Evermore Australians are under financial stress as new measures to combat the COVID-19 outbreak force businesses to close or restrict hours and services. As a nation with some of the highest debt per capita ratio, many Australians are finding themselves without sufficient savings to sustain themselves and their families for what could be six months or more, with no or limited income.
In this article, we list several avenues that may be available to Australians to ease their financial burdens during this difficult time, including under the Government’s economic response package to date.
Note for Businesses
This article has been prepared for personal income. If you are operating a business, the Commonwealth and State Governments have introduced several measures to assist businesses. To find out more visit the Commonwealth Government’s economic response website (www.treasury.gov.au/coronavirus). For Queensland businesses, refer to the Qld Government website (www.queensland.gov.au).
JobSeeker and JobKeeper
On 20 March 2020, some social security working-age payments including Newstart Allowance, Wife Pension, Bereavement Allowance, Sickness Allowance, Widow B Pension, Widow Allowance and Partner Allowance were rolled into a new payment scheme known as the JobSeeker Payment.
The JobSeeker Payment is usually available to Australians who:
- are between 22 years of age and the Age Pension age; and
- meet the residence rules; and
- meet the income and assets test limits; and
- are unemployed and looking for work, or sick or injured and can’t do their usual work or study.
Other social security payments are also available to working-age persons including:
- Youth Allowance Jobseeker;
- Parenting Payment (partnered and Single);
- Farm Household Allowance; and
- Special Benefits.
From 27 April 2020, for a period of six months:
- Individuals on any of the above working age payments will be entitled to receive an additional $550 per fortnight Coronavirus supplement; and
- The eligibility criteria for the JobSeeker Payment and Youth Allowance Jobseeker payment will be relaxed as follows:
- It will also be available to permanent employees who are stood down or lose their employment, sole traders, self-employed, casual workers and contract workers; That is, you do not need to be strictly unemployed and looking for work;
- The asset testing will be waived; and
- Waiting periods will be waived or reduced in some instances.
The Commonwealth Government also recently announced that the partner income threshold for JobSeeker would be increased to $79,762 per annum.
Individuals who are permanently unemployed should consider now if they qualify for the JobSeeker Payment, and those stood down, or on low hours, sole traders and self-employed should begin the process of applying by registering their interest at the Services Australia page (www.servicesaustralia.gov.au). More information on the JobSeeker Payment and other working-age social security can be found at the Services Australia website.
In recent days, the Commonwealth Government also introduced the JobKeeper payment. This is a new payment that will be made to employers who have experienced a minimum 30% downturn, and it will be the employer’ responsibility to pass this on to the employees. The JobKeeper payment amounts to a fixed $1500 per employee per fortnight (not income-tested). You do not need to be receiving less than $1500 a fortnight to qualify, but there are some other requirements for your employer and yourself to qualify. More details are available from the Treasury webpage on JobKeeper (https://treasury.gov.au/coronavirus/jobkeeper).
If you are employed, you should verify with your employer if they are eligible for and are applying to receive a JobSeeker payment for you. When you receive it, if you are also receiving JobSeeker, you must disclose it to Centrelink. Your JobSeeker payment will be adjusted accordingly, and, depending on income testing, may no longer apply.
Self-employed persons can also access JobKeeper if they have experienced a 30% downturn or more in their business. It is necessary to quote an ABN. Once again, you can continue your application for JobSeeker. If you are awarded JobKeeper, you will need to disclose this to Centrelink, and your JobSeeker payment will be adjusted accordingly.
JobKeeper payments will be made from 1 May 2020, backdated to 30 March 2020 for six months.
Employers and self-employed can register their interest for JobKeeper at the ATO JobKeeper registration page (https://www.ato.gov.au/general/gen/JobKeeper-payment/), and the ATO will be in touch when ready to receive your application.
There are other social security responses by the Commonwealth Government including two $750 payments to persons on specific existing social security arrangements, including students, parents, farming households and existing job seekers. These will be made automatically. More information on the Government’s economic response to the coronavirus for individuals and families, including factsheets containing all the details can be found at the Government’s designated website (www.treasury.gov.au/coronavirus/households).
Early access to superannuation
You may have heard of the Commonwealth Government’s measure to allow individuals to withdraw up to $20,000 of their superannuation tax-free. This will apply if:
- you are unemployed; or
- you are eligible to receive a JobSeeker Payment, Youth Allowance for JobSeekers, Parenting Payment (which includes 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% or more; or
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
We expect many individuals will qualify for this option. If you qualify, you will be able to withdraw up to $10,000 from your superannuation before 1 July 2020, and then up to a further $10,000 from 1 July 2020 until 24 September 2020. Applications may be made from 20 April 2020 via the MyGov website (www.my.gov.au).
Withdrawing from superannuation is also available on the existing criteria for early access, which includes compassionate grounds and severe financial hardship.
Compassionate grounds include:
- Medical treatment and medical transport for you or your dependant;
- Making a payment on a home loan or council rates so that you don’t lose your home;
- Meeting expenses to cater for disability of you or your dependent;
- Palliative care for you or your dependant; and
- Death, funeral or burial expenses of your dependant.
Severe financial hardship may be claimed if:
- You have received eligible government income support payments continuously for 26 weeks; and
- You are not able to meet reasonable and immediate family living expenses.
More information about early withdraw of your super is available on the ATO website (www.ato.gov.au/Individuals/Super/Withdrawing-and-using-your-super/Early-access-to-your-super/) or through your Superannuation Fund.
The Commonwealth Government has declared a moratorium on evictions, but not rental payments, so while you may not be evicted if you fail to pay rent, you will still be required to pay it in due course and maybe evicted in time if you fail to do so. It is essential, therefore, to strive to continue to pay rent and negotiate with your landlord if you absolutely can’t.
If you are receiving JobSeeker, you will likely be entitled to rent assistance. This is again through Centrelink, and you can find out more information about rent assistance at the Services Australia rent assistance page (https://www.servicesaustralia.gov.au/individuals/services/centrelink/rent-assistance).
For Queensland residents, the Qld Government is offering a temporary COVID-19 Rental Grant to those residents that have already exhausted other options to keep paying rent. It will pay up to $2000 per month directly to your landlord. To find out if you qualify and to apply, visit the Qld Government rental grant website (https://www.qld.gov.au/housing/renting/rent-assistance/bond-loan/covid19-rental-grant).
Home loan and credit facility payment pause
Part of the Commonwealth Government’s economic response to date includes incentives towards banks and other lenders to promote and facilitate the continuation of existing credit arrangements and new credit facilities.
When it comes to existing credit facilities, almost all banks are offering a 3-6 payment pause and other measures for home loans and small business facilities of customers affected. Each bank has issued a statement on its own measures dedicated to customers affected by the coronavirus pandemic. Look for your bank via the ABA’s website (www.ausbanking.org.au/campaigns/financial-hardship) and follow the links to your bank’s financial hardship page to understand what your bank can do and how to apply.
It is important to understand that the banks’ dedicated measures in connection with coronavirus will be in addition or ancillary to existing financial hardship and other rights that exist under the Credit Code. This is the legislation that applies to all consumer credit facilities, including home loans and credit cards. Section 72 of the Credit Code provides that a person can request a variation in their loan repayments if they are suffering financial hardship. The Code does not specify what will qualify as financial hardship or impose on the lender a requirement to accept any variation proposed by the debtor. Still, there is a requirement to consider the application and respond formally within set time frames. If the bank refuses a request to vary a credit facility on the grounds of financial hardship, a court may make that order on the application of the debtor. It is recommended that you obtain legal advice before making a hardship application to your bank and/or in the case that your application is rejected.
If you are in difficulty repaying your loan or credit card in circumstances where you believe that you would never have been able to repay or the facility should not have been given to you, this could indicate that you have other rights. For example, if the lender did not follow responsible lending procedures. In this case, you should seek legal advice and a complaint may be filed with the Australian Financial Complaints Authority (www.afca.gov.au) which replaces the old financial ombudsman and governs all complaints with regards to the financial services and superannuation industry.
Relief from electricity bills and other contracts
It is important to note that not only loans and credit cards qualify as credit facilities to which the Credit Code applies. There are a number of consumer contracts with delay payment and interest options that may qualify as Credit Code contracts to which the hardship provisions of the Code apply. Also, there are industries in which suppliers are the subject of statutory requirements or have introduced their own financial hardship options in connection with coronavirus. This might include equipment rental facilities, electricity and gas accounts, telecommunication accounts.
Most service providers have indicated an intent to help their customers, so if you expect that you will have difficulty paying any bills, you should consider researching your provider’s policy on coronavirus. Many banks now have a dedicated webpage and policy statement to make this easier. Additionally, it may be prudent to seek legal advice as to your rights under the contract.
Contractual review of a contract should consider:
- the contract’s own terms for delay or termination rights, including force majeure;
- any statutory rights applicable to the industry pertaining to the subject contract; and
- any common law rights of delay or termination, including frustration.
For Queensland residents, take note that you will receive a $200 relief payment on your electricity bill from the Queensland Government. More on the Queensland Government economic response plan can be found at the Qld Government website (www.queensland.gov.au).
What more can we expect to come?
This is a fast-developing situation, and we can expect the Commonwealth and State Governments to introduce more measures as we proceed. However, it is hard to know what may be the next action taken.
We will seek to update this publication as more economic measures are declared, and their associated legislation is formalised.
We recommend that you keep updated on the Commonwealth and Queensland Government’s actions by going directly to their dedicated websites, which have been repurposed with a clear dot point list of their announcements, updated regularly, at:
Finally, please remember that it is vital to seek legal and financial advice if faced with serious decisions, including potential default on credit facilities, rental agreements and contracts.
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