MDM Finance COVID-19 Essential Information

A brief synopsis of the current packages available:

ANZ

ANZ announced reductions to its variable home loan rates, reducing rates across all products by 15 bps, effective from 27 March 2020.

The bank will also introduce a two-year fixed rate of 2.19 per cent for owner-occupiers paying principal and interest.

For business customers, ANZ will:

• decrease variable interest small business loan rates by 25 bps, effective from 27 March 2020;

• provide temporary increases in overdraft facilities for 12 months; and
• reducing new two and three-year fixed rates for secured SME loans of up to $1 million by 80 bps to 2.59 per cent, effective 3 April 2020

CBA

The Commonwealth Bank of Australia (CBA) has also announced several relief measures for households and small business but has not reduced variable mortgage rates.

CBA home loan customers can access the following:

• cuts to one, two and three-year fixed owner-occupied principal and interest (P&I) loans by 70 bps to 2.29 per cent – effective for both new and existing customers from 30 March;
• automatically reduced repayments for all variable P&I home loan accounts (to the minimum required within the borrower’s loan contract), effective from 1 May. However, borrowers will have the opportunity to opt out if they wish to retain their current principal repayment levels; and
• the option to defer loan repayments by up to six months.

For business customers, CBA will:

• auto-enrol 76,000 businesses into loan deferral arrangements for up to six months;
• reduce rates on business loans by 100 bps, in addition to the 25-bps reduction announced on 3 March, effective 3 April;
• participate in the RBA’s new term funding facility, aimed at providing low-cost credit to businesses; and
• continue to offer a range of measures to provide further assistance to customers facing financial hardship.

For depositors, CBA will:

• increase 12-month term deposit rates by 60 bps to 1.70 per cent for new and existing CBA personal customers, available from 19 March 2020 on balances from $5,000 to $2 million; and
• increase eligibility criteria for personal overdrafts, available online or through the CommBank App.

NAB

National Australia Bank (NAB) has also announced that it would extend the offering to home loan customers experiencing financial hardship.

Mortgage customers will be able to pause home loan repayments for up to six months, including a three-month checkpoint. For a customer with a typical home loan of $400,000, NAB said this could mean access to an additional $11,006 over six months, or $1,834 per month. Customers also have the option of reducing repayments on their variable rate home loans.

In addition to suspension of repayments for home loan and business customers, NAB will:

• cut 200 bps from interest rates on new loans and all overdrafts on its flagship digital business product QuickBiz, effective March 30;
• reduce variable rates on small business loans by 100 bps, effective March 30;
• reduce fixed home loan rates by up to 60 bps; and
• introduce a 10-month term deposit rate of 1.75 per cent for depositors.

Westpac

Meanwhile, Westpac will offer customers who have lost their job or suffered loss of income as a result of COVID-19 loan deferrals of up to three months on their home loan mortgage repayments, with extension for a further three months available after review.

As with all ABA members, it will also offer small-business customers repayment holidays of up to six months.

Westpac said it will also:

• reduce overdrafts by 200 basis points for new and existing customers, effective Monday, 6 April 2020

• reduce variable interest rates on small-business cash-based loans by 100 bps, effective Monday 6 April 2020
• introduce a 2.29 per cent fixed rate home loan for one, two and three years for owner-occupied customers on P&I repayments with a Premier Advantage Package, effective Friday, 27 March 2020
• introduce a 12-month term deposit of 1.7 per cent. This will rise to 2 per cent over eight months for Australians aged 65 years and over (up to $500,000 per customer) – effective Friday, 27 March 2020.

In addition, Westpac announced a $10-billion home-lending fund to assist more Australians into home ownership.

Non-majors, including Suncorp, Bluestone, Bendigo and Adelaide Bank, Macquarie Bank, Heritage Bank MyState etc, have also released relief packages for home loan and business customers.

Government Support

Stimulus payments to households:

Aim: To assist lower income Australians

Eligibility: Predominately Pensioners, along with those receiving social security, veteran and other income support recipients and eligible concession card holders.

Benefit: The government will provide a one-off $750.00 payment – One payment per eligible recipient (i.e. if a personal qualifies for the one-off payment in multiple ways, only one payment will be made)

This payment will be tax free.

Cash Flow Assistance for Employers:

Aim: To aid businesses in managing cash flow challenges and help businesses retain employees.

Eligibility:

• Business Entities who have an annual turnover of less than $50 million
• Business Entities who pay wages and withhold tax on those wages

Benefit:

• Cash payments of up to $25,000 are available on Business Activity Statements or Instalment Activity Statements lodged for the period 1 January 2020 to 30 June 2020.

• Employers who withhold tax on employee’s salaries will be eligible for a payment of 50% of the amount withheld, up to a cap of $25,000 for the current financial year (with a minimum payment of $2,000).
• The payment will be automatically calculated in the form of a credit, allocated to the clients Activity Statement Account – either enhancing a refund or reducing a current debt with 14 days of lodgement of the March to June 2020 BAS/IAS’.
• Monthly lodgers will receive a payment calculated at three times the rate for the March 2020 lodgement, to ensure similar treatment to those quarterly lodgers.
• For employers who pay wages however are not required to withhold tax, they are still eligible for a $2,000 cash payment.

All amounts received will be tax free to the business.

Apprentices & Trainees wage subsidy:

Eligibility: Small businesses who employee fewer than 20 full time workers who retain an apprentice or trainee

Benefit: Employers will receive 50% of each trainee or apprentice wage, up to $7,000 per quarter, on wages paid from 1 January 2020 to 30 September 2020.

Four-Month Tax Deferral:

Eligibility – Businesses who have been affected by COVID-19

Benefit: Payment dates for Business Activity Statements, Fringe Benefits Tax, Income Tax & Excise payments are eligible to be deferred for a period of up to four months

This will be granted at the Australian Taxation Office’s discretion, on a case by case basis.

GST Reporting Cycle:

Eligibility – Businesses with a turnover of $20 million or less

Benefit: Businesses who currently report on a quarterly basis have the option to change to a monthly basis, allowing access to GST refunds earlier

• This applies from 1 April 2020
• If registered for fuel tax credits, this will need to be reported monthly also.
• If a business changes this reporting basis, it must remain in place for 12 months.

Amending PAYG Instalment Rate:

Eligibility: Businesses who report on the quarterly or monthly PAYG Instalment system

Benefit:

• For quarterly payers, if you vary your instalment amount for the March 2020 quarter, you are also allowed to claim a refund for any excess instalments that were paid in the September & December 2019 Quarters
• For monthly payers, you must contact the ATO to discuss varied instalment rates and refunds

Taxpayers that receive income from Trusts (investment trusts and business operating through a Trust) can vary their PAYG Instalment Rate accordingly

Increasing the instant asset write-off:

The government has increased the instant asset write-off threshold from $30,000 to $150,000 per asset, from 12 March 2020 until 30 June 2020. This applies to the purchase of new or second-hand assets first used or installed ready for use

Backing Business Investment:

The government has introduced a 15-month investment incentive, (accessible until 30 June 2021), aimed at supporting economic growth and business investment in the short term, by increasing depreciation deductions. Businesses will be eligible to deduct 50 per cent of the cost of an eligible asset on installation with existing depreciation rules applicable to the remainder of the asset’s cost.

Assistance for severely affected regions:

The government has set aside $1 billion to support regions and communities who have been economically impacted the most – including those heavily reliant on industries such a tourism, education and agriculture.

Newstart and Pensioners

Waive of the assets test and waiting period for Jobseeker allowance. This will also enable people who then receive Jobseeker allowance to access a raft of other potential Centrelink benefits. If you earn less than $1075 per fortnight, you may also be eligible.

There will be an additional $550 per fortnight for those receiving the jobseeker payment and carers.

A further $750 income support payment for those on income support.

Access to Superannuation

From April, members of superfunds who face hardship because of the Coronavirus will be able to access superannuation up to $10,000 this final year, and $10,000 next financial. The withdrawal will be tax free and will apply to those currently eligible for the supplement, and sole traders whose hours work hours or income has fallen 20% or more as a result of the coronavirus. The mechanism will be via declaration to the Tax Office. More details as to the eligibility will follow.

The minimum pension requirement has also been halved. E.g. If your current requirement is 4% of your Fund balance, it is now 2%, for this financial year and the next.

SME’s

Increase cash payments to SME’s, eligible employing businesses will receive at least $20,000 and larger SMEs will receive up to $100,000. The payment will be automatically paid through the tax system over the next 6 months. We will be seeking more information as to the eligibility as information flows through.

SMES’s with turnover up to $50m will be able to access unsecured loans for up to $250,000, under the Coronavirus SME Guarantee Scheme, to provide access for working capital. The government will guarantee 50% of any of the new loan’s issues by eligible lenders. (subject to criteria)

Companies

Temporary relief under the Corporations Act for directors of companies trading while insolvent, impacted by the Coronavirus, to assist companies in getting through this difficult period.

More specific details can be found here:

Financing update

Loans currently in progress are proceeding as planned with communications to our clients via email, phone and Zoom video conferencing.

Loan enquiries

For all new loan and refinance enquiries, we anticipate the utilisation of Zoom video conferencing in the first instance. Appointment times can be established through our Facebook page: www.faceboom.com/mdmfinancial

We are confident that we will as a community find ways to come through this together as a better and more resilient society. If you have any questions or concerns, please feel free to contact us we’ll do our best to assist you in any way we can. Our thoughts are with the people who have been impacted by this virus and with those who are feeling the strain of what’s happening around us.

MDM Finance Solutions Pty Ltd

Phone: 03 9855 9290

To your financial success,

Loretta Monda

Managing Director

MDM Finance Solutions