FINANCIAL SUPPORT FOR THOSE AFFECTED BY COVID-19 CORONAVIRUS

22 Mar FINANCIAL SUPPORT FOR THOSE AFFECTED BY COVID-19 CORONAVIRUS

It’s hard to get away from anything but Coronavirus at the moment and the last few days have seen us bombarded with news and information. This is leaving many people concerned by not only the potential impact to the health of ourselves, family and friends but the reality that many Australians may find themselves in financial distress should the worse case scenarios be realised. I thought I would share a summary of some of the latest news impacting our clients. We are still waiting on full details of most of the measures and will keep updating as we know more.

Government and Banks pledge support in these unprecedented times

This morning (Sunday 22nd) the Government unveiled further stimulus packages to those announced at the latter part of the week. The last couple of days has seen Australia close the borders to assist in the containment of the virus and try to control the spread to make it manageable and have less impact. The Reserve Bank of Australia, the Government and the banks have pledged measures to try and cushion the blow to the economy. 

New Government Stimulus Package unveiled on Sunday 22nd March:

The Federal Government has unveiled a further $66 billion economic stimulus package complimenting the $17.6 billion announced previously. These measures are anticipated to be approved on Monday (23rd March) in parliament.

Additional measures include:

Cash for welfare recipients

A second $750 payment will be automatically paid to an estimated 5 million people on 13th July. The first $750 payment, announced in the first stimulus package, will be paid on March 31.

There will also be a doubling of the Jobseeker Payment, providing people with an additional $550 a fortnight.

Support for small business

Small businesses with a turnover under $50 million and not-for-profits will receive a tax-free cash payment of up to $100,000, with a minimum payment of $20,000 for eligible companies.

The payments will be delivered by the Tax Office as a credit on activity statements from late April. It’s anticipating this will be accessible by 690,000 businesses employing 7.8 million people.

The Commonwealth is also offering to guarantee unsecured loans of up to $250,000 for up to three years.

Access to superannuation

The Government will allow people to access up to $10,000 from their superannuation this financial year and in 2020-21.

People will not pay tax on they money they access and withdrawals will not affect Centrelink or veterans’ payments.

There will also be a temporary 50-per-cent reduction in superannuation minimum drawdown requirements for account-based pensions in 2019-20 and 2020-21.

Last week’s measures:

Reserve Bank of Australia reduces cash rate to 0.25%

Within 24 hours of the decision the big 4 lenders announced significant reductions to their fixed rates, with only ANZ passing on a cut to the standard variable rate. Other lenders have yet to announce but we will keep you updated once your lender has made a decision.

Australian Banking Association – Relief Assistance

The ABA members have put in place a raft of measures aimed specifically at assisting small business cash flow. These include

·         lowering the rates on $100bn of existing lending

·         access to temporary overdrafts and increases

·         deferred payments for up to 6 months on business lending products

The above is anticipated to put an extra $8bn cash into the economy. It’s a good step to help those with business debt and alleviate some of the cash flow issues. Some things to bear in mind are that deferred payment facilities will still attract interest and the payment plans to pay back look to be on a case by case basis. We are also still waiting to see if the deferred payments will impact credit reporting (sowing as missed payments).

For information on where to apply for your bank, use the following link: https://www.ausbanking.org.au/campaigns/financial-hardship/

Consumer Mortgage Relief

The big four banks have also confirmed that a similar deferred payment plan wil be in place for consumer mortgages. Again, the exact details are still being ironed out. We are still seeking clarification on how the deferred payments will be paid back and if there will be any impact on credit files if the deferred payments are recorded as missed payments.

You can find out how to contact your bank’s hardship team by clicking https://www.ausbanking.org.au/campaigns/financial-hardship/

Other financial impacts – The ACCC has produced a useful page for those who have been impacted by cancellation of goods or services due to coronavirus, click the following link: https://www.accc.gov.au/consumers/consumer-rights-guarantees/covid-19-coronavirus-information-for-consumers

We are with you through this difficult time, if we can be of assistance then please get in touch.

Stay safe and my best wishes,

Paul

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