Covid-19 Business Concessions

Posted by Matt Connor on 25 March 2020
Covid-19 Business Concessions

The Australian and state governments have announced a number of concessions designed to boost cash flow for businesses that employ staff and purchase and depreciate business equipment. These concessions are available to businesses with turnover (gross income) up to $50 million.

Rather than repeat all the detail, we've summarised the salient points and provided a link to the government concessions.

The second fact sheet for economic reports to the coronavirus can be found at this link.

Boosting cash flow for employers
These are tax-free cash payments to your business bank account and are only available to businesses that actively employed staff as at 12 March 2020. The legislation has included integrity measures that prevent businesses from trying to manoeuvre into satisfying the eligibility criteria.

The only action required is to prepare and lodge your monthly or quarterly BAS, where gross wages and tax withheld are disclosed. In other words, no separate forms or submissions are required. The cash is then automatically refunded to your business bank account within two weeks.

Cash payments of up to $100,000 - $50,000 maximum spread between two designated time periods - for the periods between March and June 2020, and a second $50,000 for the periods June to September. You need to employ staff in both periods to be eligible for both payments.

Note, most employers won't receive the full $100,000, as the amount is calculated on PAYG withholding (disclosed as item W2 on your BAS form).

Even if you're not required to withhold tax, you're still eligible for $20,000 over the two time periods.

There are several examples in the government fact sheet explaining how the scheme would work for businesses lodging on a monthly and quarterly basis.

Payroll tax concession
Each state payroll tax authority has announced different concessions around deferring and reducing your payroll tax obligations.

Qld payroll tax information can be found at this link.

NSW payroll tax information can be found at this link.

Victoria payroll tax information can be found at this link.

Increased instant asset write-off and accelerated depreciation
These concessions relate to how asset purchases are deducted in your 2020 year-end tax return, and don't affect your immediate cash flow.

This relates to business equipment costing up to $150,000 (up from $30,000), purchased between 12 March and 30 June 2020. Unfortunately building work (such as an office or surgery fitout) does not qualify for this concession.

The tax office summary of this concession can be found at this link.

In respect to new assets purchased between 12 March 2020 and 30 June 2021, and not otherwise covered by the immediate write-off concession, an immediate deduction of 57.5% (rather than 15%) is available. To qualify, the asset must be new (not second hand) and be purchased and installed for use. Also, unfortunately, building work expenses do not qualify for this concession.

In relation to motor vehicles, you need to have a logbook to evidence business usage, and concessions are reduced for private usage and the luxury car limit.

The tax office summary of this concession can be found at this link.

If you think any of these concessions are available to you, and you have further questions, please don't hesitate to contact our office.

Posted in: Tax   0 Comments

Commit to the line

Posted by Neal Durling on 13 March 2020
Commit to the line

Like everyone, I have passions outside of my family and work; perhaps the greatest of which is mountain biking. Most mornings I'll be on the trails of Mt Coot-tha with a great group of fellow addicts before sunrise - a chance to disconnect my mind, listen to my body and be one with nature.

This morning was no different, but after yet another 24 hours of volatile markets the slippery trail conditions seemed particularly pertinent to what we are all feeling.

What to do? Slow down, vary my line, tip toe through the hazards, or maybe just get off the bike and walk - I don't really need another coffee! Perhaps I should go faster, take a different trail, I think there is a shortcut along here somewhere, I might get ahead or make up some of the time I've lost.

If you ride, you'd know that any of these snap decisions would likely increase the risk of significant injury, and so it is with your investment strategy. The best strategy, assuming you do want the coffee at the end of your ride, is to commit to the line you know so well having ridden it many times before.

Difficult, absolutely - probably the hardest thing in life is make a decision to do or say nothing, but how often has it turned out to be the right choice in the end?

This is not to say you won't slip off your intended line, it might get a little "hairy" when the world seems to slip from under you, but this is not the time to panic. Rather a time to "rebalance" as many should consider over the coming days / weeks with their portfolios, so they remain positioned appropriately when markets turn.

If you haven't ridden this trail before, my recommendation is to make an appointment with a good financial adviser. Part of their job is to make sure that next time it rains you can commit to the line.

Unfortunately you will still slip from time to time, but the coffee will taste good.

Posted in: Investment Stock market   0 Comments

Coronavirus - End of Act 1?

Posted by Neal Durling on 3 March 2020
Coronavirus - End of Act 1?

"When the facts change, I change my mind. What do you do Sir?" - Keynes

After a challenging week, which saw around 10% wiped from equity markets around the world, last night we saw a rally in many markets including the Dow Jones, which closed almost 1,294 points, or 5.1% higher. Not just the largest points gain in history but, more significantly, the highest percentage gain since March 2009. Have you noticed it really is all about the context?

So, while many of our clients are incredibly busy digesting, planning and preparing Australia's medical response, and the rest of us are busy emptying the shelves at Woolworths and Coles, after a difficult week, can we breathe a collective sigh of relief when thinking about our investments?

Unfortunately, I think we all realise the facts remain unclear and conjecture and emotion still fills the void in terms of the likely economic response of our governments and the final effect on earnings and growth.

Although the headlines this morning will likely appear much more positive, their main purpose will still be selling newspapers and regrettably informed by conjecture and emotion.

A "dead-cat bounce" is the term often given to what appears like the beginning of an upward reversal pattern that fails to continue and, eventually, returns to a downward trend that surpasses the previous low. I'll leave it you to decide if we're now viewing this event in the rear-view mirror or if we're merely at the end of Act 1 with more volatility to come. 

As usual, it's been entertaining to read the advice of "expert" commentators. Among the loudest voices we've heard that it's a good time to "steer clear of stocks", or perhaps "a good time to buy", and, my personal favourite, "add to your portfolio, selectively", which I imagine translates into, "abandon your previous portfolio established on sound asset allocation and diversification principals and instead try a bit of opportunistic trading".

Personally, if you have a sound financial plan in place I think it's a very good time to do absolutely nothing but spare a thought for our infectious disease, emergency and other specialists who will likely be at the sharp end of this.

Posted in: Investment   0 Comments

Coronavirus - is it time to panic yet?

Posted by Neal Durling on 27 February 2020
Coronavirus - is it time to panic yet?

"When the facts change, I change my mind. What do you do, Sir?" - Keynes

Experience tells us that events viewed through the windscreen are scary, but appear better once seen in the rear-view mirror.

If clues can be taken from history, Coronavirus will be no different and while there will be significant human cost, investment markets will recover, just as they have following the nine global epidemics we've faced since 1998.

It doesn't matter whether the market is being irrational on the upside (think tech boom or, more recently, Tesla) or the downside, there's always that nagging feeling that "perhaps its different this time".

Certainly, China is a larger economy, global supply chains are more interlinked, global debt is higher and investment markets have enjoyed a sustained period of high returns. But on the other hand, central banks around the world have demonstrated a preparedness to stimulate when required, supply chains are not just limited to China, and once society and investors understand and adjust to a new normal, fear recedes and opportunities emerge.

So, what's the appropriate response?

Well that depends on whether you're an investor or speculator, and whether your investment strategy fits with your investment time horizon and risk profile.  Let's deal with each of these in turn.

If you consider yourself an investor, in my experience, trying to time the market is fraught with problems and a sure-fire way to destroy wealth over time. The idea that you can sell high and buy low sounds great in theory, but will you? Nobody rings a bell at the top and, even if you get that decision right, will you really buy back in when you're feeling at your most vulnerable and fearful?

I thought not, and that makes you perfectly normal.

So what does your timeframe look like? When do you think you'll need to use the capital? Assuming you haven't been investing your tax money as leverage in search of short-term returns, I suspect it is long term and long enough for markets to recover.

This brings us to your risk profile or attitude to investment risk, which tends to feel quite different when markets are performing to when they're retreating. Investing in accordance with your risk profile is fundamental to success as its objective is to ensure you will "stay in your seat" when investment markets do what they're doing now.

In summary, the human cost of the Coronavirus has already been significant, and I'm sure there will be more bad news before we're finally looking at this event in the rear-view mirror. How long, and what the final economic effect on individuals and businesses will be, is anyone's guess. But regardless of whether this results in a further temporary fall of 5%, 20% or higher in equity markets, I do believe that clients who are investors, with the correct timeframe, and invested in accordance with an appropriate risk profile, are best served by remaining disciplined and consistent with their long-term strategies.      

In times like these there are a lot of unknowns and, in the absence of fact, conjecture and emotion usually fill the vacuum. The media and investment markets love conjecture and emotion but long-term portfolio and strategy decisions should always be based on fact.
 

Posted in: Investment   0 Comments

Important legislative change to income protection insurance: What you need to know

Posted by Alex Menzie on 24 February 2020
Important legislative change to income protection insurance: What you need to know

In December last year, The Australian Prudential Regulation Authority (APRA) announced a number of legislative changes to personal insurance. Although designed to make the industry as a whole more sustainable, these changes can have significant impacts on individuals who don't hold individual disability income insurance (i.e  income protection insurance) on 31 March 2020.

We've had a number of clients asking us for more information, so we've compiled a cheat sheet outlining the changes and the potential impact to uninsured individuals.

So what are the changes?
As things presently stand, you're able to obtain income protection insurance for a predetermined amount or agreed value. Typically, when obtaining this insurance, the insurance provider will ask you to provide proof of income. Once the policy is in force as well as at claim time, there are no further income questions. 

From 1st April 2020, you will no longer be able to obtain an income protection policy for a pre-determined agreed amount, but the payments you're eligible to receive are based solely on your income over the preceding 12 months. These changes will impact you regardless of whether you hold income protection personally or through your superannuation.

The only silver lining with these changes is that they won't impact people who already hold 'agreed' value policies on 1st April.

So what does this mean for individuals?
While on face value these changes may seem fair, and are intended to have a positive impact on the long-term sustainability of insurance providers, there are a few situations where clients may unintentionally be adversely impacted.

If you're looking to take an extended holiday, maternity leave, reducing working hours to do further training, or moving into private practice, there is potential for your income to reduce. Additionally, if a health event occurs during one of these periods, the income protection benefit you're eligible to receive will be lower than what you would potentially be eligible for today.

So pull out your income protection policy this weekend and have a look at it. If you have any questions or concerns about how the new changes will impact you, please contact us on (07) 3363 5800 or info@medicalfinanical.com.au

Posted in: Insurance   0 Comments
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Covid-19 Business Concessions

Posted by Matt Connor on 25 March 2020
The Australian and state governments have announced a number of concessions designed ...

Commit to the line

Posted by Neal Durling on 13 March 2020
Like everyone, I have passions outside of my family and work; perhaps the greatest of...

Coronavirus - End of Act 1?

Posted by Neal Durling on 3 March 2020
"When the facts change, I change my mind. What do you do Sir?" - Keynes A...
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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)