With the economy in a tailspin and the Prime Minister warning our societal lockdown will be the “new normal” for at least six months, many Australians need urgent financial assistance.
The first thing to remember is not to panic. As difficult as it may be, keeping a clear head will allow you to sensibly review the options at your disposal and find the best path to a solution.
“Do a crash budget,” said Murray Wilkinson, a financial planner with Future Gen Solutions. “Say ‘this is the minimum I need to spend, here’s what the outgoings are, here is the income and this is the shortfall’.”
The government has put in place the following measures to help Australians who have already fallen on tough times.
Coronavirus Supplement (if you lose your job)
If you are on income support or lose your job in the coming months, you will be eligible for this supplement.
This measure will kick in on April 27 and effectively doubles the nation’s unemployment benefit by delivering eligible beneficiaries an extra $550 a fortnight. That would bring the total benefit payment to $2230 a month for a single person currently on the JobSeeker payment.
Stimulus cash (If you are already on income support)
The government will also make a one-off $750 payment to all pensioners and beneficiaries as well as concession card holders sometime between the end of March and April 17. That will be matched by a further $750 payment to the same group of people from July 13.
Neither the stimulus cash or the supplement will be taxable or taken into account in benefit income tests. However, the second payment will not be paid to individuals who receive the coronavirus supplement.
JobKeeper payment (If you are stood down or lose hours)
If you are a sole trader or work for a company that is hit hard by the crisis – or get stood down or your hours reduced – you could be entitled to $1500 a fortnight from the government.
The measure covers full and part-time workers, and casuals who have worked for their employer for at least the previous 12 months.
However, workers are only eligible if they were on their employer’s books on March 1.
The JobKeeper payment works like this. If your employer has revenues of under $1 billion and loses 30 per cent of its business as a result of the crisis in a single month after March 1, then it can apply for a fortnightly wage subsidy of $1500 for every eligible employee.
If it has more than $1 billion in revenue, then it has to lose at least 50 per cent of its business to be eligible for the scheme.
If you earn more than $1500 a fortnight then there is no difference to your pay if you keep working during the crisis. The money will go to your boss to subsidise your salary.
But if you earn less than that – or are stood down or have your hours cut because of the coronavirus – then you will get paid the full $1500 a fortnight.
This means some workers – especially part-timers – will receive a pay rise under the measure. Either way, it is designed to help your boss keep you employed.
Workers cannot, however, claim both JobSeeker and JobKeeper. The former is for people who lose their jobs and are not re-hired, the latter is for stood-down workers who hold onto their jobs.
Self-employed people will have to apply themselves to get the JobKeeper payment.
Employers will receive this payment from the first week of May, but your boss can take a temporary hit and start paying you immediately.
Super early release (if you are in financial difficulty)
Superannuation is put away for your retirement but during the crisis the government will allow people who have struck hard times to access up to $20,000 from their fund in two instalments by September 24, 2020.
To be eligible you must be unemployed, made redundant or had your working hours cut by 20 per cent or more.
Application is made through the MyGov website and sole traders can also apply if they lost at least 20 per cent of their income because of the virus.
The first $10,000 can be accessed before July 1; the second, between July 1 and September 24.
David Simon, principal with Integral Private Wealth, cautioned people to think twice about dipping into their super, though.
“You are taking out money after values have fallen so you are eroding your balance more than you would have three months ago,” he said.
If you have your super in different allocations including growth, fixed-interest and cash, “you should make the withdrawal from the cash allocation,” Mr Simon said.
If your fund allows it, you could also move the whole $20,000 from a balanced option and put it into cash, so you don’t damage your fund if there are further sharemarket falls between now and September 24, before the second $10,000 withdrawal must be made.
It’s also worth taking a look at your loans
“Many mortgages today have an offset facility where you can draw down on the capital,” Mr Wilkinson said.
“Check with the bank on what you can draw down, because this is extra capital you have.
“Also check your insurance. If you have income protection insurance, either inside or outside your super, ask for a waiver on the premium which you can often get for six months. That keeps the insurance in place without you paying premiums.”
Most banks have also offered six-month mortgage holidays for home owners suffering financial hardship.
So, if you are under financial pressure, call your bank or head to their website to find out what assistance they can offer.
It’s worth noting here, too, that many energy providers are also providing payment relief.