Update Tuesday 7 April 2020
It is fair to say that over the past week investment market volatility has reduced in most of the major share markets. This is not to say that markets have normalised or that the risks have gone away. To the contrary, we believe that there is every likelihood that we could see another leg down in share markets if things deteriorate much further in the USA. However, we do believe that the huge injection of capital from central banks has helped to stabilise markets in the short term. The following article by Alex Harris - Senior Research Analyst at IOOF looks at the comparison between the GFC vs Coronavirus to see if there are any similarities. “Comparing the GFC and the Coronavirus Crisis we can draw some interesting parallels between these two crises. Whilst the GFC was initially a financial crisis, starting in the banking sector, the Coronavirus is a public health crisis that is also having a significant impact on the economy. Therefore, the ability to bring the crisis to an end will be a combined approach by both Doctors and Governments. In an increasingly connected world, the current crisis has played out much more quickly than during the GFC. The speed of the crisis has been much faster this time around, both because of its nature, but also because many industries have had to shut down almost overnight. Fear levels in the community are certainly just as high as during the GFC, although the type of fear is different. Currently, people are also fearing for their lives, along with their financial wellbeing. The prevalence of social media in society these days has contributed to the rapid spread of fear. The Government has played a similar role in both crises – most importantly with their stimulus packages. Massive stimulus programs were and are being implemented. The goal is to ensure that the financial system remains working until the crisis passes. Interestingly, the GFC and Coronavirus responses by governments are different from what was done during the Great Depression after 1929. Back then, governments were too slow to provide help, so the recovery took much longer in the 1930s than it did after the GFC. The major drawback of the stimulus programs will be increased government debt levels. Many governments, including in Australia, struggled to reduce their debt in the wake of the GFC. After the Coronavirus crisis passes, bringing government debt levels under control will be very difficult – it will be up to future generations to repay the money. It will also be much harder for governments to use interest rate reductions to stimulate the economy in the future, as interest rates are already at very low levels.” Understandably, people are worried not only about the health impacts of the virus, but also about the health of their investments. We recognise this and now more than ever we are here for you to answer any questions you might have. Naturally there are some questions we don’t have the answers to, but we can help to ensure you make the most informed decision regarding your finances.
Source and Credit: Tony Marshall - Financial Planning Expert WD Nicholls CA
The Australian Taxation Office (ATO) will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.
We have been in contact with the ATO in relation to the inability to pay outstanding debts as a result of the COVID-19 situation. This is the summary of what the ATO have offered in relation to existing debts:
Integrated Client Account (ICA), for GST reporting – payment deferral until 30th September 2020.
The MARCH 2020 BAS payment has been deferred until 14th September 2020.
All Activity Statements are still required to be LODGED by the due date, however, no payment is required until these dates, or until contact is made again to negotiate further arrangements.
Income Tax Account – the ATO automatically included this as per above, so payment deferral until 30th September 2020 on the balance of this account also.
When making a call to the ATO, please state that your enquiry is due to COVID-19 to obtain the GIC remission.
In relation to interest and penalties, anything applied to ATO account after 23 January 2020 can be requested to be remitted/reversed.
Other options available to assist businesses impacted by COVID-19 include:
Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.
Employers will still need to meet their ongoing super guarantee obligations for their employees.
Important note: the deferral payment arrangements are not automatic and we urge our clients to contact the tax office to make an enquiry or ask one of our team to assist you.
Source and credit: ato.gov.au
The NSW government has now pledged $750 million to help small businesses across the state deal with the economic impact caused by the coronavirus pandemic.
The grants of up to $10,000 must be used for funding unavoidable business costs such as utilities, overheads, legal costs and financial advice.
To be eligible, businesses must be “highly impacted” by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020.
Businesses will need to have an ABN as at 1 March 2020, employ between one and 19 employees and have a turnover of more than $75,000.
Businesses will also need to have payroll below the NSW 2019–20 payroll tax threshold of $900,000.
The grants will be available through Service NSW within a fortnight and remain open until 1 June 2020.
“This is real, rapid relief for tens of thousands of businesses and it will help ensure many businesses that are not eligible for payroll tax waivers and deferrals can live to trade another day,” said NSW Treasurer Dominic Perrottet.
“Many local cafés, restaurants, corner shops, gyms and small accommodation providers will be eligible to apply.”
Source and credit: Accountantsdaily.com.au
We believe in our community and we would like to offer support to our clients who are in business and wish to showcase a weekly deal on our website. We have introduced a Community tab on our website where current clients who register may be able to make an offer and have a link to their website. Please email us should you wish to apply. Spaces are limited and conditions apply.
We will continue to share with you the most up to date news as it happens, and we are here to answer any questions you might have.