New beginnings for the Newstart Allowance

4 March 2020

From 20 March, 2020, the new JobSeeker Payment replaces Newstart Allowance as the main working age payment. As part of the Government’s welfare reform package, many other payments cease from 20 March, 2020. Legislation to implement the changes was passed in 2017. Advisers should advise affected clients of the changes in order to manage their expectations and to consider possible strategies to maximise their payment. 

The following payments will cease on 20 March, 2020:

  • Newstart Allowance;
  • Sickness Allowance (closed to new recipients from 20 March, 2020 and ceases on 20 September, 2020);
  • Widow Allowance (closed to new recipients on 1 July, 2018 and ceases on 1 January 2022);
  • Partner Allowance (ceases on 1 January, 2022);
  • Widow B Pension;
  • Wife Pension; and
  • Bereavement Allowance.
  • Newstart 
  • becomes JobSeeker

JobSeeker is effectively the new name for the Newstart Allowance from 20 March, 2020 and it becomes the main working age Centrelink payment. Clients receiving Newstart Allowance do not need to do anything and will automatically transfer to the JobSeeker Payment. Clients will continue to receive the same rate of payment and hold a health care card, providing their circumstances do not change.

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From 20 March, 2020, eligible clients can receive the JobSeeker Payment if they satisfy at least one of the following requirements:

  • They are looking for work;
  • They cannot temporarily work or study due to sickness or injury; 
  • They have recently lost their partner.
  • Information relating to some of the ceasing payments
  • Sickness Allowance is an income support payment for people who are temporarily incapacitated for work or study and do not have adequate levels of income support. The person must be able resume their employment or return to their studies once they have recovered from their incapacity.
  • Widow B Pension is a payment for a widow who did not get a Parenting Payment, has limited money and has lost the financial support of their partner;
  • Wife Pension is an income support payment for female partners of people receiving an Age Pension or Disability Support Pension as of June 1995. No new claims of the Wife Pension have been granted from 1 July, 1995.; andBereavement Allowance provides short-term financial assistance of up to 14 weeks for recent widows.

HOW CAN YOU HELP YOUR CLIENTS?

Advisers may wish to use the table above to guide clients through their possible options from 20 March, 2020. Clients who are affected should receive communications from the Department of Human Services about the upcoming changes. In most cases, clients will be transferred automatically to the new JobSeeker Payment.

If clients expect to continue receiving Centrelink benefits, advisers may wish to explore the possibility of certain strategies to maximise the amount of the payment, for example:

  • Making contributions, within allowable limits, to super for the client or their partner. Amounts held in accumulation phase are not means tested if the client is under Age Pension age;
  • Investing in improvements to their main residence which is exempt from means testing;
  • Certain prepaid funeral expenses and cemetery plots. These are exempt assets and there is no limit. Alternatively, funeral investments or bonds may be an option. Each member of a couple can invest up to $13,250 (2019/20) for a prepaid funeral or cemetery plot and be exempt from means testing; and  
  • Singles and couples can gift $10,000 of assets per financial year, with a limit of $30,000 in any rolling five financial year period. Gifts in excess of these limits are assessed as an asset, known as a deprived asset, and deemed under the income test for five years from the time of the gift.  

Mark Gleeson is senior technical manager at IOOF TechConnect.




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