The COVID-19 situation is having a major impact on the Australian economy and affecting the lives of all Australians, including our Energy Super members.
The Australian Federal, State and Territory Governments have announced a range of stimulus measures to support both businesses and individuals.
Here are some of the benefits members may be eligible for.
Information current as at 11 August 2020
Some initial options to consider
If you experience a loss or reduction of income due to COVID-19, you may still be able to maintain a basic standard of living by using existing savings and government support.
A good place to start is with the family budget. Work out how your expenses have changed, or could be further reduced over the coming months, and include any income or government assistance you are eligible for.
You might then want to consider the other ways you can reduce expenses over the coming months by deferring non-essential spending, or speaking to your:
- Bank — most banks are offering up to a six-month ‘pause’ on home loans and other debts (like credit cards).
- Utility providers and telecommunication companies — most companies can offer payment plans.
- Landlord — the government has announced landlords will be unable to evict renters due to financial difficulty during the COVID-19 situation. You may also be able to negotiate reduced rent.
- Local council — most local councils are offering support for businesses and families affected by COVID-19, from rates reductions, to rebates on licence fees, to grants for community organisations.
Even with the above measures, there still may be a gap between your income and savings, and the ongoing expenses you have to meet. To bridge this, some people are considering accessing a part of their superannuation benefits to get them through.
With any of the above, including where you defer or reduce payments, you'll need to resume payments at a future date so you'll need a plan in place for getting back on top of these. This could include catching up on loan repayments or increasing your super contributions when conditions improve.
Financial assistance available
As at August 2020, the government provides a wage subsidy to around 3.5 million workers who receive a flat payment of $1,500 per fortnight through their employer, before tax. This is equivalent to 70% of the national median wage.
From 28 September 2020, this payment will reduce to:
- $1,200 per fortnight for full-time workers
- $750 for part-time workers (people working fewer than 20 hours a week).
From 4 January 2021, this will further reduce to:
- $1,000 per fortnight for full-time workers
- $650 per fortnight for part-time workers.
Payments are scheduled to end in March 2021.
Eligibility for JobKeeper
Eligible employers include businesses structured through companies, partnerships, trusts and sole traders. Not-for-profit entities, including charities, are also eligible.
Businesses with a turnover of less than $1 billion a year are eligible if their turnover has been reduced — or will be reduced — by more than 30% relative to a comparable period a year ago (of at least one month).
Employers with an annual turnover of $1 billion or more need to show a reduction in revenue of 50% or more to be eligible.
ACNC-registered charities other than universities and schools must show at least a 15% reduction in turnover.
Certain businesses are ineligible. See the ATO website for full eligibility details.
Employees eligible for the payment must be at least 18 years old as at 1 March 2020 and be:
- employees who were working with the employer on 1 March 2020 and who were retained or continue to be employed by that employer
- employees who were stood down on or after 1 March 2020 but have since been reemployed by the same employer.
Casual employees must have been working for the employer for at least 12 months as at 1 March 2020, and not be permanent employee of any other employer.
If you were 16 or 17 as of 1 March 2020, you may be able to qualify if you are independent or not undertaking full-time study. Check with the ATO.
To qualify, you must be an Australian citizen or hold a permanent visa, a protected special category visa or a non-protected special category visa and have been living in Australia continually for a decade or more. New Zealand citizens on a special category visa will also be eligible.
Eligibility changes from 28 September 2020
Employers will need to reapply for the JobKeeper extension, and the eligibility rules have two main changes:
- Eligible employees need to have been employed from at least 1 July, rather than 1 March.
- Eligible employers must demonstrate a reduced turnover comparing the 2020 June quarter to the 2019 June quarter.
See the ATO website for full details.
How payments are made
Employers receive the full payment amount for each eligible employee. They must pay each of their eligible employees at least the full payment amount (before tax), including employees who previously received less than $1,500 per fortnight before tax. Employees earning more than $1,500 per fortnight before tax will continue to receive their regular income, subsidised in part by the JobKeeper payment.
Payments are made to the employer monthly in arrears by the ATO. Employers must continue to pay the Superannuation Guarantee on regular wages, but it's at their discretion whether they pay superannuation on additional JobKeeper payments.
For example, if a worker’s ordinary pay is $1,000 a fortnight plus superannuation, they will receive the $1,500 JobKeeper payment, with superannuation paid on the first $1,000 and the employer able to decide whether to pay it on the remaining $500.
Employees will receive a notification from their employer that they are receiving the JobKeeper Payment. Most employees will need to do nothing further, but employees who have multiple jobs, are not Australian citizens or are currently receiving an income support payment will have additional obligations.
Eligible businesses can apply for the payment online. Employers will need to provide information to the ATO on eligible employees, however for most businesses the ATO will use Single Touch Payroll data to pre-populate the employee details for the business.
As of 27 April 2020, A Coronavirus Supplement worth $550 per fortnight is paid to both existing and new recipients of:
- JobSeeker Payment
- Partner Allowance
- Widow Allowance
- Sickness Allowance
- Youth Allowance
- ABSTUDY Living Allowance
- Parenting Payment
- Farm Household Allowance
- Special Benefit.
The supplement is paid on top of these existing payments.
From 24 September 2020, this supplement will reduce to $250 a fortnight, and is due to end on 31 December 2020.
Waiting periods that would typically apply to these types of payments are waived, however a Liquid Assets Waiting Period will be applied from 25 September 2020.
Asset tests are also waived until 25 September 2020.
Sole traders, the self-employed, casual workers and contract workers whose volume of work has been affected may also be eligible, provided they’re earning less than $1,075 a fortnight.
Partner income test
The JobSeeker Payment and associated Coronavirus Supplement are subject to a partner income test. For each dollar your partner earns over a certain amount, your payments will be reduced. These amounts are also affected by whether you have any other income, have dependants or receive other types of government assistance.
The partner income test has been relaxed until 25 September 2020 to ensure an eligible person can receive the payment, and associated Coronavirus Supplement, providing their partner earns less than $3,086 per fortnight — around $79,762 per year (a temporary increase from the current cut-off of approximately $48,000 per year).
However, a reduction of 25 cents is applied to your payment for every dollar your partner earns over $1,165 a fortnight, and you will no longer receive a payment once their fortnightly earnings reach $3,086. From 25 September 2020, this reduction will go up to 27 cents for every dollar your partner earns over $1,165 a fortnight.
The personal income test for individuals on JobSeeker Payment still apply. (Though the amount you are able to earn without affecting your payment goes up from $106 to $300 a fortnight from 25 September 2020.)
Temporary access to super
The government will allow some people affected by the coronavirus to access up to $10,000 of their super in the 2019–20 financial year (applications now closed), and a further $10,000 in the 2020–21 financial year (applications open until 31 December 2020), tax free. Energy Super fully supports this government initiative for those who are facing financial difficulties during this challenging time.
You can apply online through myGov up until 31 December 2020. You must self-certify that you satisfy the eligibility criteria.
To be eligible, at the time you apply, you must:
- be unemployed; or
- be eligible to receive one of the following payments:
- JobSeeker Payment
- Youth Allowance for job seekers
- Parenting Payment (single or partnered)
- Special Benefit Farm Household Allowance; or
- on or after 1 January 2020, you:
- were made redundant; or
- had your working hours reduced by 20 per cent or more (including to zero); or
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
The super lump sum benefit under these conditions:
- will not be subject to tax
- will not affect Centrelink or DVA payments (although will be counted as an asset and deemed as income if not spent and kept in cash)
- can only be applied for once in each financial year.
In a financial year, you can only make a single withdrawal, of up to $10,000.
Please note, you may also be eligible for other existing conditions of release such as financial hardship or compassionate grounds. See the full list of early withdrawal circumstances on the ATO website.
You may also need to consider the impact of these withdrawals on your insurance cover. If your balance drops below $6,000, your insurance may be cancelled.
Support for retirees
To assist retirees, the government is temporarily reducing minimum super drawdown requirements for account-based or allocated pensions, annuities and similar products by 50% for the current financial year and the 2020–21 financial year. This should reduce the need for retirees to dispose of investment assets in the current share market downturn to fund their minimum drawdown requirements.
Minimum payment rates for account-based and allocated income streams
AGE CURRENT RATE (%) REDUCED RATES 2019–20 & 2020–21 (%) Under 65 4 2 65–74 5 2.5 75–79 6 3 80–84 7 3.5 85–89 9 4.5 90–94 11 5.5 95 or more 14 7
Deeming rates reduced further
From 1 May 2020, the deeming rates were reduced from 1% to 0.25% for investments up to $51,800 for singles and $86,200 for couples. They were cut from 3.0% to 2.25% for investments over these amounts.
Table 1: Deeming rates and thresholds from 1 May 2020
SINGLE COUPLE RATE (%) First $51,800 First $86,200 0.25 Over $51,800 Over $86,000 2.25
The government states the change will benefit around 900,000 income support recipients, including around 565,000 people on the Age Pension who will, on average, receive around $105 more from the Age Pension in the first full year that the reduced rates apply.
For example, if you have a bank account with a balance of $5,000, it is currently deemed to earn 1.0% interest. It will soon be deemed to earn 0.25% interest, reducing your assessed income and potentially increasing your pension amount.
Your Energy Super account
Your Energy Super Income Stream account is considered to be a financial investment. Please note there are some exemptions if you commenced your income stream on or after 1 January 2015.
As such, the balance of your Income Stream account will be ‘deemed’ to earn a certain amount of income based on the balance at 1 July each year. If the Income Stream account was opened part way through the year, the balance at the opening of your account will be reported.
Deeming is irrespective of the actual level of payments that you are drawing from your account as income.
Your Energy Super Accumulation account is not considered a financial investment until you reach your qualifying Age Pension age (or age 60 if you qualify for a Service Pension).
Learn more about deeming
The effect of changes in the deeming rates on your eligibility and entitlements will depend on your personal circumstances.
Learn more about deeming and exemptions on the the Department of Human Services website.
If you have any questions about your specific situation, you can also access the Department’s Financial Information Service.
State and territory stimulus
The state and territory governments have also announced economic stimulus packages. These measures include support for both business and individuals and households. See the official government pages linked below for details.
- New South Wales
- Business support package — grants and funds to help industries affected by coronavirus.
- Support for people who have lost their jobs or income due to COVID-19.
- Western Australia
- South Australia
- Stimulus and support for individuals and businesses — everything available in the one place.
- Australian Capital Territory
- Northern Territory
How do I get help?
If you don’t have a financial adviser, it might be a good idea to speak with one of our financial advisers provided through ESI Financial Services*. Depending on your needs, this may be at no cost to you.
Book a phone consultation online.
* Energy Super has appointed ESI Financial Services Pty Ltd (ESIFS) (ABN 93 101 428 782) (AFSL 224952), a wholly owned entity of Energy Super, to provide financial advisory services to members.
This article was prepared in August 2020 by Electricity Supply Industry Superannuation (Qld) Ltd (ABN 30 069 634 439) (AFSL 336567), the Trustee and Issuer of Energy Super (ABN 33 761 363 685), and may contain general financial advice which does not take into account your personal objectives, situations or needs. Before making a decision about Energy Super, consider your financial requirements and read the relevant Product Disclosure Statement, available at www.energysuper.com.au or by calling 1300 436 374.