling and fact sheets.

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