The Australian Government, State Parliaments and the Australian Health Organisations are meeting on a regular basis to work through the COVID-19 Pandemic and put in place restrictions to try and stop the spread.
Along with these restrictions the Australian Government with the assistance of State Parliaments are implementing stimulus packages. These packages are being put in place to try and balance the restrictions being created.
There have been two stages released so far regarding these stimulus packages. What is available to you?
Jobseekers/ Single Parent/ Casual Workers and Sole Traders:
A “Corona Virus Supplement” is available to jobseekers, single parent, casual workers and sole traders that have been affected by the economic downturn. It will be available to current and new Australians through Centrelink Benefits.
This supplement will be available on top of what payments you may currently be receiving as a jobseeker.
If you are a ‘sole trader’ or ‘casual worker’ and you are currently making less than $1075 a fortnight you will be automatically eligible to receive the full supplement.
This supplement will see an extra $550 per fortnight being made via your Centrelink payment.
For example: if you are currently receiving the single parent payment which is $612 per fortnight, you meet the criteria of making less than $1075 per fortnight and as such will receive the extra $550 per fortnight supplement, taking your total benefit payment to $1,162 per fortnight.
In addition, if you are a ‘sole trader’ or ‘casual worker’ and due to recent events pertaining to COVID-19, your income or hours worked have been reduced by 20% or more, you can access up to $10,000 of your superannuation TAX FREE now, with the option of accessing another $10,000 next financial year (July 2020).
Commonwealth Senior Card Holders/ Aged Pension/ Carers/ Family Benefits:
If you are not eligible for the “Corona Virus Supplement”, the Government and Parliaments have made an additional $750 stimulus payment available to you.
If you are receiving the Age Pension, Carers Allowance, Family Tax Allowance or have a Commonwealth Seniors Card the payment of $750 will automatically occur in your benefit payment from July 13.
This stimulus payment will be in addition to the $750 payment announced in Stage 1 Stimulus Package earlier this month, which is being paid around March 31st, with most to get this payment no later than 17th April.
The deeming rates applied for the pension income assessment will be reduced by a further 0.25 percentage points to reflect the recent extraordinary announcement by the RBA which has seen the cash rate reduced to 0.25 basis points (the lowest we have seen).
The deeming rate nationally from the beginning of May will see the lowest rate being 0.25% and the upper deeming rate being 2.25%. This may see the national seniors estimated age pensioners receive on average an additional $219 per year.
This change will benefit around 900,000 income support recipients.
Businesses/ Companies that are wanting to keep their staff:
Small to Medium businesses/ companies and Not-For-Profit organisations with a turnover under $50 million will receive a tax-free cash payment of up to $100,000 to help them with retaining staff and to continue operating the best they can in these ever changing conditions.
The minimum guaranteed payment will be $20,00.
Please note this does not mean extra pocket money for employees. The Government and Parliaments are linking the payments to staff wage tax withholding as an incentive to hold on to more of their workers during this time.
This tax-free cash payment gives small to medium businesses and Not-For -Profit organisation a chance to get to the other side.
* Along with the Government and Parliament stimulus packages, business cash flow lenders have available products that will allow up to $150,000 to be lent using minimal documentation evidence and these funds are not secured.
** On top of the above, The ACCC providing urgent interim authorisations to allow the Australian Business Association (ABA) and banks to work together to offer small business relief package.
The package will allow for deferral of principal and interest repayments for all term loans and retail loans for 6 months with less than $3 million in total debt to credit providers, to small business in all sectors impacted by COVID-19 pandemic.
At the end of the deferral period businesses will not be required to pay the deferred interest in a lump sum. Either term of the loan will be extended or the level of the loan repayments will be increased.
The interim authorisation applies to all ABA members which currently includes, AMP Bank, ANZ, Bank Australia, Bank of Queensland Limited, Bendigo and Adelaide Bank Limited, Commonwealth Bank of Australia, HSBC, Macquarie Bank, National Australia Bank, Suncorp Bank and Westpac.
All lenders within Australia are still open for business and all are wanting to assist customers during the COVID-19 crisis.
You will find that lenders are offering COVID-19 relief regarding repayments for their customers. The options available may include:
- Deferring payments for 3 months up to 6 months, depending on lender and their policy. When lenders are deferring payments to assist those with this unprecedented crisis, they are capitalising the repayment to the loan, which may affect the term of the loan.
- Assisting with reviewing interest rates being charged
- Assisting with reviewing bank fees and charges
- Looking at interest only repayments being made available without further assessment requirements
- Looking at debt consolidation options
- Hardship provisions can be put in place
If you are a sole mortgage holder or you are a joint mortgage holder and one of you or either have recently lost your job or have had income/hours reduced due to COVID-19 make contact with your local bank or mortgage broker immediately. Express that you are calling to discuss options relating to hardship surrounding COVID-19/ Corona Virus, in stating this it will spark the customer service operator or mortgage broker to direct you to the correct departments.
Depending on your circumstances you may find along with speaking at length with you that a lender may ask you for further evidence regarding your claim to defer repayments, these may be:
- A document that outlines your money plan (like a budget) including income and expenses
- A medical certificate (if you are advising of contracting the virus)
- A letter from your employer (advising of dismissal/ closure of premises)
- Pay slips
- A Centrelink statement
- Bank statements for the last 3 months
You will find each lender has various options available to help you during COVID-19 pandemic and we are being advised the easiest way to communicate with your lender is to google your bank name along with corona virus and you will find details of what your lender is asking of you.
Alternatively, please get a hold of your mortgage broker and they will be more than willing to help you and work with you and the lender.
Refinance/ Debt Consolidation:
The RBA has reduced the cash rate to 0.25 basis points acknowledging these unprecedented times we find ourselves in to stimulate the economy.
Majority of lenders as of 23rd March or 30th March were implementing the RBA decrease to the cash rate to 0.5 basis points announced 4th March and are yet to implement the most recent change.
If you are looking at refinancing or looking at options of debt consolidation or would like to check your current interest rate is the right one for you, to assist with cashflow during this time we highly suggest you check that your lender or the lender you are looking at has passed on all the recent RBA’s decisions.
Your mortgage broker or Dollars with Sense have the ability to review 100’s of product and rates and receive communication from lenders on promotions and rate changes, it may be worth a chat.