Assistance for business and individuals; changes to interest rates.
The Federal Government has announced further economic stimulus to assist business and individuals dealing with the downturn caused by the COVID19 health crisis.
The new package is worth $66 Billion. Along with the first round of stimulus, and measures announced by the Reserve Bank last week, the total assistance to the economy so far is worth $189 billion. It is likely there will be further economic stimulus announced soon.
Government Package Highlights
Small business cash payment: businesses will be given a cash payment of $20,000 up to $100,000 to help keep staff employed during the coronavirus. It's important to note this is a payment delivered by the ATO as a credit on PAYG withholding tax paid on wages on activity statements due from the 28th April onwards.
Instant asset write-off increase: claim instant deductions on items worth up to $150,000 (up from $30,000) until 30 June 2020
Unsecured loans: the Federal government is offering to guarantee unsecured loans up to $250,000 for terms up to 3 years. Available for new loans from early April to 30th September 2020.
Superannuation access: individuals can gain access to $20,000 of their superannuation tax-free over the coming months. Applications will be available from April 2020.
Jobseeker payment: the Jobseeker Payment will be temporarily doubled, providing an extra $550 per fortnight. In addition to those already enrolled, It will apply to sole traders and self-employed who are eligible.
Assistance with home loan and business loan repayments
For customers experiencing difficulty in making home loan repayments for any reason relating to health or changes in income, banks have announced a 6-month loan repayment deferral. This means no payments are required to be made to your home loan during this time.
It is important to note however, that the interest on your loan will still accrue and capitalise into the principal outstanding during the term of your payment deferral. As an alternative you may consider requesting you loan be converted to interest only for this time.
The Australian Banking Association confirms access to a 6-month deferral of all loan repayments will be extended to small business lending also.
Further Information about payment deferrals is available from your bank's website
Changes to home lending rates
In addition to government assistance, the Reserve Bank (RBA) announced a further 0.25% rate cut on Thursday last week. As a result, banks are in the process of advising their new interest rates for owner occupied and investment customers.
The RBA's activity has had particular effect on fixed rates and as an example owner occupied 1, 2 and 3 year rates are as low as 2.29% with some lenders. Fixed rates for residential investment has also been reduced with rates in the around 2.59% available.
Banks are still making announcements about these changes so we'll keep you advised.
If you have any questions about your home loan, repayment deferral, interest rate changes, or any other matter, do not hesitate to contact our office. We'll only be too happy to assist you.
