Guide to planning your estate 2020/21

The ongoing Coronavirus crisis is all over the news and while the reports from Victoria are concerning, it’s good to remember that in absolute and global terms Australia is still managing the medical crisis exceptionally well. That said, the lockdowns, border closures and general loss of consumer and business confidence have affected the economy and so the Government has stepped in with massive support measures.

The massive cost of those measures—and better data about the crisis—means the government has recently proposed some changes to the conditions of some of their main measures.

Here’s a summary.

1. JobKeeper Payment

Under the JobKeeper payment, businesses that meet certain criteria can get a subsidy from the Government to continue paying their employees. Eligible employers need to apply to the ATO for the payment on behalf of their employees.

By keeping employees ‘tied’ to their jobs, JobKeeper is designed to maintain employment. Typically getting people back into the workforce is one of the most difficult economic problems caused by recessions.

JobKeeper was due to cease on 27 September.

The Government has proposed to extend the JobKeeper program with the payment to be reduced over time and paid at two rates. The two rates relate to whether you’re considered to be a full-time or part-time worker for this purpose, and is intended to be determined based on the hours you worked in the applicable test period. Depending on your circumstances, this test period will be either February or June 2020. Full-time workers are those who have worked more than 20 hours in the applicable test period.

From 28 September 2020 to 3 January 2021:

• the payment rate will fall to $1,200 each fortnight for full-time employees, and
• $750 each fortnight for part-time employees.

From 4 January 2021 to 28 March 2021, the JobKeeper payment rate will be:

• $1,000 each fortnight for full-time employees.
• The rate for part-time employees will fall to $650 each fortnight over this period.

To find out more, including whether you’re an eligible employee, visit the Federal Government’s JobKeeper payment web page treasury.gov.au/coronavirus/jobkeeper.

2. Income support for individuals

The Government has implemented some temporary measures to enable more people to access some social security benefits and concessions. This includes temporarily relaxing some of the eligibility criteria for certain payments.

The Coronavirus supplement also temporarily increases the total payments available to eligible social security recipients.

• Payment of the Coronavirus supplement of $550 per fortnight for those already receiving a qualifying income support payment continues until 24 September 2020.
• The Government has proposed to extend payment of the supplement to 31 December 2020 at a reduced rate of $250.

The supplement is taxable and is paid automatically to people receiving an eligible payment or benefit. The list of qualifying income payments is available here.

If you’re receiving JobKeeper payment from your employer, this must be declared as income if you’re applying for or receiving any payments or benefits.

You can register online via MyGov or by phone for social security payments and other concessions.

3. Economic support payments for pensioners

Two payments of $750 each were made to people receiving certain social security payments and eligible concession card holders. The first payment was made from 31 March 2020 and the second payment was paid around 10 July 2020.

Importantly, these payments are not taxable and don’t count as income for the purposes of social security, Farm Household Allowance and veteran payments.

Contact Services Australia at www.servicesaustralia.gov.au to discuss the full range of benefits and concessions that may apply to you.

4. Access to your super

Whilst your super is designed to provide for a better lifestyle in retirement (via long-term investment), the Government is allowing temporary early access to super for certain people who are in financial difficulty as a result of COVID-19’s impact on your finances.

Eligibility rules apply to determine whether you’re able to make a withdrawal under this temporary measure.

From 1 July 2020, you can submit one request for an early release of up to $10,000 of your super—this is the second stage of the Government’s early release of super program, with an amount up to $10,000 also being available for release up to 30 June 2020.

Originally, applications for an additional lump sum in the current financial year needed to be submitted by 24 September but the Government has proposed to extend this date to 31 December 2020.

To apply for a release of your super under this temporary measure, applications need to be made online via MyGov. The ATO will then contact your fund to process the release.

It’s important to remember that any money you take out of super now leaves you less money invested for retirement. While it may make sense to draw on your super now if you are in financial need, a chat to a financial adviser may help you balance your current cashflow worries with your long-term lifestyle needs.

We are here to help you navigate your finances during COVID-19. Contact Dev Sarker at 1300 717 136 today!

Source: www.mlc.com.au (https://www.mlc.com.au/personal/blog/2020/08/managing_the_covid-19_crisis)

It’s easy to think you’ll never get ahead when you have mounting bills to pay, on a reduced or lost income and limited savings, all because of a pandemic that no one saw coming.

But, it can be done.

Take confidence in knowing that with determination, understanding the support options available to you and having a realistic plan, debt and bills can be managed.

In this article, we’ll address six steps that could help to get you back on track with managing your debt during COVID-19.

1.    Understand how much you owe

The first step is to add up all of your debt, to get a clear picture of what you owe.

While laying all your cards out on the table can be extremely confronting, especially if you’ve never done it before, it’s a critical step to see the bigger picture of your financial situation.

2.    Keep track of your expenses and income

The next step is to work out how much you can afford to pay to cover your debts.

Having a clear picture about what you earn versus what you spend, can highlight areas where you may be able to pull back spending. Whatever income you’re able to save can then be allocated towards your debt. There are budget planners and phone apps you can use to track your spending. Alternatively, you can simply download your bank statements and keep a record of your receipts. Make sure to include everything from your necessities like rent or mortgage, utilities and transport to what you spend on non-essentials like entertainment.

3.    Investigate the support options available to you

Depending on your situation, there are a number of ways you can get financial assistance to deal with the impact of COVID-19.

Financial and banking institutions

Some banks are now allowing customers to defer their mortgage repayments temporarily, in addition to refunding late fees and interest for credit card payments.

It’s important to remember that while this option might help with your short-term cash flow, interest will continue to be charged to your outstanding loan amount – meaning more interest could be payable over the term of the loan. It’s also worth checking with your bank to ensure these offers apply to you.

Government response packages

The Federal Government is supporting individuals and families affected by COVID-19 through a range of measures, including:

Read MLC articles for more detail about these measures and if they apply to you.

4.    Develop a plan to manage debt

Now that you’ve identified how much you owe and the financial assistance available to you, the next step is to develop a plan.

Having a debt management plan in place that’s realistic to follow, can help you manage your debt to achieve your goals. But remember to keep a long-term view. You want to ensure that this isn’t a just a temporary fix, otherwise the problems could kick up again.

Set priorities

If you have more than one outstanding debt, consider working out how much you can repay on each, based on the minimum repayment owing.

Alternatively, if you’re able to repay more than the minimum, look at prioritising your debts. You’ll need to think about things such as the type of debt you have -for example, an investment loan, or personal debt – and how much is owing.

For example, if you only have personal debt, you may choose to prioritise repaying debts with the highest interest rate first, given these will be costing you the most to keep them around longer.

At the end of the day, the approach you take is a personal one but it’s important to have a plan and stick to it. And that could mean making other changes.

5.    Set aside a savings fund for emergencies

Whilst you can never prepare for events like COVID-19, there are things you can do to ensure when these types of situations arise, you’re able to get through them.

One approach may be to set up a savings fund for emergencies, where you transfer a small amount of your income to a high interest savings account on a weekly, fortnightly, or monthly basis. This will then provide a financial safety net which you can draw on when you really need it.

6.    Seek professional support

Managing debt is not something that comes easily to most people, so sometimes speaking to a professional can help put your mind at ease.

A financial adviser will assess your situation and provide you with a manageable repayment plan, which may see you pay your debt off faster.

Bottom line: the most important thing to remember is that you can get ahead with managing your debt during COVID-19, but it will require some changes and reprioritisation. Use the various resources and support available to you and stick to a plan. You can do it!

We’re here to help, contact Dev Sarker at 1300 717 136 today.

Article source:  https://www.mlc.com.au/personal/blog/2020/06/manage-debt-during-covid-19