COVID-19 safety net expanded
In a rapidly evolving response to the spread of COVID-19, the Federal Government’s second support package announced over the weekend has flicked the switch to more income support for retirees and workers.
Between the first $17.6 billion package announced on March 12, and this latest $66.1 billion package, the emphasis has shifted from stimulus aimed at keeping businesses up and running, to support for individuals to get them through the crisis.
Importantly, casuals and sole traders along with employees who lose work due to the coronavirus shutdown will receive help.
Retirees affected by falling superannuation balances and deeming rates out of line with historically low-interest rates have also been offered some reprieve.
Minimum pension drawdowns halved
Self-funded retirees will be relieved the Government has moved quickly to temporarily reduce the minimum drawdown rates for superannuation pensions.
Similar to the response in the wake of the Global Financial Crisis, minimum drawdown rates for account-based pensions and similar products will be halved for the 2020 and 2021 financial years.
This means retirees will be under less pressure to sell shares or other pension assets in a falling market to meet the minimum payments they are required to withdraw each financial year.
Deeming rates cut again
In addition to the cut in pension deeming rates announced in the first stimulus package, the Government has cut deeming rates by a further 0.25 percentage points. This reflects the Reserve Banks latest cut in official interest rates to a new low of 0.25 per cent.
Deeming rates are the amount the Government ‘deems’ pensioners earn on their investments to determine eligibility for the Age Pension and other entitlements, even if that rate is lower than they actually earn.
This move will bring deeming rates closer in line with the interest rates pensioners are receiving on their bank deposits, especially those with lower balances.
From 1 May 2020, deeming rates will fall to 0.25 per cent on investments up to $51,800 for singles and $86,200 for couples. A rate of 2.25 per cent will apply to amounts above these thresholds.
Early access to super
More controversially, the Government has also announced it will allow anyone made redundant because of the coronavirus, or had their hours cut by more than 20 per cent, to withdraw up to $10,000 from their super this financial year and a further $10,000 in 2020-21.
Sole traders who lose 20 per cent or more of their revenue due to the coronavirus will also be eligible.
The Treasurer said the process is designed to be frictionless, with eligible individuals able to apply online through MyGov rather than going to their super fund.
While this provides an additional safety net for individuals and families who face the loss of a job or a significant fall in income, we do urge our clients to consider accessing their super as a last resort.
Taking a chunk out of your retirement savings now, after a big market fall, would not only crystallise your recent losses but it also means you would have less money working for you when markets recover.
So before you do anything, speak to us and look at other income support measures.
Relief for those out of work
All workers, including casuals and sole traders, who lose their job or are stood down due to the coronavirus shutdown, will be eligible for a temporary expansion of Newstart (now called JobSeeker) payments to new and existing recipients.
Individuals who meet the income test will receive a coronavirus supplement of $550 a fortnight on top of their existing payment for the next six months. This means anyone eligible for JobSeeker payments will receive approximately $1100 a fortnight, effectively doubling the allowance.
This measure includes people on Youth Allowance, Parenting Payment, Farm Household Allowance and Special Benefit.
Importantly, the extra $550 will go to all recipients, including those who get much less than the current maximum fortnightly payment because they have assets or have found a few hours of part-time work.
Support for pensioners
Pensioners have also received additional support. On top of the $750 payment announced on March 12, an additional $750 will be paid to any eligible recipients, as at 10 July 2020, receiving the Age Pension, Veterans Pension or eligible concession cardholders.
More support to come
This latest support package is unlikely to be the last as the Government responds to a rapidly evolving health crisis and progressive shutdown of all but essential economic activity.
If you have any questions about your investment strategy or entitlements to government payments, please don’t hesitate to call.
Information in this article has been sourced from https://treasury.gov.au/coronavirus/households
How to manage anxiety and isolation during quarantine
By Dr. Aarti Gupta
Since the World Health Organization declared the COVID-19 outbreak a global pandemic, many of us, even those who have not been infected by the virus, will choose to quarantine in our homes for the upcoming weeks.
Capsized travel plans, indefinite isolation, panic over scarce re-sources and information overload could be a recipe for unchecked anxiety and feelings of isolation. Here are a few pointers that could help you survive spiralling negative thoughts about this uncertain time.
1. Reframe “I am stuck inside” to “I can finally focus on my home and myself”
As dismal as the world may feel right now, think of the mandated work-from-home policy as an opportunity to refocus your attention from the external to the internal. Doing one productive thing per day can lead to a more positive attitude. Set your sights on long-avoided tasks, reorganize, or create something you’ve always wanted to. Approaching this time with a mindset of feeling trapped or stuck will only stress you out more. This is your chance to slow down and focus on yourself.
2. Stay close to your normal routine
Try and maintain some semblance of structure from the pre-quarantine days. For those individuals with children, sticking to a routine might be easier; however as you work from home, it could be tempting to fall into a more lethargic lifestyle, which could lead to negative thinking. Wake up and go to bed around the same time, eat meals, shower, adapt your exercise regimen, and get out of your PJ’s. Do laundry on Sundays as usual. Not only will sticking to your normal routine keep you active and less likely to spiral, but it will also be easier to readjust to the outside world when it’s time to get back to work.
3. Avoid obsessing over endless Coronavirus coverage
Freeing up your day from work or social obligations gives you plenty of time to obsess, and if you have a tendency to consult Google for every itch and sneeze, you may be over-researching the pandemic as well. Choosing only certain credible websites (who.int or cdc.gov is a good start) for a limited amount of time each day (perhaps two chunks of 30 minutes each) will be in your best interest during this time.
4. A chaotic home can lead to a chaotic mind
With all the uncertainly happening outside your home, keep the inside organized, predictable and clean. Setting up mental zones for daily activities can be helpful to organize your day. For example, try not to eat in bed or work on the sofa- just as before, eat at the kitchen table and work at your desk. Loosening these boundaries just muddles your routine and can make the day feel very long. Additionally, a cluttered home can cause you to become uneasy and claustrophobic of your environment- so keep it tidy.
5. Start a new quarantine ritual
With this newfound time, why not do something special during these quarantined days? For example, perhaps you can start a daily journal to jot down thoughts and feelings to reflect on later. Or take a walk every day at 4 pm, connect with your sister over FaceTime every morning, or start a watercolour painting which you can add to every day. Having something special during this time will help you look forward to each new day.
Remember, this can be a stressful time for many Australians, but there are many services such as psychologists and therapists that have moved online if you need them.
This article was sourced from the Anxiety and Depression Association of America
COVID-19 and working from home: What you can claim on tax
Thousands of Australians are adjusting to working from home for the first time as the coronavirus crisis forced offices around the nation to close.
As a result, stationery shops are running out of stock, the NBN has been forced to free up more capacity and telecommunications companies have begun sharing data to lessen the workload.
Working from home comes with its unique challenges and unique costs: you are now suddenly financially responsible for operating your own office.
Here’s a quick guide on what you can claim on tax as a result of your self-isolation.
I had to buy a laptop to work from home. Can I just deduct the full cost as part of my tax?
In essence no – and you should also have a chat with your employer about providing you with equipment needed to do your job.
If you didn’t need a new computer to work from home, but thought now would be a good time to upgrade, there are some expenses you can deduct at tax time.
According to the Australian Tax Office (ATO), you can claim the full cost of items you’ve had to buy for your home office, up to $300.
It’s highly likely your brand spanking new computer cost more than that, in which case you can deduct the decline in value of your new laptop (depreciation). The ATO has a handy depreciation tool here.
Now I’m at home all day I’m using way more electricity… surely I can deduct that?
Yes, you can. The tax office recognises that running a dedicated workspace takes a toll on your power bills.
As a result, you can claim a work-related proportion (read that twice) of your running expenses such as heating, cooling and lighting.
Other running expenses include the cost of repairs to your equipment (fixing laptop), cleaning costs (sanitising your work area) and consumables such as printer ink and paper.
Great. But how on earth do I separate my work expenses from my general household bills if it’s all under the one roof?
Here’s where things get tricky. The ATO essentially allows for two ways: an easy way and a hard way.
The hard way requires you to calculate your work-related expenses of working from home, meaning you’ll need to keep tight records of the hours you work and work out a proportion of your heating, cooling, lighting, cleaning and the decline in value of furniture.
That’s pretty tough.
The easy way is to deduct what the ATO has calculated to be a fixed rate of 52 cents for each hour you work from home. A standard eight-hour shift would likely mean you could deduct $4.16 for running expenses for each day you worked from home.
If you think that’s stingy, head online to the ATO for a full breakdown of how to calculate your running expenses down to the last cent.
This sounds complicated but worthwhile. What do I need to do right now?
You’ve likely only just started working from home in the past seven days. I urge everyone who has done this to grab themselves and clean and un-scribbled diary to set aside as your tax record.
Generally, the ATO needs a four-week representative period to work out approximate ongoing running expenses, so you’ll need to be tight with your notes until May.
In this diary make sure you immediately pop any receipts for anything you’ve paid for to work from home – that’s a good start.
From there, for each day record the hours you work, the number of work calls you make and preferably even who they were to if you don’t get an itemised phone bill.
Also pop down how much you are paying for internet (you can claim up to $50 with limited documentation, so better to keep tight records) and how much you are paying for your phone.
This is all too much work. I’ll just be poor.
Don’t be like that – five minutes a day could result in you getting paid what you are actually owed by the tax office.
Remember a tax return isn’t some bonanza lottery where you try and swindle your way to a winter cash boost – it’s simply getting returned how much you’ve overpaid the ATO.
The information provided on this website is general in nature only and does not constitute personal financial advice.
Written by Stuart Marsh for 9 News
The Economic Stimulus Package
By now you’re probably aware that the Federal Government has announced a $17.6 billion stimulus package. One designed to “protect the economy by maintaining confidence, supporting investment and keeping people in jobs”.
If you’re wondering what that might mean for you, here’s a brief guide to the four major components of the package.
Payments to lower-income households
Post-GFC, the Rudd Government sent $900 cheques to adult Australians earning less than $80,000.ii The Morrison Government is doing something similar by providing Newstart recipients, age pensioners and veterans a one-off payment of $750. These payments will start flowing into the bank accounts of 6.5 million (mainly) lower-income Australians from March 31. While most working Australians won’t receive this payment, this type of tightly targeted payment will provide maximum bang for buck in terms of stimulating the economy.
Cashflow assistance to business
Business owners and their employees have also been well-catered for in the stimulus package.
Small and medium-sized businesses that employ staff and have a turnover of less than $50 million will be eligible for tax-free payments of between $2000-$25,000. It’s estimated this ‘Boosting Cash Flow for Employers’ measure will benefit 690,000 businesses that collectively employ 7.8 million people. Given there’s a $25,000 ceiling on the payment regardless of the size of a business’s workforce, it’s a measure that will benefit smaller businesses much more than medium-sized ones.
Business owners who employ apprentices and trainees are also eligible to apply to have the Government pay half their wage for the first nine months of 2020. It’s estimated this measure will assist 70,000 business and 117,000 apprentices and trainees.
While it’s a separate initiative, the Government’s provision of modest financial support for casual workers who contract Coronavirus will directly benefit those casual workers and indirectly benefit their employers. Without this payment to casuals, employers might have, for instance, had to worry about infected staff turning up to work out of financial desperation.
Support for business investment
The government is loosening the criteria around the instant asset write-off. Pre-Coronavirus, businesses with a turnover of up to $50 million could instantly write-off the purchase of assets costing up to $30,000. Post-Coronavirus, businesses with a turnover of up to $500 million can write off asset purchases of up to $150,000.
On top of this, the Government has also accelerated depreciation deductions for the next 15 months. Up until June 30, 2021, businesses turning over less than $500 million will be able to deduct 50 per cent of the cost of any eligible asset the moment it’s installed. It’s predicted these two tweaks to the investment rules could benefit up to 3.5 million businesses that collectively employ almost 10 million Australians.
Assistance for regional Australians
Regional Australia, already laid low by drought and bushfires, will be disproportionately impacted by Coronavirus. Many regional economies are dependent on the industries – tourism, education and agriculture – most affected by the pandemic. It’s yet to provide much detail, but the Government has promised to spend $1 billion propping up the nation’s regional economies.
The end of the beginning
There’s broad agreement the Government’s stimulus package has been well-designed and will reduce the chance of Australia slipping into its first recession in three decades. But with share markets across the globe increasingly volatile and countries closing their borders, Australia is in unchartered territory and there may well be further changes to Australia’s economic policy settings in months to come.
If you have any queries in relation to how the above measures may apply to your circumstances, please do not hesitate to contact our office.
Unless otherwise end noted, all the facts, figures and claims in this article come from the CommSec Economic Stimulus Package document
Over the last 3 weeks the world has been consumed with the unfolding Corona Virus epidemic and the subsequent impacts on share markets and potentially on the global economy. At this time Future Assist hopes that you and your family are all well and have not been affected in any way.
Will Future Assist services remain at full capacity?
Absolutely! In fact, Future Assist currently provides over 90% of its current advice, service and reviews through telephone, video conferencing and skype. In addition, we have a distributed workforce with 4 physical offices and people that work from home. As such we are well placed to ensure services are sustained at full capacity.
Do I need to sell any of my shares?
Future Assist adopts a long-term investment strategy and does not recommend day trading. One of our core investment methodologies is that we do not try to guess or beat the market, our strategies are based on tried and tested long term investment strategies and are backed by strong historical data and principles. If you have any further questions, feel free to contact an Adviser.
Do I need to do anything if I have an MDA?
No. The purpose of an MDA is to give you peace of mind. The MDA platform is actively managed by Future Assist’s MDA Investment Committee and these investments are being frequently monitored and adjusted to meet market conditions. Future Assist is on the front foot with the current conditions and has implemented strategies for our MDA clients accordingly.
What about my property investments?
Share market volatility is where bricks and mortar investments shine. Interest rates are at historical lows and lending is exceptionally affordable. Once again Future Assist believes investors with property should experience very minimal volatility this year and most states are set for modest growth.
Do I need to do anything about my super or SMSF?
No. Once again, the strategies established for our clients are always developed with market corrections and long-term strategies in mind. For retail and industry superannuation clients (without property diversification), you may find your super balances vary greatly during this time of volatility however markets will eventually settle.
Should I buy or change anything with my investment portfolio?
While your situation is unique, for most of our clients we once again recommend holding. Clients looking to buy or making changes to their portfolio should consult with their Adviser as any changes during times of volatility need to be carefully considered. For now, it’s time to just take a deep breath and keep in mind that markets will recover and if you sell now you may risk making your losses real.
What is the Government doing to stabilise the economy?
Actually, quiet a lot. We are lucky that the Australian government is well placed to stimulate the economy and has released an $18 billion stimulus package and is well equipped to meet this challenge. You can read more about what the government is doing to protect the economy here https://www.pm.gov.au/media/economic-stimulus-package
We believe there is even more stimulus to come!
I’m feeling a bit worried now… what can I do?
To be honest you are not alone, most of us are a little anxious now but keep in mind that nothing stays the same. Fear is the biggest driver of both markets and people now and once this subsides things will return to normal.
We all need to support each other and do our bit to slow and prevent the risk of coronavirus spreading. Isolating ourselves from others for a short period of time is on the horizon but as we have seen in other countries it’s not the end of the world. People still get up each morning, make a cup of tea or coffee and go about their day. We just need to adopt a sensible and practical approach for the upcoming months.
There are many myths of what coronavirus is and how you should protect yourself. I encourage you all to get the right information which can be found here:
Bumpy markets ahead
After a period of optimism, global investment markets have hit the panic button on fears about the possible economic impact of the coronavirus (COVID-19).
At times like these, it’s good to get some perspective.
Australian shares rose 24 per cent last year, touching record highs, and 10 per cent a year over the past seven years. Global shares rose 28 per cent last year and 17 per cent over the past seven years. After such a good run, many observers have been saying shares were looking fully valued and that a correction was likely.
The thing with market corrections is that it is impossible to predict what will trigger them or how long and severe they will be.
Avoid knee-jerk reactions
At this point, markets are responding to uncertainty. Nobody knows what the extent of the economic fallout will be, so the temptation is to bail out of shares and put your cash in the bank. Or jump ship and switch to a ‘safer’, more conservative option in your superannuation fund.
While the urge to act and protect your savings is understandable, knee-jerk reactions can be a mistake.
It’s near impossible to time the markets. Not only do you risk selling when prices are near rock-bottom, but you also risk sitting on the sidelines as the market recovers. As history tells us it always does.
In an ever-changing world, the basics of investing stay the same. By sticking to some timeless rules it’s much easier to avoid emotionally driven reactions and focus on your investment horizon.
Have a plan
Investing is a lifelong journey and like all journeys, you are more likely to reach your destination if you plan your route. Without a plan, it’s easy to be distracted by the latest market worries and short-term price fluctuations.
Think about your personal and financial goals and what you want to achieve in 1,5,10, 20 years’ time. Be specific, put a dollar figure on your goals and plan how to reach them.
Low risk comes with lower returns
Many people are wary of investing in shares because of the perceived risks. Growth assets such as shares and property do entail higher risk than cash in the bank, but they also deliver higher returns in the long run.
Perhaps the biggest risk of all is not earning the returns you need to achieve your goals. While domestic and international shares produced stellar returns last year, cash returned just 1.5 per cent which was below the level of inflation. Cash returns were not much better over the past seven years, averaging 2.2 per cent a year.
Spread your risk
Shares, property, bonds and cash all have good years and bad. While shares and property tend to provide the highest growth over time, there will be years when prices fall or go sideways. In some years, bonds and even cash produce the best returns.
A good way to reduce volatility and enjoy smoother returns over time is to diversify your investments across and within asset classes. That way, one bad investment or difficult year won’t sink your ship.
The most appropriate mix will depend on your age, the timing of your goals and your risk tolerance. You will need cash for emergencies and short-term goals, with enough money in growth assets to last you through your retirement.
Let your savings grow
The effect of compound interest is often referred to as magic, but there’s no trickery involved. Better still, it requires no work on your part, just the willpower to reinvest the income you earn on your investments, so you earn interest on your interest.
Rather than sell shares in quality companies in a panic, you could continue to collect your share dividends and reinvest them in more shares or other quality assets. This way, you avoid crystallising short-term paper losses and benefit from the inevitable market recovery.
That’s the simple but powerful concept behind superannuation which locks away your savings and all investment earnings until you retire.
When fear is driving markets, it’s important to get back to basics and think long term. If you would like to discuss your overall investment strategy, don’t hesitate to get in touch.
Achieving focus in a world of distractions
Feel like you’re running on a hamster wheel, beholden to the constant pinging of your phone, busier than ever? You’re not alone, with the trap of always being ‘on’ a curse of the modern-day world.
A 2019 report from BankMyCell found that the average smartphone user checks their device approximately 63 times a day, and 69% check their phone within five minutes of waking up.
These habits are taking a toll. In 2015, TIME reported that we now have a shorter attention span than a goldfish. They traced the drop in attention back to the year 2000 when the mobile revolution started.
Most of us couldn’t work or even live without our smartphones, but there are ways to pair back the time you spend glued to technology and instead focus on your goals. And even without a phone in hand, there are things vying for our attention – if you’re a parent it could be your kids, or at work, it could be your co-workers and boss. Perhaps it’s even your mind processing a thousand thoughts per hour, or mulling over something from the past or worrying about the future.
We all contend with many distractions, both internal and external, on a daily basis. Here are some tips for building your attention span to take back control of your life.
Be deliberate about what you pay attention to
As well as spending less time with technology, think about other distractions you have to deal with. Perhaps you have noisy co-workers who hold impromptu catch-ups next to your desk, or the sound of construction next door to your office.
By flexing your discipline muscle, you’ll be able to focus your attention to ignore both internal and external factors that are making your mind wander. While you may not be able to put a stop to these distractions, such as a ringing phone or loud office chatter, think about how you can better cope with them. Maybe it’s physically removing yourself from the area or using noise-cancelling headphones or consciously reverting your attention to your task at hand.
Reduce tech time
If accidentally leaving your phone at home sends chills down your spine, the thought of reducing the time you spend on your mobile may make you anxious. But many of us underestimate how long we spend on our devices. Having read the above statistic, do you think you check your phone much less than 63 times a day?
There are apps that will tell you exactly how long you spend on your phone. They can also block notifications, disable sites and send you reports of your weekly phone habits. The BankMyCell stats also reflect that 41% of respondents succeeded in limiting their phone usage, so this is an achievable goal that will make a real difference in your day to day life.
Pick up some reading material
While not everyone is a bookworm, reading is a hobby in which attention is key. Whether you pick up a book or something shorter such as a magazine or newspaper, reading strengthens your ability to concentrate on the single task at hand. ‘Use it or lose it’ certainly applies to our attention spans, and reading can help lengthen and strengthen them. And by choosing hard copies over reading on your phone, you’ll be avoiding eye strain and the negative effects of blue light.
Exercise can also help build not just literal muscles, but also your attention muscle. It has been found that physical exercise may strengthen the ability to pay attention due to a change in brain activity as a result.
Runners often credit the methodical ‘one front in front of the other’ rhythm of running as a way to slow their minds down and clear their thoughts. Other forms of exercise, such as lifting weights or taking a class in dance or yoga, can also hone our attention span as we’re following instructions and making mindful movements to ensure we avoid injuries.
You can make small changes in your life that can build your attention muscle, better enabling you to stay present and focused. Being deliberate about what you pay attention to and how you spend your time will result in an improved ability to control your attention, and as a result, your life.
Tax Alert March 2020
The ATO is providing taxpayers in bushfire areas with more time to get their tax affairs in order, but at the same time it’s getting tough on employee car parking benefits and investigating lifestyle assets owned by wealthy taxpayers.
Here’s a roundup of some of the latest developments when it comes to tax:
Deferrals for taxpayers affected by bushfires
In the wake of this summer’s devastating bushfires, the ATO has announced it will be automatically deferring any lodgements or payments that taxpayers in bushfire-impacted postcodes are due to make.
Deferral will apply to income tax, activity statement, fringe benefits tax (FBT) and excise return lodgements and any associated payments, with the new deadline being 28 May 2020. Refund payments will be prioritised.
If you are affected by the bushfires but don’t live in a postcode on the ATO’s list, phone its Emergency Support Infoline on 1800 806 218. The service can also assist with re-issuing tax returns and activity statements, re-constructing your tax records and setting up payment plans.
Super obligations also delayed
SMSFs in bushfire zones have also been given extra time to meet their lodgement and compliance obligations.
The deferral applies to SMSF members and trustees living in an affected postcode, even if your SMSF’s address is not in these areas.
Employers in bushfire zones are still required to meet employee super guarantee (SG) obligations by the due date. SG charges for late SG payments will not be waived.
More employers up for FBT on car parking
The ATO has released a new draft interpretation of the FBT legislation that could see more businesses paying FBT if they provide employees with car parking benefits.
Draft Taxation Ruling TR 2019/D5 is due to commence on 1 April 2020 and replaces the former ruling, which was in place for over 20 years.
Under the ATO’s new interpretation, if your staff car parking facilities are both in the vicinity of your business and within 1 kilometre of a car park that offers all-day parking as a ‘commercial’ car park for FBT purposes, you may have to pay FBT on the value of your employees’ car spaces – even if they were tax-free before. A car park can be commercial for FBT purposes even if its fee structure discourages all-day parking by charging a higher fee.
If your business is near a shopping centre, hospital or airport for example, you should review your obligations prior to the new FBT year.
ATO collecting details on lifestyle assets
Taxpayers with ‘lifestyle assets’ like yachts, thoroughbred horses, expensive cars and fine art are likely to find themselves under the tax man’s microscope after the ATO requested five years of policy details from insurers.
Over 30 insurers have been asked to provide details of assets over certain value thresholds for use in the ATO’s data matching program.
Valuations of assets owned by around 350,000 taxpayers will be added to the ATO’s database, providing it with a more complete picture of a taxpayer’s actual financial situation. Although the information will not be used to start automated compliance activities, it will be used for risk profiling purposes.
Early release of super on ATO radar
The tax man is once again warning taxpayers that withdrawing your super savings before a condition of release is met is illegal.
If you are approached by someone promoting a scheme offering early release of your super benefits, the ATO is asking you to contact it on 13 10 20.
CGT blow for non-resident property owners
Property owners who are non-residents for tax purposes are no longer eligible for the main residence exemption (MRE) for capital gains tax (CGT) when they sell their home.
Under new legislation, the MRE is now denied to non-resident taxpayers if they dispose of a property purchased after 9 May 2017, unless certain life events occur within six years of becoming a foreign resident for tax purposes.
For homes purchased prior to 9 May 2017, non-resident taxpayers only have until 30 June 2020 to sell their former home if they do not want to pay full CGT on the capital gain made since the original property purchase.