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 »

The business impact of the coronavirus

Posted on Thursday, February 27, 2020
Only a week ago most global share markets, including ours, hit record highs. At the time of writing the losses as a result of the coronavirus outbreak amount only to our 2020 gains so far. What's unclear, of course, is how widely the coronavirus will spread and how much damage it will do, leading to uncertainty in financial markets across the world. However, it is worth noting that last year the market volatility was hugely consumed by the trade war between the United States and China, which could have resulted in catastrophic consequences. What happens from here? In my opinion, if the outbreak is not resolved soon central banks globally will step in, so you will see countries providing stimulus in the form of interest rate cuts, tax cuts and monetary policy reform. But lower interest rates won't make a sick person well, or give public health authorities confidence that businesses can reopen. All interest rate cuts can do is lower borrowing costs and help encourage busin ... Read the rest of entry »

Coronavirus is starting to bite businesses

Posted on Wednesday, February 19, 2020
It seems the coronavirus outbreak is starting to bite Australian small businesses. I recently spoke to a landlord on the Gold Coast who says he’s had two Chinese restaurant tenants break their leases in the last fortnight. I also spoke with an international education provider here in Melbourne who told me their business has seen a 40% reduction in inquiries from China, India and Korea, and more than a dozen cancellations from on-campus residents. Real estate agents in Melbourne and Sydney are celebrating booming clearance rates but reporting a significant downturn in Chinese interest, with inquiries in Balwyn and Box Hill at the lowest rates they’d seen in a decade. There’s no doubt it’s been a tough 8-10 weeks across Australia, with devastating bushfires, damaging storms, and now the coronavirus spooking consumers into staying home and not spending money. This, of course, is causing cashflow problems for many small businesses. The key to mitigating cashflow risk is examining care ... Read the rest of entry »