Life’s busier than ever for small business owners. Scammers hope you’re too busy to check what they’re saying so you’ll hand over your personal or financial information.

While we’re supporting you through COVID-19 (coronavirus), the ATO is also working behind the scenes to support you and identify scammers who are trying to steal your money or identity while you’re most vulnerable.

Look out for these tell-tale signs of tax scams if you get a suspicious call, message or request.

We will never:

• send an email or SMS with a hyperlink to our online services such as myGov
• request personal identifying information via a return email unless you’ve agreed to engage with us this way
• threaten you with immediate arrest and insist you stay on the line until you make a payment
• prevent you from discussing your tax affairs with your registered tax professional
• request payment of a debt via iTunes, Google Play cards or other vouchers, cryptocurrency, cardless cash transfer, offshore wire transfer or into a bank account not held by the Reserve Bank of Australia
• ask you to pay a fee to receive a refund.

If you’re ever unsure about an ATO communication, do not reply. Phone the ATO scam hotline on 1800 008 540, visit ato.gov.au/scams , or speak to your agent or trusted adviser.

Next step:

• Verify or report a scam

If you are unsure, reach out to your financial adviser or accountant and check before taking action. The JBS Financial team are here to help, reach out here.

How to reduce expenses after a job loss and get back in the driver’s seat of your finances.

With many thousands of Australians experiencing job losses and reduced hours as a result of the COVID-19 (coronavirus) pandemic, many will need to take a look at their expenses to continue living within their means.

The average Australian household spends almost $75,000 each year on living expenses, excluding major expenses such as rent or insurance. That adds up to between $1,100 and $1,700 per household each week that’s spent on personal care, pampering our pets, transport, alcohol, fashion and more.

The good news is that there are some simple ways to cut back on these expenses. Whether you need to slash your costs significantly or simply tighten up your spending after a job loss, here’s where to start.

1. Know where you’re spending money

The first step is to evaluate where your finances stand today. If you already have a working budget, use it as a starting point, but expect that you may need to make some adjustments if your financial circumstances have changed. Itemise your monthly expenses as much as possible and separate out essential needs like housing, food and utilities, versus “wants” like entertainment, takeaway meals or online shopping. This will help you to see where you can realistically cut back, find cheaper alternatives and help save extra money.

2. Cut back housing expenses

When you need to make immediate changes to your budget, starting with the largest targets can have a big impact. For many of us, this means housing costs – either a mortgage or rental payments, as approximately 20% of Australians’ gross household income is spent on housing. If you’re paying off your home, many banks are offering “mortgage holidays” to clients experiencing financial challenges.

If you’re ahead on your repayments, there may be other options, including reducing repayments or using your offset or redraw facilities to get access to additional money. You might also consider temporarily switching from a principal-and-interest mortgage, to one that’s interest-only.

Paying off only the interest will instantly reduce your repayment amount. However, it may also take you longer to pay off the mortgage as a whole. Speak to your financial adviser or lender to discuss which options are right for your circumstances.

If you rent and have been impacted financially you may seek a rental reduction. The Australian government has agreed to a six-month moratorium on at least some evictions. The Tenants’ Union is posting up-to-date information about landlord obligations during this crisis, as well as pointers for how to negotiate with your landlord.

3. Save money on your phone and internet

Next, cast a ruthless eye over regular utilities like phone and internet bills. Many telco companies make it easy to bundle all your devices into a single plan, which can work out cheaper in the long run. If you and your family have separate mobile and data plans with different providers, look at whether consolidating them can help you save.

On the other hand, you might find you’re still paying for old devices that are attached to a bundled plan. Take a close look at all your plan inclusions and get rid of any phones or tablets that are sitting unused in a drawer.

You may also discover that you can get by with less data on certain devices, because you’re using them through your home network rather than being out and about. If you’re out of contract, talk to your telco about how much you can save by cutting back on your wireless data.

4. Trim the costs on food

Until recently, Australians were spending around $11.7 billion a year at restaurants and $10.6 billion on takeaways. While you’re probably not eating out right now, takeaway food can still make a hole in your budget, so use the extra time at home as an opportunity to get into the kitchen.

Take a savvy approach to home cooking by adding more vegetables and legumes to your diet, and staying away from expensive cuts of meat. Avoid shopping at the grocery store when you’re hungry, buy home-brand products where possible and always take a shopping list. Try cooking bigger batches of food so you have enough for a couple of meals, without doubling the cost (and always eat the leftovers). Be mindful of waste at home, the average Australian household throws away almost 300kg of food per person each year.

5. Find value in your lifestyle

Now is an opportunity to consider what you value most. By looking closely at your current spending, you’ll probably find ongoing monthly payments for expenses that are really not important to your household: music lessons for a child who hates the instrument; subscriptions to publications no one’s regularly reading; apps and software that are on auto-renew payment.

More than 14.5 million Australians – that’s over half of us – have at least one pay TV subscription in their home. If you still keep returning to free-to-air, it’s time to reassess. Cutting out things you don’t use or value is painless and gives you extra money that you can better use elsewhere.

There will also be areas where you can get the same value for less money. You hold a gym membership to be healthy, but while they’re no-go zones, freeze your membership payments and look for inexpensive or free at-home workouts instead. The same applies to beauty treatments like hair colouring and manicures, which can be done at home.

6. Forego any guilty pleasures

In tough times, it can be tempting to find solace in an occasional treat or guilty pleasure. But when you look at the expense, those seemingly cheap thrills could be costing you a lot of money. For example, Australians spend $14.9 billion each year on alcohol and $21.5 billion on clothing and shoes.

Be honest about where you’re most likely to splurge and remove any triggers like email newsletters (hit unsubscribe) or social media (unfollow those too-tempting accounts).

Now you know some of the steps you can take to help yourself, let us help you. Firstly, take a look at our Money Makeover series on our website. Next book a chat with the JBS Financial team so we can help you protect what you’ve worked hard to grow – your retirement nest egg.

Source: AMP

Introduction

The blanket coverage of coronavirus and its impact on the economy can lead to a lot of confusion. Some reports are hopeful of anti-viral drugs, others say a vaccine is at least a year away. There is talk of curve flattening but still rising cases and deaths. There is news of an easing in lockdowns but also worries about “second waves.”

All this against a backdrop of collapsing economic data and surging unemployment. Some prognosticators say now is a great buying opportunity for investors whereas others see more financial pain ahead.

This is a horrible time for humanity and particularly those directly affected by coronavirus. If ever there was a time to turn down the noise, this is it. Here is a summary of where we are currently at.

The bad news

• The reported number of coronavirus cases globally is still rising and has now gone through 2.5 million.
• The reported death rate is still rising and is now up to 6.9%.
• Many worry about a “second wave” of cases. This occurred in the 1918 Spanish flu outbreak, and Singapore and Japan which had been cited as models for containment are now cited as examples of this.
• Most medical experts still say a vaccine may be a year or more away.
• In the absence of a vaccine, there is some worry about coronavirus outbreaks occurring every winter as it migrates around the world.
• Economic activity data is literally falling off a cliff. This was highlighted by the IMF’s forecast for a contraction in the global economy of 3% this year and in advanced economies of around 6%. This masks a likely 10 to 15% slump in GDP centred on the June quarter. Falls of that magnitude have not been seen since the Great Depression. The collapse in economic activity in the US and Australia is highlighted by weekly economic activity trackers we have constructed based on data for things like restaurant bookings, energy usage, confidence, foot traffic and jobs.
• We are constantly hearing forecasts of unemployment going to 10%, 15% and maybe even 30% in the US (which does not have the benefit of Australian JobKeeper wage subsidies – if you are having a salary paid by JobKeeper then you will not be unemployed).
• This in turn is creating much consternation around whether there will be an economy left once the shutdowns end and/or how governments will get their debt down.
• Finally, the blame game is on. While partly politically motivated, US China tensions seem on the rise again. 

The good news

• While the total number of coronavirus cases is rising, new cases appear to be levelling off or in decline.
• Numerous European countries, led by Italy, look to be following the same path as China which saw a blowout in new cases, a lockdown followed 2-3 weeks later by a peak in new cases and then falling new cases. Australia appears to have been very successful in following this path (with the peak coming faster) and the US now seems to be following the same path, albeit its yet to show a decent downtrend in new cases. Social distancing clearly works!
• Following this, the focus is shifting towards an easing of lockdowns. Various European countries and New Zealand have already announced some easing, allowing some shops to open/activities to occur. The US has released guidelines for states to move through a three phased reopening if they meet various criteria (in terms of falling new cases and hospitals coping) before moving to each new phase.
• While Australia’s PM Scott Morrison has indicated that current restrictions will remain broadly in place for another few weeks, he has indicated three criteria for an easing in restrictions: better testing; better contact tracing; and confidence in containing outbreaks all of which makes sense given the risks Australia faces coming into winter. Of course, successful antivirals and/or a vaccine would make it all a lot easier, but we can’t rely on either just yet.
• Most countries talking of easing are well aware of the risk of a second wave. Hence a focus on phased easing only once certain criteria – around testing, new cases and quarantining – have been met. This is very different to what happened in relation to Spanish influenza where there really wasn’t any testing. For Australia this is likely to mean a gradual opening up from May. In the absence of a vaccine, full international travel is likely to be the last thing to return. That’s not great but given that in net terms its worth less than 0.5% of GDP to the Australian economy, it’s trivial compared to the 10-15% hit that’s come from shutting or partially shutting about 25% of the economy as it would be this mainly domestically driven activity that would bounce back as the shutdown is eased.
• Fiscal and monetary stimulus has been ramped up to the point that they should help minimise second round effects on economies enabling them to bounce back faster. This is particularly the case in Australia where the focus has been on job subsidies to preserve jobs, support businesses, and low-cost RBA funding has enabled banks to offer loan payment holidays. Yes, there may be longer term issues in paying down debt, but they are small compared to the cost of allowing a bigger and deeper hit to the economy from not protecting businesses and incomes through the shutdown.

If, as appears likely, an easing of the lockdowns becomes common place in May/June, then April or maybe May should be the low point in economic data much as February was in China. This does not mean that things will quickly bounce back to normal – some businesses will not reopen, uncertainty will linger, debt levels will be higher, and business models will have to adapt to different ways of doing things around working and shopping.

On our forecasts it will look like a deep V recovery in terms of growth rates, but looked at in terms of the level of economic activity it will take a lot longer to get back to normal and this will mean that it will take a while to get unemployment down – from a likely peak in Australia of around 10%. But at least growth will be able to return and spare capacity and high unemployment will mean that it will take a while for inflation to pick up and so low rates will be with us for a long time.

This is all very different to five or six weeks ago when there was talk of six-month lockdowns, no confidence as to whether they would work, and the policy response was seen as inadequate.

What does it mean for investors?

From their high in February to their low around 23 March, global shares fell 34% and Australian shares lost 37% as all the news was bleak. Since that low to their recent high, shares have had a 20% plus rally helped by policy stimulus and signs of coronavirus curve flattening. But this strong rally has left them a bit vulnerable in the short term – particularly as we have now entered a period which is likely to be see very weak economic data and news on profits. The very short-term outlook for shares is uncertain and a re-test of the March low cannot be ruled out.

However, shares are likely to be higher on a 1-2 year horizon as evidence of the curve flattening and easing shutdowns, combined with policy stimulus, ultimately see a return to growth against a background of still very low interest rates and bond yields.

From a fundamental investment point of view, the historical experience that covers recessions, wars and even pandemics (in 1918) tells us that the long-term trend in shares and other growth assets is up and that trying to time bottoms is always very hard.

No one will ring the bell at the bottom, which by definition will come at a time of maximum bearishness when all the news is horrible. Maybe the low was back in March, maybe it wasn’t. So, a good approach for long-term investors is to average into markets after bear market falls over several months.

What does all this mean for you? Whether you are entering the investment market for the first time or you’ve been an investor for some time, it’s important to understand the risks and know what your goals are. Book a chat with the JBS Financial team and discuss what is right for you.

Source: Dr Shane Oliver, Head of Investment Strategy & Chief Economist, AMP Capital. April 2020.

Have you received an unexpected email or text asking you to ‘confirm’ personal details by clicking on a link or opening an attachment? It could be an attempt to steal your information for financial gain. Identity theft is on the rise, so it’s important to know how to protect yourself.

It’s hard to believe people may be trawling through your garbage or waiting for you to click on an email so they can pick up some personal information about you. But the unfortunate reality is that identity theft is a big problem and one that’s growing over time.

According to the Australian Federal Police (AFP), once criminals have your information, they can apply for a credit card or other financial services, open a bank account, run up debts or obtain a loan – all in your name. They could also apply for a job, government benefits, a mobile phone contract, a driving licence or a passport in your name.

The more technology advances, the better scammers get at separating people from their money – and you may become a victim without even knowing it. Some people only realise when bank statements don’t arrive or they are receiving no post at all.

That’s because the fraudsters have redirected their mail to themselves. Others find out when they see items on their bank statements that they don’t recognise or receive letters from solicitors or debt collectors for loans or accounts that have been set up in their name.

The rising costs                                                                                                                  

Of all the types of financial fraud and other scams reported to Scamwatch in 2017, 13.3% involved a person losing their personal information, with total financial losses of $11.8 million. By comparison, data for the year to 31 October 2018 shows an increase in cases to 16.1%, with victims of identity theft out of pocket by $20.4 million as a result.

How to protect yourself

To protect your identity and personal information, you should follow these tips from Scamwatch:

• Be alert to suspicious texts or emails. Avoid opening them where possible. If a message is worded to try and make you act with urgency, delete it immediately.
• If you want to verify that a message is legitimate, look up the contact details for the organisation and use these to get in touch. Do not use the contact details provided in the message sent to you.
• Never send money or give account details or copies of personal documents to anyone you don’t know or trust.
• Choose passwords that are difficult for others to guess and update them regularly. Don’t use the same password for every account and don’t share them with anyone.
• Secure your networks and devices with anti-virus software and a good firewall. Avoid using public computers or Wi-Fi hotspots when you’re accessing or providing personal information.
• Only make online payments using a secure payment service. Look for a URL starting with ‘https’ and a closed padlock symbol. Or use a payment provider such as PayPal.
• Lock up your mailbox and shred or destroy any documents containing personal information.
• Accessing your credit report is one way of checking that no one is using your name to borrow money. Visit the ASIC MoneySmart website to find out how to access your credit report.

What to do if you’ve been targeted

Any type of identity theft can be reported to the police as a crime. Applying for a Commonwealth Victims’ Certificate can help you support your claim that you are a victim of identity crime. Support is also available from IDCARE, a free service that will help you limit the impact identity theft.

If you have been a victim of identity crime and you still have your card, the AFP says you shouldn’t have to pay for anything bought on it without your permission (subject to the terms and conditions of your account).

If your card has been reported lost or stolen, the AFP says you will usually not have to pay, unless it can be shown that you have acted fraudulently or without reasonable care, for example, by keeping your PIN number with your card.

When handling your sensitive documents and security information you need to take every care. If you’ve been targeted please take note of the steps outlined above. If you have any concerns about the handling of your private information, please reach out to the JBS Financial team here.

Source: FPA Money & Life

Statistics show that less than half of all small businesses survive after 4 years. Most small businesses have low cash buffers and fixed expenses like rent, utilities, and employee wages. So, any disruption to cash flow is a grave threat. And that’s without a pandemic.

Over the last 2 weeks, we brought you parts 1 and 2 on how the Government plans to support individuals and households, and small businesses. In this 3^rd and final article in the series, we’ll take a look at what support is available to meet the immediate cash flow needs of businesses.

A lifeline for survival

As the fear of uncertainty continues to blanket over the economy, small and medium enterprises are conserving cash, re-assessing, and prioritising. Lack of funds can paralyse any business, so access to resources is readily available to ensure survival.

Together with the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA), the Australian Government has released a series of programs to support the flow of credit.

Coronavirus SME Guarantee Scheme

What is it?

Under the Scheme, the Government will provide a 50% guarantee over the value of loans to Small and Medium Enterprise (SME) lenders. It aims to enhance the lender’s willingness and ability to provide credit. The Scheme commenced in early April and will be available for new loans made by participating lenders until 30^th September 2020.

What are the terms?

• Maximum loan size is $250,000 per borrower
• Loan duration is up to 3 years, with a repayment-free period of 6 months
• The loan is unsecured, so assets are not required as security
• The loan will be subject to the lender’s usual credit assessment processes.

Who is eligible to apply?

Businesses with a turnover of up to $50 million can apply. Lenders who wish to participate are invited to complete an Expression of Interest form.

Quick and efficient access to credit

What is it?

This measure will provide a temporary exemption for responsible lending obligations for lenders and will apply to new credit, credit limit increases, and credit variations and restructures.

Who is eligible?

All businesses that meet the small business definition.

RBA reducing the cost of credit

What is it?

This package is designed to reduce borrowing costs. The RBA has released a funding facility for the banking system so that banks will have access to at least $90 billion in funding at a fixed interest rate of 0.25%. By lowering the funding costs for banks, interest rates for borrowers will also be reduced.

Who is eligible?

Households and businesses.

Support for non-ADI and smaller ADI lenders in the securitisation market

What is it?

Authorised Deposit-Taking Institutions (ADI) are banks or financial institutions that can accept deposits from members of the public. An ADI license is required to offer deposit products including term deposits, savings accounts, cash management accounts, etc.

The Government is providing the Australian Office of Financial Management (AOFM) with $15 billion to invest in structured finance markets through purchasing assets that support small businesses (like unsecured and secured loans) and consumer lending (credit cards and personal loans).

This measure will assist smaller lenders to maintain access to funding to keep mortgages and other borrowing costs for businesses low.

Ensuring banks are well-placed to lend

What is it?

APRA announced temporary changes to expectations regarding bank capital ratios to support banks’ lending to customers, particularly if they wish to take advantage of the new facility being offered by the RBA.

Conclusion

This concludes our 3-part series. Here again, are the key measures released in the fight to save the Australian economy from collapse:

1. Support for individuals and households. Financial assistance in the form of wage subsidy, income support payments for the unemployed and pensioners, and temporary early release of superannuation.
2. Support for businesses. This includes measures for a temporary cash flow boost, a safety net for financially-distressed businesses, investment incentives, and wage subsidies for apprentices and trainees.
3. Supporting the flow of credit. To better manage the impact of the Coronavirus and help support activity, these reforms are designed to encourage lending to businesses through low-cost funding and cutting red tape.

While many are comparing the current pandemic to the Global Financial Crisis, it’s a completely different problem that needs a completely different solution. Will the measures work? Let’s hope so.

Let’s check in on each other. Let’s stay home and save lives.

We’re in this together. If you need help working out what initiatives you can access please reach out to the JBS Financial team for help here.

Here are links to some useful resources:

https://www.ruok.org.au/

https://www.health.gov.au/

https://headspace.org.au/

https://mindspot.org.au/

https://www.ato.gov.au/

https://rba.gov.au/

https://www.apra.gov.au/

Small Business Counts report (2019)

If the threat of a large-scale outbreak of an infectious disease isn’t enough to worry about, the financial implications of coronavirus is also making investors nervous.

You may have read about how the shutdown of industry across China, effectively the world’s manufacturing hub, risks hurting the global economy. You may also have heard about large falls in global stock markets, in addition to the price of commodities such as oil. It feels like there’s been no shortage of alarming twists.

Despite this, a market correction can even be a good thing in the long run. In this article, we share how coronavirus may impact investments and how investors can respond to market shocks.

Why does coronavirus affect stock markets?

There are a few reasons. The first is because it is impacting the ability of companies to produce goods. For example, Apple has already said that factory shutdowns in China will prevent it from getting hold of some of the parts it needs to make iPhones.

The second is in how it affects demand. For example, consumers and companies are cutting back on unnecessary travel, hurting the travel and tourism sectors. Many other sectors are also experiencing a fall in demand, such as the hospitality industry, as more organisations are encouraging staff to work from home.

The third is the impact on investors’ willingness to take risk. Before the coronavirus crisis, the stock market had been performing very well and many investors were sitting on considerable profits. This was despite economic growth having been relatively weak for years.

Many investors had been uncomfortable with how far stocks had risen against this backdrop. Coronavirus has given them the reason they were looking for to bank some of those profits and reduce their exposure to the stock market.

What is the silver lining for investors?

Those with a longer investment horizon can worry less as investing is a long-term game. That is not to say someone with investments should just ignore current volatility though. There are some sensible steps to take, and there might even be opportunities for the brave.

While negative headlines about the stock market can be off-putting, investors should be grateful for them. Every dollar invested today could buy considerably more shares than it would have done at the start of the year.

Five sensible steps to protect your investments 

1. Don’t panic – think long-term

It’s important to make considered decisions when adjusting your investment portfolio. An emotional response will very rarely benefit your savings. By staying invested now you could benefit when the market picks up again.

2. Reassess your attitude to risk

What these episodes can usefully do is prompt a re-evaluation of how much risk we are willing to take. It’s all very well charging into the stock market when it’s been going up for years: these corrections remind us there can suddenly be a downside. Many of us will take some risk in the hunt for higher returns, and there are ways to moderate that risk.

3. Reassess your portfolio

Are you happy with the mix of risk? Check you are happy with the proportion of your savings that are in the stock market as opposed to cash or government bonds, and diversify if you are concerned. Some funds offer ready-made diversification by spreading across asset classes. Do your research. You could de-risk yourself by simply holding more cash in savings accounts but be aware of the effect of inflation versus interest rates.

4. Diversify your exposure to the stock market

Even within the portion of your portfolio that is invested in the stock market, be sure that it is diversified in itself. Some people have pet regions or sectors and over-reliance on them can be a set-up for big losses if things go wrong. Either diversify yourself or choose managed funds that are themselves diversified.

5. Drip-feed

By investing a regular amount each month you take away a lot of risk – it is the opposite of trying to time the market. In times of stock market falls the amount you invest will be picking up more units. This means you will ride out much of any market volatility.

Making an investment into the share market takes careful consideration. We can provide you with the investment and financial planning strategies—and sympathetic ear—that you may need right now. Reach out to the JBS Financial team here.

Source: Schroders, March 2020

A nation of small businesses

If you suddenly have to shut your doors and your business revenue becomes a fraction of what it used to be, maybe even zero, and you have to continue paying rent and your workers, how long will you survive?

When a small business runs out of cash, the business dies. So, we have a real crisis on our hands.

Accounting for 98% of all Australian businesses and employing 2.2 million people, the engine room of our economy is on the brink of disaster. So, the Government has announced a stimulus that will give small business owners some encouragement.

Previously, we brought you part 1 of a 3-part series on how the Government will support individuals and households. In this article, we turn our attention to the backbone of the Australian economy – small businesses.

The numbers

At this moment, we are realising how important small business is in our economic landscape. According to a recent statistics report by the Australian Small Business and Family Enterprise Ombudsman:

• Small business accounts for nearly 98% of all Australian businesses, employing 2.2 million people
• Out of a total of 2.3 million businesses, 878,000 employ
• Of the 878,000 that employ, 823,000 are small businesses (94%)
• Of the 823,000 small businesses, 628,000 are micro-businesses (76%)
• 62% of Australian businesses are sole traders with no employees
• 27% are micro-businesses with 1-4 employees
• 5% are small businesses with 5-19 employees
• Over 4 years, the survival of non-employing businesses is at 59.6% which is less than the average of 64.5%. In comparison, large businesses have a survival rate of 85.6%
• The highest proportion of business owners is in the 45-59 age group
• The greatest barrier to innovation faced by micro and small businesses is access to funds (23%) and lack of skills (22.6%)

Support for businesses

To manage cash flow and keep people employed, the Australian Government has released the following support package.

JobKeeper Payment

We’ve included this in our Part 1, here it is again.

What is it?

This is a wage subsidy of $1,500 per fortnight, per employee, available to businesses and not-for-profits significantly impacted by the Coronavirus, so they can continue paying their employees. Payments will be made to the employer monthly in arrears by the Australian Taxation Office (ATO). The subsidy starts on 30 March 2020, with the first payment to be received by the employer in the first week of May.

Who is eligible to claim?

• Businesses with an annual turnover of less than $1 billion where their turnover has fallen or will likely fall by 30% or more; or
• Businesses with an annual turnover of more than $1 billion where their turnover has fallen or will likely fall by 50% or more; or
• Self-employed individuals, if they meet the turnover tests mentioned above; or
• Not-for-profits registered with the Australian Charities and Not-for-Profit Commission (ACNC) if their turnover has or will likely fall by 15% or more, relative to a comparative period.

Where you have more than 1 employer, only 1 employer will be eligible to receive the payment.

How do you claim?

Eligible employers must elect to participate by applying to the ATO as, at the time of writing, this can be done by visiting the ATO website and registering for JobKeeper updates.

Cash flow support for small and medium businesses

What is it?

This temporary cash flow boost is done through 2 sets of payments from 28 April 2020 to support employers to retain employees. The payments will be a minimum of $20,000 and up to $100,000, delivered through credits in the activity statement system when the activity statements are lodged.

The first cash flow boost is based on the amount of the business PAYG withholding. The credit will be equal to 100% of the amount withheld, with a minimum of $10,000 even if the amount withheld is zero.

The second cash flow boost is based on the value of the initial cash flow boost at a rate of 50% (for quarterly lodgers) and 25% (for monthly lodgers).

Who is eligible to claim?

• A small or medium business that:
  • held an ABN on 12 March 2020 and continue to be active;
  • has a turnover under $50 million;
  • made eligible payments (like salary, wages, director fees, retirement/termination payments, compensation payments, voluntary withholding from payments to contractors) that the business is required to withhold from.
  • derived business income in the 2018-19 income year and lodged its 2019 tax return on or before 12 March 2020;
  • made GST taxable, GST-free or input-taxed sales in a previous tax period and lodged the relevant activity statement on or before 12 March 2020.
• Not-for-profit organisations that:
  • held an active ABN on 12 March 2020;
  • have a turnover of less than $50 million; and
  • made payments to employees.
• Charities registered with the Australian Charities and Not-for-profits Commission if they meet the eligibility criteria.

How do you claim?

Businesses don’t need to apply. It will automatically be applied to the accounts of eligible businesses when activity statements are lodged for the relevant periods. The cash payments will initially be applied to reduce liabilities to the ATO, however, if the business is in a refund position, the refund will be received within 14 days.

Temporary relief for financially-distressed businesses

What is it?

This package aims to reduce the threat of insolvency and wind up for businesses struggling due to the Coronavirus. They include:

Temporary higher thresholds and more time to respond to demand from creditors

• For a period of 6 months for companies, there will be a higher threshold from $2,000 to $20,000 and more time to respond to demands from creditors from 21 days to 6 months;
• For a period of 6 months for individuals, the minimum amount of debt required for a creditor to initiate bankruptcy proceedings will be increased from $5,000 to $20,000 and time to respond to demands will also be increased from 21 days to 6 months; and
• For debtors who make a declaration of intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.

Temporary relief from directors’ personal liability for trading while insolvent

• For 6 months, directors will be relieved from personal liability for insolvent trading;
• Cases of dishonesty and fraud will continue to be subject to criminal penalties; and
• Any debts incurred will still be payable.

Treasurer to be given a temporary instrument-making power under the Corporations Act (the “Act”)

• For 6 months, power will be granted to the Treasurer to amend provisions of the Act or modify obligations, to provide relief from obligations to enable compliance with legal requirements.

Increasing the instant asset write-off

What is it?

The Instant Asset Write-Off (IAWO) threshold will be increased from $30,000 to $150,000. This means businesses will be able to immediately deduct purchases of eligible assets up to $150,000 for new or second-hand assets. From 1 July 2020, the IAWO for small businesses with a turnover of less than $10 million will revert to $1,000.

Who is eligible to claim?

Business with a turnover threshold of up to $500 million (up from $50 million) can apply.

Backing business investment

What is it?

For 15 months, depreciation deductions will be accelerated so that eligible businesses get a deduction of 50% of the cost of new assets first used or installed by 30 June 2021.

Who is eligible to claim?

Businesses with turnover below $500 million purchasing new assets.

Supporting apprentices and trainees

What is it?

It’s a wage subsidy of 50% of the apprentice’s or trainee’s wage paid between 1 January 2020 and 30 September 2020, up to a maximum of $21,000 per eligible apprentice or trainee.

Who is eligible to claim?

Small businesses employing less than 20 employees who retain an apprentice or trainee.

How do you claim?

Employers can register from early April 2020, with final claims to be lodged by 31 December 2020.

Assistance for severely affected regions and sectors

Support for Coronavirus-affected regions communities and industries

What is it?

The Government has set aside a total of $1 billion to support regions, communities, and industries disproportionately affected by the impact of the Coronavirus, including industries such as tourism, agriculture, and education, through existing or newly-established initiatives or programs. There is no set date at the time of writing. Some of the measures include:

• Waiving of the Environmental Management Charge for tourism businesses that operate in the Great Barrier Reef Marine Park;
• Assistance to help businesses identify alternative export markets or those affected by disruptions in the supply chain; and
• Promotion of tourism.

Who is eligible?

The affected industries and communities will be working with the Deputy Prime Minister to develop the plans.

Support for Australian airlines and airports

What is it?

The package will be in the form of relief from a range of taxes and Government charges to reduce the impact on international and domestic air travel including reimbursement of aviation fuel taxes, relief from Airservices Australia charges, rebate for Domestic Aviation Security, and additional funding for Regional Aviation Security. The package will be in place for 8 months from 1 February 2020 to 30 September 2020.

Who is eligible?

Businesses conducting commercial and aeromedical aircraft operations who are subject to taxes and charges, covered by the package.

Australian Tax Office (ATO) Administrative Relief

What is it?

Similar to the relief provided following the bushfires, the ATO will provide relief for taxpayers affected by the pandemic, on an individual basis. This includes deferring tax payment for up to 6 months, allowing variation to PAYG instalment amounts to zero for the March 2020 quarter, and setting up temporary shop fronts to assist small businesses. Also, the ATO will look to enhance its presence in other regions to allow people to learn more about the relief options.

Who is eligible?

All taxpayers affected by the outbreak can contact the ATO on 1800 806 218 or visit the website on www.ato.gov.au.

Final Word

In the wake of the Coronavirus outbreak, some small businesses are closing their doors, maybe permanently, but there’s hope. What our Government wants to do is to ensure that small businesses have a cash lifeline to last them until they can open up again.

Most businesses are not well-prepared to come into this crisis. What’s important is knowing what is available and then understanding how to access support.

Just like family, employees need to be taken care of by business owners. We should worry about the economy after we worry about our people.

Stay safe. Stay healthy. Let’s look out for each other.

Here are links to some useful resources:

https://www.ruok.org.au/

https://www.health.gov.au/

https://headspace.org.au/

https://mindspot.org.au/

https://www.ato.gov.au/

Small Business Counts report (2019) https://www.asbfeo.gov.au/sites/default/files/documents/ASBFEO-small-business-counts2019.pdf

Australian Small Business and Family Enterprise Ombudsman: https://www.asbfeo.gov.au

Life constantly challenges us with unknowns, yet some of these hit closer to home and harder than others in their impact. 

The coronavirus is unprecedented in our lifetimes, so we are charting new territory in the world’s response to this crisis. The uncertainty around its far-reaching impact is creating fear for many around the globe, as governments act to minimise the spread of the virus.

Due to the fast changing nature of the government response to this momentous challenge, there are significant unknowns. There are short term unknowns around the government’s evolving response to the crisis and you could be concerned about the stability of your work situation. And longer term about how will this impact you into the future? Perhaps you’re wondering when you will be able to retire as your super balance takes a dive? Will the economy and businesses survive the disruption? How will you be supported through this period?

You are not alone in experiencing these fears. As humans we like to deal with ‘knowns’ and plan accordingly, rather than be at the mercy of uncertainty and instability. Whether it’s something as big as the coronavirus or a smaller unknown, there are however ways we can become more comfortable with uncertainty.

Planning for the unknowns

Planning for the unknowns sounds like a contradiction. After all, if we don’t know how, when and if we will be impacted, how can we plan for it? Yet planning for potential outcomes can help us feel more in control and be one less worry to deal with.

You don’t need to think of every possible eventuality, but given the challenges society is facing, consider what the implications mean for you and your family. What can you do to minimise the impact?

Then the next, possibly more challenging thing to do, is to accept that you can’t plan for all eventualities and acknowledge that there may be some things out of your control. Focus your attention on what you are able to have some control over and then look at narrowing the list down to what really matters most to you, letting the rest of the ‘noise’ dissipate.

Stay positive and engender connection

The situation is changing rapidly and it’s tempting to constantly monitor news feeds, as it can feel more empowering to feel like you know what is going on. Just be mindful of taking breaks from the updates if they are fuelling feelings of uncertainty. Step outside and enjoy a little fresh air, call a friend or just do something small that gives you a bit of a breather and a little perspective.

The societal impact of the coronavirus is huge and is having a significant impact effect on many of our lives. It’s important to remember that these changes aren’t necessarily permanent and that we are all in this together.

Connection is important in helping us feel grounded and supported during a period of uncertainty. This crisis is first and foremost a health and human crisis, so we need to be respectful of not only our own health, but those of others. We can help those who are more vulnerable. There are many good news stories arising of people assisting and connecting with their neighbours and those in need.

Understanding the impact on the markets

Markets have experienced a significant downward trend as the impact of the coronavirus continues to develop across the globe. This has had a significant impact on investments and more broadly on superannuation account balances.

While it is understandable to feel unsettled, consider your long term financial goals. Avoid making rash decisions based on fear, as this can crystallise your losses and put you on the sidelines for when the market recovers and as history shows, it always does.

Especially during this period of uncertainty, we hope you are keeping well and looking after yourself. We are here for you every step of the way. Don’t hesitate to get in touch with us if  need assistance – contact us here.

It’s a different world

The Coronavirus pandemic has disrupted every aspect of our daily lives from workplace closures to schooling children at home, from lockdowns to panic buying.

Globally, as of 13 April 2020, there have been 1,776,867 confirmed cases, including 111,828 deaths reported to the World Health Organisation. In Australia, from Jan 26 to 13 Apr 2020, there have been 6,322 confirmed cases with 61 deaths.

Costing more than $320 billion, the Government has released economic relief to support affected workers, businesses and the broader community.

This is part 1 of a 3-part series on how the Government will support individuals and households, businesses, and the flow of credit in the Australian economy. We’ll explain what’s been announced, how it may affect you, and what to do next.

Here are the key measures released:

1. Support for individuals and households. Financial assistance in the form of wage subsidy, income support payments for the unemployed and pensioners, and temporary early release of superannuation.
2. Support for businesses. This includes measures for a temporary cash flow boost, a safety net for financially-distressed businesses, investment incentives, and wage subsidies for apprentices and trainees.
3. Supporting the flow of credit. To better manage the impact of the Coronavirus and help support activity, these reforms are designed to encourage lending to businesses through low-cost funding and cutting red tape.

How the pandemic affected our economy and the rest of the world

These are challenging times – for everyone. The outbreak of the Coronavirus poses significant health impacts, but also major economic consequences.

A decline in economic activity and financial markets

While the initial effect was felt in the Chinese economy, lockdowns announced in major economies in Europe, the Americas, and Asia to contain the outbreak meant economic activity has declined.

China recorded the largest fall in industrial production and manufacturing in its history.

Demand for goods and services has declined in the tourism, hospitality and retail industries due to restrictions on large gatherings, availability of imported goods and travel bans.

Stock markets around the world have fallen substantially and the Australian dollar is 11% lower than it was in early January.

On the upside, falls in global demand have pushed oil prices down 65% lower but consumers tend to benefit from lower petrol and gas prices.

Protecting the community but at a cost

The Government has now put in place strong measures to protect Australians to limit the spread by activating the National Incident Room, releasing masks and other personal protective equipment, enhancing border controls and imposing strict travel restrictions and promoting social distancing. Is it enough? Can our health system manage the outbreak?

Ironically, by restricting the movement of people, some businesses have been forced to close and jobs are being lost.

The good news?

There is good news and it largely relates to support for individuals, households, and businesses to minimise the significant economic consequences from this pandemic.

Let’s take a look at what’s available, what it means for you and what you can do to get it.

Support for individuals and households

In response to the crisis, Prime Minister Scott Morrison has announced measures at an estimated total cost of $320 billion, to support workers, households, and businesses. In this article, we discuss what’s available for individuals and households.

JobKeeper Payment

What is it?

This is a wage subsidy of $1,500 per fortnight, per employee, available to businesses and not-for-profits significantly impacted by the Coronavirus, so they can continue paying their employees. Payments will be made to the employer monthly in arrears by the Australian Taxation Office (ATO). The subsidy starts on 30 March 2020, with the first payment to be received by the employer in the first week of May.

Who is eligible to claim?

• Businesses with an annual turnover of less than $1 billion where their turnover has fallen or will likely fall by 30% or more; or
• Businesses with an annual turnover of more than $1 billion where their turnover has fallen or will likely fall by 50% or more; or
• Self-employed individuals, if they meet the turnover tests mentioned above; or
• Not-for-profits registered with the Australian Charities and Not-for-Profit Commission (ACNC) if their turnover has or will likely fall by 15% or more, relative to a comparative period.

Where you have more than 1 employer, only 1 employer will be eligible to receive the payment.

How do you claim?

Eligible employers must elect to participate by applying to the ATO as, at the time of writing, this can be done by visiting the ATO website and registering for JobKeeper updates.

Income support payments for the unemployed

What is it?

This measure comprises temporary expanded access to the JobSeeker payment and a new time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight on top of the existing income support payment.

The expanded access includes payment access to permanent employees who are stood down or lost employment; sole traders; self-employed; casual workers; and contract workers who meet the income tests. In addition, there will be reduced means testing and reduced waiting times.

It’s important to note that you will not be able to access employer entitlements or income protection insurance at the same time as receiving the JobSeeker Payment and Youth Allowance Jobseeker under these arrangements.

The Coronavirus supplement will commence from 27 April 2020 and the expanded access will commence from 25 March 2020.

Who is eligible to claim?

Existing and new recipients of JobSeeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, Farm Household Allowance, and Special Benefit.

How do you claim?

You can claim online or over the phone.

Payments to pensioners and concession cardholders

What is it?

These are 2 separate payments of $750 to assist to lower-income Australians such as pensioners, social security and veteran income support payments, and eligible concession cardholders. The purpose is to manage the impact of the recent volatility in financial markets and the impact of low-interest rates on retirement savings.

The payments will be exempt from tax and will not count as income for social security purposes.

Who is eligible to claim?

• For the first payment:
  • You must be an Australian resident and be receiving one of the eligible payments or hold one of the eligible concession cards at any time from 12 March 2020 to 13 April 2020, inclusive.
• For the second payment on 10 July 2020:
  • You must be an Australian resident and receiving one of the eligible payments or hold one of the acceptable concession cards that we’re entitled to the first payment, except those who are receiving an income support payment that is eligible to receive the Coronavirus supplement.

How do you claim?

The first payment will be paid automatically from 31 March 2020 and the second payment from 13 July 2020 by Services Australia or the Department of Veterans’ Affairs (DVA).

Temporary early release of superannuation

What is it?

Individuals affected by the coronavirus will be allowed to access up to $10,000 of their superannuation this financial year and a further $10,000 next financial year. Payment will be tax-free and will not affect any Centrelink or DVA payments. When the ATO has processed your application, it will make a determination and then notify your superannuation fund to release the payment to you.

Who is eligible to claim?

• You must satisfy one or more of the following:
  • You are unemployed; or
  • You are eligible to receive the JobSeeker payment, Youth Allowance, Parenting Payment, Special Benefit or Farm Household Allowance; or
  • On or after 1 January 2020:
    • Redundant; or
    • Working hours reduced by 20% or more; or
    • If you are a sole trader – your business was suspended or there was a reduction in your turnover of 20% or more

How do you claim?

You can apply directly to the ATO through the mygov website (www.my.gov.au) and certify that you meet the criteria, from 20 April 2020.

Temporarily reducing superannuation minimum drawdown rates

What is it?

It’s a 50% reduction in minimum pension drawings for 2019-20 and 2020-21 for account-based pensions and similar products, to reduce the need to sell investment assets to fund minimum draw-down requirements.

Who is eligible to claim?

Retirees with Account-Based Pensions and similar products.

How do you claim?

Retirees should contact their Financial Planner if they want to make the reduction. If you have already withdrawn the current minimum drawdown requirements, you can’t put the amount back into your superannuation.

Reducing social security deeming rates

What is it?

From 1 May 2020, the upper deeming rate will be 2.25% and the lower deeming rate will be 0.25% to reflect the low-interest-rate environment and its impact on the income from savings. On average, those on the Age Pension will receive around $324 more in the first full year that the reduced rates apply.

Who is eligible to claim?

If you are an income support recipient, including Age Pensioners.

How do you claim?

It will be automatically calculated by Services Australia.

Let’s recap what’s available for individuals and households

The Government has announced financial assistance in the form of wage subsidy, income support payments for the unemployed and pensioners, and temporary early release of superannuation. If you are an affected worker, individual or household, help is available.  Some payments can be claimed online, over the phone or automatically paid. Call your trusted Financial Planner or accountant, if you have one.

The world is healing

A pandemic is spreading. People are in quarantine. Some businesses and schools are closed. The whole world is in crisis mode and no one knows how long it will last. These are scary times.

It’s ok to feel scared, confused and overwhelmed. As we’re all forced to deal with the new reality of a pandemic, let’s look at some positives and a small reason to celebrate.

• Fast food replaced by home-cooked meals;
• Children are home with their families;
• Parents are home taking care of their children;
• People are health and hygiene conscious again;
• Less traffic on the road;
• Petrol is affordable; and
• The air is cleaner.

Our environment has shifted radically in the space of a few weeks. Let’s do our bit to slow  the spread of the virus.

Let’s check in on each other. Let’s stay home and save lives.

We’re in this together. If you need help working out what initiatives you can access please reach out to the JBS Financial team for help here.

Here are links to some useful resources:

https://www.ruok.org.au/

https://www.health.gov.au/

https://headspace.org.au/

https://mindspot.org.au/

https://www.ato.gov.au/

With the ongoing escalation of the COVID-19 crisis many people are struggling. Huge changes are happening and we’re all being affected, socially, emotionally and financially.

If your ability to work and earn an income has already been affected, you’re likely to be worried about how you’re going to cover your bills and mortgage and pay for the essentials your family need.

Take care of the present first

Depending on your life stage, you may also have slightly longer term – but still important –financial concerns on your mind.

If you’re close to retirement, you may be anxiously watching how your superannuation balance has been affected by volatile financial markets. If you’ve saved a deposit and have been house hunting, perhaps you’re wondering if now is the right time to buy.

Your long-term goals and strategies can only be built on strong financial foundations. If you can maintain a strict budget and really rein in your cash flow for the duration of this extraordinary period of uncertainty, then you’ll be preserving that stability you need to make methodical progress towards your goals when we all come out the other side of this crisis.

Review your budget and strip out as many non-essentials as you possibly can. Look at deferring your mortgage repayments for three months or asking your landlord to take rent payments out of your bond. Talk to your credit card, mobile phone and utilities providers and see what you can negotiate.

These steps can help you hold onto any cash you have saved for longer. Not only does this give you a greater sense of security, it can turn those savings into enough to last you for months instead of weeks.

It’s now even more important to feel confident in the choices you’re making about money. Getting advice and taking action on your finances can help you experience less stress as things keep changing from day to day. When so many other things seem to be spiralling out of control, you can make a difference to your state of mind by being realistic about what you can change, and what you can’t.

There is no other time when professional advice is more valuable than it is now. So if you have a financial planner, talk to them. Ask them whether now is the right time to go ahead with that property you’re buying or how to manage your retirement plan if your investments have taken a hit.

If you don’t have that professional support, make sure you’re doing lots of research and thinking things through or reach out to the JBS Financial team and let’s chat about how we can help you here.

Source: FPA Money & Life