April 03, 2020

April 03, 2020 | Adviser News

Government assistance for Australians in financial stress

On 22 March 2020, the Australian Federal Government announced its second economic stimulus package designed to support those most severely affected through the coronavirus (COVID-19) pandemic. This builds on the first financial package which was announced on 12 March, 2020.

The recent support package was passed by Parliament on 23 March 2020, and includes temporary early releases of superannuation, temporarily reducing superannuation minimum drawdown rates, reducing social security deeming rates and the addition of a range of income support payments. 

Further, on 30 March, the Australian Government announced the $130 billion JobKeeper Payment designed to help keep Australians in jobs.

A summary of the overall economic response as it may affect your individual and business clients follows.  Zurich will continue to monitor the Government’s announcements and will provide you with updates as further information become available.


Temporary early release of superannuation

From 20 April 2020 individuals affected by COVID-19 will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.


Before applying for early release individuals should consider:

  • Given the falling share market, they will be crystallising any losses incurred.
  • Care needed with withdrawals to ensure account balance is sufficient to maintain insurance coverage including Death/TPD and Income Replacement, where insurance premiums are deducted from the individual’s superannuation account.
  • The impact of withdrawals and other actions now on future retirement funding.


To apply for the COVID-19 early release, an individual must satisfy any one or more of the following requirements:

  • They must be unemployed; or
  • They must be eligible to receive a jobseeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  • On or after 1 January 2020:
    • they were made redundant; or
    • their working hours were reduced by 20% or more; or
    • if they are a sole trader, their business was suspended or there was a reduction in their turnover of 20% or more.

These requirements ensure that access to the early release of superannuation on this additional compassionate ground is targeted to those individuals who have been affected by the adverse economic impacts of Coronavirus.

Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.

How to apply

Individuals need to apply online directly to the ATO through their myGov account (www.my.gov.au) for early release of their superannuation from 20 April 2020. Individuals will need to certify that they meet the above eligibility criteria.  Individuals are not able to apply directly to the superannuation fund.

Update on customer verification obligations from AUSTRAC

In response to the COVID-19 pandemic AUSTRAC will introduce a Rule under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF). This Rule will ensure that superannuation funds making payments to their members under this initiative for temporary early release of superannuation, where the payment is approved by the ATO and processed through myGov and ATO online, will not have to conduct additional customer verification under the AML/CTF regime.

Please note at this point AUSTRAC have not indicated any changes to the customer verification process for other payments or redemptions. Zurich is keeping on top of further announcements from AUSTRAC and will let you know if there are any additional changes in this respect.

Further information

Additional information on the COVID-19 temporary early release of superannuation can be found in the Zurich Early access to Super Factsheet and Access to Super Government Factsheet.


Temporarily reducing Pension and Annuity minimum drawdown rates

For many retirees, the significant losses in financial markets as a result of the COVID-19 crisis are having a negative effect on the account balance of their superannuation pension or annuity.

To assist retirees, the Government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities by 50% in the 2019-20 and the 2020-21 financial years as follows:

Age Existing % of account balance Reduced % of account balance
 55-64 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 older 14% 7%

Further information

Additional information on the reduced Pension and Annuity minimum drawdown rates can be found in the Government Retirees Factsheet.

Social Security

The government will be reducing the deeming rates by a further 0.25 of a percentage point to reflect the latest rate reductions by the Reserve Bank of Australia. Deeming rates are used to estimate the income individuals receive from their financial assets.

From 1 May 2020, the lower deeming rate will be 0.25 of a percentage point and the upper deeming rate will be 2.25%. The rates are as follows:

  Investment value Deeming rate
Singles Up to $51,800 0.25%
  Over $51,800 2.25%
Pension Couples (combined) Up to $86,200 0.25%
  Over $86,200 2.25%
Non-pension couple (each) Up to $43,100 0.25%
  Over $43,100 2.25%

The government estimates that this change is expected to 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.


Income support for individuals

Over the next six months, the Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.

This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.

These changes will apply for the next six months, and payments will commence from 27 April 2020.

Further information

Additional information on the income support for individuals can be found in the Income Support for Individuals Government Factsheet.


Payments to support households

The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.

The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020. Around half of those that benefit are pensioners. The second payment will not be made to those eligible for the Coronavirus supplement.

A person can be eligible to receive both a first and second support payment. However, they can only receive one $750 payment in each round of payments, even if they qualify in each round of the payments in multiple ways.

The payment will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.

Eligible individuals do not need to do anything to receive the $750 Economic Support Payment as the relevant Government Department will automatically pay the first payment from 31 March 2020 and the second payment from 13 July 2020.

Further information

Additional information on the income support for households can be found in the Payments to support households Government Factsheet.

Child care

Legislative amendments to the Family Assistance Act and Family Assistance Administration Act will be made to provide the Government with limited flexibility to manage the impact of the Coronavirus, as well as future disasters, on families and on business continuity for child care services.

The amendments allocate extra allowable absence days, in addition to the current 42 days. The allocation of extra allowable absence days is intended to help offset absence days taken as a result of the impact of the Coronavirus. This will help ensure continued subsidised fee relief for families with children enrolled in approved child care.


JobKeeper payments for employers to keep employees in the workforce

On 30 March 2020 the Australian Federal Government announced a third tranche of fiscal stimulus, which will see businesses receive a fortnightly wage subsidy of $1,500 per eligible employee for a maximum period of six months. The subsidy will reportedly start on 30 March 2020, with the first payments to be received by employers in the first week of May.

According to the treasurer, “This $1,500 JobKeeper payment is a flat payment and is the equivalent of around 70% of the median wage and represents about 100% of the median wage in those sectors most heavily impacted by the coronavirus like retail, like hospitality and tourism.”

To receive the JobKeeper payment, employers must register an intention to apply on the ATO website and assess that they have, or will, experience the required turnover decline.  The payments will be administered through the ATO and Single Touch Payroll System, which means that employers and employees will not have to interface with Centrelink to access the funds.

Some points on eligibility:

  • Employers will be eligible if their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30% relative to a comparable period a year ago (of at least a month) will be eligible. For businesses with over $1 billion turnover, the 30% reduction requirement changes to 50%.
  • Includes sole traders and Not-for-profit entities.
  • JobKeeper payment will be made for Full time, Part time and Casual employees (who had been employed for at least 12 months) who had been stood down on or after 1 March 2020
  • Workers from New Zealand on 444 visas will be included.

The payments will apply to employees who were on the books on 1 March 2020, which means that worker who have been stood down or even retrenched after that time may be eligible.

Legislation is expected within the next week or so. Zurich is keeping on top of further announcements and will let you know if there are any additional changes in this respect.

Further Information

Additional information on JobKeeper payments can be found in the Zurich JobKeeper payments Factsheet, Zurich JobKeeper Payment Extension Factsheet and JobKeeper Payment Government Factsheet

Small to medium businesses

Aside from measures to help affected individuals, the government has also announced a range of new measures for business.  These include:

  • An increase to the instant asset write-off threshold (from $30,000 to $150,000)
  • Accelerated tax deductions for new assets
  • Cash for small and medium sized business ($20,000 - $100,000)
  • Support for small business to retain their apprentices and trainees.
  • A temporary increase to the threshold at which creditors can initiate bankrupt proceedings.

The government will also take coordinated action to support the flow of credit through the economy to help businesses manage the impacts of the pandemic.

Enhancing the instant asset write-off for small businesses

Taxation law has been amended to increase the cost threshold below which business entities can access an immediate deduction for depreciating assets and certain related expenditure (instant asset write-off) from $30,000 to $150,000, from 12 March 2020 to 30 June 2020 and access has been expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

The higher instant asset write-off threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

The instant asset write-off is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.

Boosting cash flow for employers

The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

On 12 March 2020, the Government announced the Boosting Cash Flow for Employers measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses. Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.

Under the enhanced scheme, employers will now receive a payment equal to 100% of their salary and wages withheld with the maximum payment of $50,000.  The minimum payment is now $10,000.

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.

The cash flow boost provides a tax free payment to employers and is automatically calculated by the ATO.  There are no new forms required.

Further information

Additional information on the Boosting Cash Flow for Employers measure, including the eligibility requirements, can be found in the Cash flow assistance for businesses Government Factsheet.

Support for apprentices and trainees

Small business will receive support to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.

Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter) and can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Further information

Additional information on the Support for apprentices and trainees measure, including the eligibility requirements, can be found in the Cash flow assistance for businesses Government Factsheet.

Temporary relief for financially distressed businesses

To provide a safety net for financially distressed businesses so that they can remain operational and resume normal activity once the threat of the Coronavirus subsides, temporary provisions (expressed to last six months), specific to the corporate insolvency law regime, will be introduced, including:

  • An increase in the threshold at which creditors can issue a statutory demand (from $2,000 to $20,000) and the time companies have to respond to a statutory demand (from 21 days to six months).
  • An increase in the threshold for a creditor to initiate bankruptcy proceedings (from $5,000 to $20,000) with a similar extension in the time period for debtors to respond to a bankruptcy notice.
  • Relief for directors from personal liability for trading while insolvent provided the debt is incurred in the ordinary course of the company’s business.

Further information

Additional information on the support for financially distressed businesses can be found in the Providing temporary relief for financially distressed businesses Government Factsheet

Coronavirus SME Guarantee Scheme

To help small businesses (turnover of up to $50 million) gain access to working capital, the government will guarantee 50% of new business loans issued by participating lenders.

Under the Coronavirus Small to Medium Enterprises (SME) Guarantee Scheme, the Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower.
  • The loans will be up to 3 years, with an initial 6 month repayment holiday.
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.

Businesses will need to contact their lender to see if they offer loans under the Coronavirus SME Guarantee Scheme (loans must be approved by 30 September 2020). The decision on whether a business qualifies for extra credit will rest with the lender.

Further information

Additional information on the Supporting the flow of credit for SMEs measure, including the eligibility requirements, can be found in the Supporting the flow of credit Government Factsheet.

We will be monitoring developments closely and updating this page with new developments as they arise. In the meantime, as always, please reach out to your Zurich representative if you have any questions on the above.


Important information:  This publication is intended as general information only and does not take into account the personal investment objectives, financial situation or needs of any person. It is dated 31March 2020, is based on Zurich’s interpretation of the subject matter (some of which are proposals only), and includes information derived from sources believed to be accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such. Neither Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 of 5 Blue Street North Sydney NSW 2060 (Zurich), or any of its related entities, employees or directors give any warranty of reliability or accuracy and do not accept any responsibility arising in any way including by reason of negligence for errors and omissions. Zurich recommends investors seek advice from appropriately qualified professionals.