The COVID-19 pandemic has yielded a devastating impact on the Australian workforce as several nonessential businesses have either been forced to close or the very least change its standard operating model amid stringent self-isolation and containment policies.
In response to the economic pressures of the pandemic, the Federal Government has announced a range of stimulus measures to support individuals, households and businesses via the Coronavirus Economic Response Package Omnibus Bill and associated Bills.
Gilton Valeo understands the importance of delivering clear communication and advice amidst the constant change, updates in policy and sea of information that is being broadcasted. As such, we have curated this factsheet for employees who have been adversely affected by the economic pressures of the pandemic.
If you have been made redundant, stood down, or if your working hours and pay has been reduced due to the coronavirus pandemic, know that there is support for you. The Australia Government is providing financial assistance to Australians to support them through the COVID-19 pandemic. This assistance includes, but is not limited to:
- Centrelink JobSeeker payments;
- JobKeeper payments; and
- Special Benefit payments;
- Temporary early release of superannuation.
Centrelink JobSeeker
The JobSeeker program is the main income support payment issued by Centrelink for those who have been stood down or lost their jobs during the pandemic.
In response to the pandemic, the Federal Government has temporarily increased the JobSeeker payment by $550 per fortnight for both existing and new recipients, effectively doubling the current rate. The Coronavirus supplement will come into effect from 27 April 2020 and will remain in effect for six months. In addition to this, Centrelink will also be providing a one-off economic support payment of $750 between 31 March and 13 April 2020.
This effectively means that if eligible, the stood down employee may receive $750 as a one-off payment, plus a maximum of $1,100 per fortnight.
Who is eligible?
You will be eligible for the JobSeeker program if you:
- Are an Australian citizen or permanent resident aged between 22 and 66; or
- A protected Special Category Visa holder; or
- A Special Category (Subclass 444) Visa Holder; or
- A New Zealand citizen on Norfolk Island residing in Australia for 12 months in the 2 years immediately preceding date of application; and
- A permanent employee who has been stood down or lost their job; or
- A sole trader, self-employed, a casual or contract worker whose income has reduced.
The following eligibility criteria have also been temporary waived for JobSeeker payments:
- The assets test;
- The ordinary waiting period (waived until 12 June 2020);
- The Liquid Assets Waiting Period;
- The Seasonal Workers Preclusion Period;
- The Newly Arrived Residents Waiting Period.
Further, from 25 March 2020, access to payments will become easier with a temporary removal of the requirement for an Employment Separation Certificate, proof of rental arrangements and verification of relationship status.
Does my partner’s income matter?
To be eligible for the JobSeeker program your partner must earn less than $3,068 a fortnight ($79,762/year).
However, given the widespread adverse effects of the pandemic, Centrelink has altered the way this test is now measured. The Partner Income test looks at your partner’s current fortnightly wage only and the financial assistance you are eligible for is based on that alone.
In short, it does not matter if your partner earned $200,000 this tax year already. If they’re earning less than $3,068/fortnight right now, you’re considered to have met the requirement per the eligibility assessment.
This is a well-received change as it makes the JobSeeker program easier to access and ensures that people can get income support when they are most in need of it.
Who is not eligible for the JobSeeker program?
While the criteria for acceptance has been expanded, not everyone is automatically eligible for JobSeeker payments, or any other available welfare payments via Centrelink. This includes:
- Anyone with a partner earning more than $79,762;
- Workers receiving employer entitlements such as sick leave, annual leave or redundancy packages;
- People claiming income protection insurance;
- Anyone whose income still exceeds the threshold for their circumstances.
I am a temporary visa holder, what does this mean for me?
Unfortunately, Centrelink support programs such as JobSeeker are not applicable to temporary visa holders.
However, there are other options that may be available to you which we will be discussing below.
For further details, please refer to: https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment
JobKeeper Payments
As a way to safeguard the Australian Workforce, Prime Minister Scott Morrison has announced a $130 billion job support plan, which includes a fortnightly payment of $1,500 to employees to keep Australians in jobs.
This payment is known as the JobKeeper payment, a subsidy program designed to keep businesses from letting go, standing down or reducing the hours of their workers so that more employees can retain their job and continue to earn an income.
The program also works to alleviate pressure in the Australian welfare system as well as safeguard the future of those individuals who are not eligible for the JobSeeker program.
Who is eligible?
The program directly effects both employers and employees, as there are two eligibility criteria, one pertaining to employers and one pertaining to employees as outlined below.
Employers (including non-for-profits) will be eligible for the subsidy if:
- Their business has a turnover of less than $1 billion and their turnover has fallen by more than 30 per cent (of at least a month); or
- Their business has a turnover of $1 billion or more and their turnover has fallen by more than 50 per cent (of at least a month); and
- The business is not subject to the Major Bank levy; and
- The employer must have been in an employment relationship as at 1 March 2020 and need to confirm that each eligible employee is currently employed.
Employees will be eligible for the subsidy if:
- They were employed by an eligible employer at 1 March 2020;
- They are sole traders, full-time, part-time, or long-term casuals employed on a regular basis for longer than 12 months as at 1 March 2020;
- They are at least 16 years of age;
- Are an Australian citizen, the holder of a permanent visa, a protected special category visa, non- protected special category visa who has been residing continually in Australia for 10 years or more, or a New Zealand citizen on a special category (subclass 444) visa.
Self-employed individuals will also be eligible to receive the JobKeeper Payment where they expect to suffer a 30 per cent decline in turnover relative to a comparable period a year ago (of at least a month).
To establish that a business has faced either a 30% or 50% fall in their turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months relative to their turnover a year earlier.
Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable), the Tax Commission will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus. The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. as soon as business ceases or significantly curtails its operations).
There will be some tolerance where employers, in good faith, estimate a greater than 30% fall in turnover but actually experience a slightly smaller fall.
Who will receive the payments?
Eligible employers will receive the payment for each eligible employee that was on their books on 1 March 2020 and continues to be engaged by that employer – including full-time, part-time, long-term casuals and stood down employees.
Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
Where employees have multiple employers – only one employer will be eligible to receive the payment. The employee will need to notify their primary employer to claim the JobKeeper Payment on their behalf. The claiming of the tax free threshold will in most cases be sufficient notification that an employer is the employee’s primary employer.
Employers have a legal obligation to pass on the JobKeeper payment to their eligible employees.
What will be the payment process?
Employers will receive $1,500 per employee fortnightly for each eligible worker, which equals 70% of the national median wage, from 30 March 2020 for a maximum of six months.
Where employers participate in the scheme, their employees will receive this payment as follows:
- If an employee ordinarily receives $1,500 or more in income per fortnight before tax, they will continue to receive their regular income according to their prevailing workplace The JobKeeper payment will assist their employer to continue operating by subsidizing all or part of the income of their employee(s);
- If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax;
- If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax;
- If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight, before tax.
With respect to superannuation it will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Employers will pay employees as usual and payments will be made to the employer monthly in arrears by the Australian Tax Office.
Our partners, Source, has provided a detailed summary of this stimulus package found here.
What if I was stood down or sacked?
If an employee has been stood down, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
This means that employees of businesses that shut down due to various restrictions – such as cafes, restaurants, theatres, casino workers etc. will continue to be paid even if they are not working.
I am a temporary visa holder, what does this mean for me?
Currently only New Zealand citizens on a Subclass 444 visa will be eligible for JobKeeper payments.
Other workers on temporary visas are currently ineligible but this is continually under consideration by the Federal Government. As such, we will proceed to inform you upon any updates or changes to the eligible criteria.
For further details, please refer to: https://treasury.gov.au/coronavirus/JobKeeper.
Special Benefit
Under the welfare scheme, Centrelink will issue fortnightly payments to eligible individuals who are in severe financial hardship and do not meet the eligibility criteria for any other program under the welfare scheme.
Who is eligible
To be eligible, you must meet the residence rules and all of the following must apply to you:
Residence Rules
You meet the residence rules, you must live in Australia (some exemptions may apply) and are either:
- An Australian citizen
- A permanent residence visa holder
- A protected Special Category Visa (SCV) holder
- Temporary protection type visas
- Partner provisional visas, such as subclass 820 or 309 visa.
Other Requirements
- You are in severe financial hardship due to circumstances beyond your control;
- You do not enough to support you and your dependents;
- You can not get any other income support payment.
“Severe financial hardship”
You are deemed to be in severe financial hardship if any of the following occurs to you:
- You earn less than the highest Special Benefit fortnightly payment;
- You can’t improve your financial position;
- You have limited savings.
For these purposes, “limited savings” refers to the following:
- For short term payments you and your partner must have no more than fortnightly Special Benefit payment amount;
- For long term payments you must have no more than $5,000. Please note that there may be waiting periods for newly arrived residents.
How much will I get?
Special benefits payments are determined on a case by case basis with an income and assets tests.
However, if you are deemed eligible for the Special Benefits program you will then receive the Coronavirus Supplement payment of $550 fortnightly and the two separate support payments of $750 between 31 March and 13 April 2020.
Income test
For every $1 of gross income you earn or get, your rate of Special Benefit reduces by $1. Centrelink will look at both your income and, where relevant, your partner’s income.
Centrelink will also look at any extra support you may get from other third parties, including any of the following:
- Food;
- Accommodation;
- Utilities;
- Other goods and services.
Asset Test
An asset is any property or possession you own in full or part. This includes any assets you have outside Australia and any debts owing to you.
The assets test will involve Centrelink verifying if you:
- Own a home; or
- Are buying your own home.
I am a temporary visa holder, what does this mean for me?
Unfortunately not all temporary visa holders will be able to access the Special Benefit scheme. Only protected SCV holders, temporary protection type visa holders and provisional partner visa holders will be able to access this scheme.
For further details, please refer to: https://www.servicesaustralia.gov.au/individuals/services/centrelink/special-benefit
Early Access to Superannuation
Whilst superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.
The early release program commences 20 April 2020 and if you are eligible you will be able to access up to $10,000 of your superannuation before 1 July 2020, as well as a further $10,000 in the 2020-21 financial year but you must apply prior to 24 September 2020 when the measure ends.
In short, you can access up to $20,000 of your super.
The amounts accessed will be treated as non-assessable non-exempt income and therefore tax free. As such these payments will not impact any Centrelink payments or any other income or means testing.
Who is Eligible?
To satisfy early release of your super you must satisfy one or more of the following requirements:
- You are unemployed; or
- You are eligible to receive a:
- JobSeeker payment; or
- Youth allowance for JobSeeker; or
- Parenting payment; or
- Special benefit; or
- Farm household allowance;
OR On or after 1 January 2020, you:
- Were made redundant; or
- Had your working hours reduced by 20% or more; or
- Are a sole trader and your business was suspended or there was a reduction in your turnover of 20% or more.
I am a temporary visa holder, what does this mean for me?
Most temporary visa holders with work rights will be able to access their Australian superannuation early to help support themselves during this crisis.
Should this be a last resort?
Accessing superannuation early should be approached with extreme caution and only as a last resort.
An ISA analysis shows a 20-year-old who accesses the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance. A 30-year-old who accesses $20,000 from super now could lose about $100,000 when they hit retirement and a 40-year-old could lose more than $63,000.
The government has provided a significant program of wage stimulus measures which we have discussed above, including increasing welfare support payments which should be considered and exhausted before tapping into your super.
For further details, please refer to: https://www.business.gov.au/Risk-management/Emergency- management/Coronavirus-information-and-support-for-business/Early-access-to-superannuation
Summary
We sympathise with the Australian workforce and those who have contributed to our economy and in essence our quality of life.
In these times of change and uncertainty we hope we were able to provide some clarity on the welfare programs that are available to those who have been made redundant, stood down, experienced reduced hours or reduced remuneration, in particular sponsors and visa holders.
Know that we are here to provide you with support, and we are pressing for ongoing communication with all relevant Government Departments in order to gain additional information to provide you with regular updates as they happen.
If you would like to discuss your unique situation further, please do not hesitate to contact our consultants on (02) 8234 8400 or email us at info@giltonvaleo.com.au.
