Extension of JobSeeker Payment Measures

On 21 July 2020, the Government announced its intention to extend income support for individuals to continue to assist them during the covid-19 pandemic.

While the government is extending the payment period of its temporary coronavirus supplement, the amount of the supplement will be adjusted during the extended period to reflect the gradually improving economic conditions. The government is also improving incentives and gradually reintroducing obligations for payment recipients to seek work.

It is important to note that at the time of writing, these measures are proposed only and have not been legislated.

Extending and adjusting the Coronavirus Supplement
The temporary Coronavirus Supplement of $550 per fortnight became payable to eligible income support recipients from 27 April 2020, and is scheduled to cease on 25 September 2020. The Government is now extending the Coronavirus Supplement payment period to 31 December 2020 with a reduced amount applicable during the extended period. This means:

• The Coronavirus Supplement will continue to be $550 per fortnight for payments up to and including the reporting period ending 24 September 2020 as originally scheduled.

• From 25 September to 31 December 2020 (ie the extended period), the Supplement amount will be reduced to $250 per fortnight.

The Coronavirus Supplement is payable to both existing and new recipients of eligible income support payments during the extended period. The eligible income support recipients remain the same:

• JobSeeker Payment (and all payments transitioning as a result of JobSeeker Payment)

• Youth Allowance

• Parenting Payment (Partnered and Single)

• Austudy

• ABSTUDY Living Allowance

• Farm Household Allowance

• Special Benefit

• eligible New Enterprise Incentive Scheme participants

• Department of Veterans’ Affairs Education Scheme

Anyone who is eligible for the Coronavirus Supplement will receive the full rate of the supplement during the relevant applicable periods. The Coronavirus Supplement is assessable income, however, the recipient may be entitled to the beneficiary tax offset to reduce the amount of tax payable.

Increasing income free area for JobSeeker and Youth Allowance (other) recipients
From 25 September 2020 until 31 December 2020, the income free area for JobSeeker Payment and Youth Allowance (other) will increase from $106 per fortnight for 2 of 3 JobSeeker Payment and $143 per fortnight for Youth Allowance (other) to $300 per fortnight for both. The proposed changes are intended to improve incentives for individuals to re-enter the workforce or take on additional work as the economy recovers. This means that recipients of these payments can earn income of up to $300 per fortnight without affecting the maximum payment rate of JobSeeker Payment or Youth Allowance (other).

Adjusting income test taper rate
Personal income
From 25 September until 31 December 2020, a JobSeeker or a Youth Allowance (other) recipient’s payment rate will be reduced by 60 cents for every dollar of income they earn above $300 (ie the income free area) per fortnight under the income test.

This replaces the current income test:

• JobSeeker Payment reduces by 50 cents for each dollar between $106 and $256 per fortnight, and 60 cents for every dollar over $256 per fortnight.

• Youth Allowance (other) reduces by 50 cents for each dollar between $143 and $250 per fortnight, and 60 cents for every dollar over $250 per fortnight.

Partner income test where partner is not receiving a pension
The temporary reduction of the partner income test taper rate (reduced from 60 cents to 25 cents from 27 April 2020) is due to cease on 25 September 2020. The Government announced its intention to extend this partner income test taper rate reduction and increase the taper rate from 25 cents to 27 cents from 25 September to 31 December 2020.

In conjunction with the increase to the JobSeeker income free area, a partner can earn up to $1,165 per fortnight without reducing the JobSeeker payment. JobSeeker Payment is reduced by 27 cents for every dollar the partner earns above $1,165 per fortnight and the partner income test cut-out for JobSeeker payment will be $3,086.11 per fortnight or $80,238.89 per annum (assuming the income support recipient’s personal income has not reduced their maximum rate of payment).

Access to payments
Access to payments will change from 25 September 2020 to ensure appropriate targeting of income support as the economy recovers.

• Means testing — From 25 September 2020, means testing will be reinstated in the following ways: – asset testing for all payments will be reinstated, for both existing and new recipients; and – the Liquid Assets Waiting Period (LAWP) for all payments will be reinstated.

• Expanded criteria - JobSeeker Payment and Youth Allowance (other) criteria will continue to provide payment access for permanent employees who are stood down or lose their employment and sole traders, the self-employed, casual workers and contract workers who meet the income and assets tests until 31 December 2020.

• Reduced waiting times — The Ordinary Waiting Period, Newly Arrived Resident’s Waiting Period (NARWP) and the Seasonal Work Preclusion Period will continue to be waived until 31 December 2020.
  – When the Coronavirus Supplement ceases, those people who were serving a NARWP will continue to serve the remainder of their waiting period, but the time the person was receiving the Coronavirus Supplement will count towards their NARWP. Residency requirements still apply.
  – Income Maintenance Periods and Compensation Preclusion Periods will continue to apply.

Reintroduction of job-seeking requirements
Jobseekers’ mutual obligation requirements were suspended from 24 March 2020 until 8 June 2020. During this time, unemployment payment recipients were not required to attend appointments, look for work or participate in activities.

The gradual reintroduction of mutual obligation requirements commenced on 9 June 2020, including:

• voluntary job searches;

• at least one phone or online appointment with a jobseeker’s employment services provider;

• voluntary participation in activities, either online or in person; and

• payment suspensions or penalties for failure to comply.

When determining a jobseeker’s mutual obligation requirements, an employment services provider will take into consideration the jobseeker’s capacity to comply with requirements and the state of the local labour market.

Smoothing the transition from JobKeeper to JobSeeker
The Government announced changes to the JobKeeper Payment from 25 September 2020 may make recipients of that payment eligible for the JobSeeker Payment or other income support payments. The Government is making further changes to income support arrangements for JobKeeper Payment recipients who transition onto income support.

Income support recipients earning above their income test cut-off point and on a nil rate of income support will be 3 of 3 able to continue to keep their concession card and return seamlessly to income support if their earnings reduce below their cut-off point. Services Australia will allow recipients of the JobKeeper Payment to apply for income support payments ahead of the cessation of their JobKeeper Payment to ensure they can quickly access income support after JobKeeper Payment ends.

To discuss how these measures could potentially impact you, please contact us for a detail discussion.

This summary was prepared by Colonial First State FirstTech

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Source: https://www.cfs.com.au/content/dam/colonial-first-state/docs/adviser/firsttech/FT-JobSeeker-extension-final.pdf