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Government throws a lifeline by extending financial assistance payments
By MyBudget Editor

The Federal Government has announced that millions of workers will keep receiving the JobKeeper wage subsidy until the end of March 2021 under a new eligibility test. The temporary Coronavirus Supplement for JobSeeker will also be extended. But the government will cut the value of both payments from the first week of October and will introduce two tiers to the JobKeeper subsidy so that part-time workers no longer receive a full-time rate.

JobKeeper and Coronavirus Supplement extended

With Australia in the depths of its first recession in 30 years, and parts of the country facing down a second wave of COVID-19 infections, calls have been growing for the Federal Government to extend its JobKeeper wage assistance payment and JobSeeker Coronavirus Supplement for the unemployed. Heeding the call, the government has announced that both measures will run until at least the end of 2020, and in the case of JobKeeper, beyond.

However, some changes have been made to the payments which will mean that most people will receive less than they’ve been getting in recent months. We summarise the changes so you can get a better picture of what your financial situation may look like going forward.

JobKeeper payments reduced and broken into two tiers

People receiving JobKeeper, who have either been stood down by their employer or had their hours cut, will continue to get the current $1500 a fortnight payment until 27 September, when the payment was originally scheduled to end. 

The Government has extended the payment into 2021, but has created a tiered system to differentiate between full-time and part-time workers, after it found that some people receiving JobKeeper were getting paid more than they would in their regular job.

From 28 September, employees who worked more than 20 hours per week in the month of February 2020 (before COVID-19 took hold in Australia), will receive $1200 a fortnight until 3 January, reducing to $1000 a fortnight until the scheme’s new end date on 28 March 2021.

Employees who worked less than 20 hours a week in February 2020 will receive $750 a fortnight until 3 January, reducing to $650 a fortnight from then until 28 March. 

To be eligible for the $1200/$750 payment until 3 January, your employer will need to show that their turnover fell in the June 2020 and September 2020 quarters. For payments beyond 3 January, your employer will need to show that their turnover also fell in the December 2020 quarter.

The fall in turnover required for businesses to be eligible is either 15% if they’re a charity or not-for-profit; 30% if they have annual turnover of less than $1 billion, or; 50% if their turnover is over $1 billion.  

These tougher eligibility requirements mean the government expects less people will qualify for JobKeeper. So far, more than $30 billion in JobKeeper payments have been paid to 3.5 million employees. Going forward, however, the government expects 1.4 million employees will receive the payment between September and January, reducing to 1 million between January and March. 

The Government has created a fact sheet for more information on the changes to JobKeeper. 

Coronavirus supplement reduced by $300 a fortnight

The $550 Coronavirus Supplement, which is paid to recipients of the JobSeeker payment as well as a range of other income support payments, is also changing after its original end-date of 24 September.

From 25 September, the supplemental payment will reduce to $250, meaning the maximum fortnightly rate for a person receiving JobSeeker will fall from the current $1110 to $810. 

The income-free threshold will also be increased from 25 September, meaning people can earn up to $300 a fortnight without their payment being affected. The JobSeeker income taper test has also been modified.

At this stage, the Coronavirus Supplement will end on 31 December 2020, but the Government has indicated it could be extended into 2021. 

Some of the eligibility requirements for the payment are also changing. From 4 August, people looking for work will be required to undertake four job searches per month in order to continue to qualify for the payment. Means testing and partner income testing will also be reintroduced from 25 September. 

The government has created a fact sheet for more information on changes to the Coronavirus Supplement.

Early access to superannuation

Temporary early access to superannuation has also been extended for eligible Australian and New Zealand citizens and permanent residents. In round one of the scheme, people were able to apply online.

through myGov to access up to $10,000 of their super before 1 July 2020. Round two was due to close on 24 September, but has been extended to 31 December 2020, which gives people a further three months to access up to $10,000 more from their retirement savings. More information is available here.

What’s the long-term cost of accessing your super early? According to Industry Super Australia, a 30-year-old who takes $20,000 out of super this year would finish with around $79,000 less for retirement. Keep in mind that the majority of people to access the scheme have been younger than 40. Fortunately, there are a plenty of alternatives to consider before making a super cash grab.

Small business loans scheme

The Federal Government is also extending its coronavirus SME Guarantee Scheme, which provides a 50% guarantee to small business lenders to support new, short-term unsecured loans. 

The scheme was initially due to finish on 30 September, but will now be available for loans made up until 30 June 2021. 

Sole traders and the self-employed also continue to be eligible for the SME guarantee scheme and extended JobKeeper payments, and JobSeeker eligibility has been expanded to include sole traders. 

Other types of financial support

Other types of COVID-19 financial support previously announced by the government, such as temporary access to super and support for retirees remain unchanged, however the free childcare measure has ended. 

MyBudget is here to help

If you’re doing it tough thanks to the COVID-19 and the recession, MyBudget is here to help. You can talk to a money coach for free by phoning 1300 300 922 or enquiring online

We can create a free customised budget to help you get on top of your finances. At the same time, you can learn more about financial assistance that might be available, such as rent relief, financial hardship, payment arrangements, how to start saving and make your money go further.

Book a free budget consultation. Our personal budgeting specialists work with you to create  a free customised budget that’s yours to keep. Call 1300 300 922 or enquire online.

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