Finance News

"Jobkeeper" payment should help a lot more people sleep easy

Posted on Wednesday, April 1, 2020
The government’s latest tranche of coronavirus stimulus – the “jobkeeper” payment – is going to help a lot of business operators and their employees sleep easier through this crisis.   It’s important to note how monumental this piece of stimulus is. Any business that can prove a 30% drop in earnings will be eligible for a $1500 fortnightly payment for each employee. And in my view, the government will want to pay out this money, so they’re unlikely to be too nit-picky if you can only prove a 27% drop, for example.   Of course, there are concerns around the potential for employers to rort the system, but I think this is unlikely due to the introduction of single-touch payroll for all businesses last year. The ATO now has almost-immediate visibility on business revenue, which will make it easy for them to judge drops in revenue, but also make it difficult for dodgy operators to game the system.   From an employee perspective, all who have been affec ... Read the rest of entry »

Government stimulus: cutting through the noise

Posted on Thursday, March 26, 2020
In these extremely difficult times, it’s easy to get lost in all the noise. As the government works to counter the medical crisis, as well as shore up the economy, they’ve announced multiple rounds of stimulus measures particularly to assist SMEs. One announcement you might have missed, is the major banks are offering loans of up to $250,000 to SMEs, where no repayments will be required for 6 months. The unsecured loans are 50% guaranteed by the government and no interest will be charged unless the funds are actually drawn down. This presents as a potentially once-in-a-lifetime debt consolidation opportunity for businesses. In many cases small business owners are required to offer their family home as collateral to secure business finance, or they may have struggled to get finance at good rates since the Royal Commission. This might be an opportunity to sit back, assess the business’ debt position, and take advantage of an opportunity presented by a horrible situation. Of course, we&r ... Read the rest of entry »

The government's coronavirus stimulus package explained

Posted on Wednesday, March 18, 2020
Last week the government announced a significant stimulus package aimed at keeping small businesses afloat through the coronavirus crisis. But according to many people that I’ve spoken to, the details and the potential impact have been lost among the coronavirus noise. So here’s a breakdown. Basically the stimulus package amounts to a tax break for small businesses that employ staff. This is the key. In order to be eligible, a business must employ at least one staff member. The tax break is equal to a 50% rebate on tax paid up to $50,000. This means a maximum rebate of $25,000. As an example, let’s consider a business that has three employees: -       Employee 1 earns $100,000, so the employer pays $25,000 tax -       Employee 2 earns $80,000, so the employer pays $18,000 tax -       Employee 3 earns $50,000, so the employer pays $7,500 tax -       The employer&rsqu ... Read the rest of entry »

A whirlwind week as coronavirus takes its toll

Posted on Wednesday, March 11, 2020
It’s been a whirlwind week for our markets as the impact of the coronavirus outbreak continues to grow.   Monday was the worst day in a decade for our share market as more than $100 billion was wiped. To that point we’d lost a full year of gains in just 35 days.   This is obviously bad news for those of us deriving income from investments or superannuation as there have been significant falls of up to 20%.   The flipside is that petrol prices are falling and will continue to do so, so we’ll pay less at the bowser. This, combined with some interest rate relief may serve to stimulate a small amount of spending confidence, as people feel a slight easing on the monthly budget.   Monday’s trading in the US saw the biggest single day fall since the GFC, but the good news is that Tuesday’s local trading brought some relief, with the share market making a 3% gain.   Our general advice to clients has been to stay the course and trust in yo ... Read the rest of entry »

Interest rates cut ✅ Cuts passed on ✅ Economic stimulus ✅

Posted on Wednesday, March 4, 2020
As we predicted, the RBA has cut interest rates to even lower historic lows. The difference is that for the first time in a long time, the big banks have passed the cut on immediately and in full. There have also been some announcements around small business loan cuts from the banks, as well as a payroll tax deferral from the Queensland government, which I hope other state governments will emulate. All this amounts to stimulus, in an attempt by governments to give consumers and businesses confidence to return to spending. There is no doubt that the coronavirus has impacted pretty much every small business in Australia already, whether it’s directly through issues dealing with China, or indirectly through the downturn in confidence. This downturn is perfectly exemplified by the absurd stockpiling of toilet paper that has occurred in recent days, as Australians seemingly prepare for the coronavirus apocalypse, contrary to all government advice. Furthermore, I’ve recently spoken to small busines ... Read the rest of entry »
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