Hi Everyone,

You’ve all probably heard the saying “we live in interesting times”. I’m sure we’d all rather a little less interesting and put up with just the boring “same old same old”, but at least for the next few months it looks like the world as we knew it has changed – and we will all need to change with it.

What a year this has been. So many of our fellow Australians still reeling from the need to keep stock alive during the extended drought and communities devastated by the bushfires – and now what appears to be the worst pandemic in the past 100 years.

Our thoughts are with all our clients at the moment – whether you be a business owner, an employee, a teacher, a medical or emergency services worker, or retired – in some way or other the impact of the COVID-19 virus and the actions being taken to try to slow its spread throughout the community will be felt by us all.

We’ve brought forward our monthly newsletter to bring you a summary of the recent Government stimulus packages announced over the past 2 weeks (which I understand have passed through both houses of parliament last night and are now law). Of course, we, like everyone else, are still waiting on the final detail on how some of these measures will be implemented but we’ll share what we know now and update as required through our website and/or social media.

The financial markets are the most volatile I have ever seen, and this too is likely to go on for some time. The economic impacts of the measures being taken to try to limit the spread of COVID-19 will have a major short-term negative impact on markets, and much of the world will go into recession.

The long-term impact on the global economy won’t be known for some time and will largely depend on how well the actions being taken to stop the spread of the disease work and how protracted the enforced economic slowdown becomes. What we do know from history is that markets can and do recover – what we don’t know at this time is the shape that recovery will take (will it be a sharp rebound once the medical emergency passes, or will it be slow and protracted).

Fear and panic are driving the daily fluctuations – please try not to make irrational decisions during these times.

We all need to do our bit to try to get through the next few months as best we can and follow the health warnings and social distancing rules. It’s likely many of us will be infected by the virus at some point, but if we can try to reduce or defer our chances of catching it as long as we can it might help take some pressure off our hospital systems.

This is the time we need to pool together and lend a hand to our mates, our neighbours and the elderly. It is a time to be courteous and considerate, and to understand these are difficult times for everyone.

We have been working over the past couple of weeks to position our business as best as we can to ensure we can continue to serve our clients. Our team are all set up now to be able to work from home and we’ve taken appropriate measures to protect the security of our client information. Of course, it’s not the same as being on site and we will be subject to how well the internet speeds hold up, so we know you’ll understand if things take a little longer.

Naturally, we are all concerned with the health and safety of our loved ones, our team and our clients. We each need to evaluate the potential impact of this situation on our businesses and our lives. As such, we have decided that all client meetings until further notice will be via telephone or video conferencing, and as far as possible all documents will be uploaded via secure online Dropbox for electronic signing.

We are sure you will all understand and respect our decision and encourage you to call us if you have any concerns during this time.

Stuart, Heather and our friendly team at Excel.

The Economic Stimulus Package

The Economic Stimulus Package

Maintaining confidence, supporting investment, keeping people employed

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. i

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.iii

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.iv

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.

i Unless otherwise end noted, all the facts, figures and claims in this article come from the CommSec Economic Stimulus Package document

ii https://finance.nine.com.au/personal-finance/900-cash-bonus-who-gets-it/facdc354-9a48-4e9e-850c-2bb8705dbe29

iii https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf

iv https://www.smh.com.au/politics/federal/casual-workers-face-wait-up-to-13-weeks-for-coronavirus-payment-20200312-p549cj.html

Coronavirus safety net expanded

Coronavirus safety net expanded

What does it mean for you?

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 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 card holders.

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

Learning from the Littlies

Being called childish isn’t usually a compliment, however there are many things we can learn from children. Here are some important life lessons that they can teach us (or remind us of).

No dream is too big

Think back to the earliest memory you have of being asked what you’d like to be when you grow up. It’s likely your answer was a bit out of the ordinary – perhaps you even wanted to be a dinosaur or a princess! When kids answer this question, their imaginations run wild and they don’t stop to think of feasible career pathways to their goal. For them, no dream is too big (even ones not grounded in reality).

While being realistic is an important life skill, as we grow up we can lose the knack of dreaming big. We can talk ourselves down by thinking that our dreams aren’t possible or that they’ll take too much hard work to achieve.

Playing it safe and not challenging limiting beliefs can keep us in a place of dissatisfaction. So whether you want to climb the career ladder, try your hand at a new hobby or go off on an adventure, channel your inner-child – let yourself believe that these dreams are possible and start fearlessly working towards them.

Don’t be afraid to ask for help

Children are encouraged to ask questions and seek help from adults when they need it. You may have had no issues putting your hand up in class, but as an adult you’re hesitant to reach out for assistance.

Research paper ‘Why Didn’t You Just Ask?’ (published in the Journal of Experimental Social Psychology) explains that “even a minor request can invite rejection, expose inadequacies, and make a help-seeker feel shy, embarrassed, and self-conscious.”i

Perhaps you could do with career advice or need help with a more personal matter. Moving beyond a tentativeness to ask for assistance will help you feel more supported and capable, so ask away. Remember, all of us need a helping hand from time to time.

We’re not that different from each other

When you watch children interact, you’ll often notice how willing they are to make new friends and interact with each other. They might be poles apart in terms of their personalities and backgrounds, yet they tend to find common ground and band together to play.

Adult relationships tend to be more complicated. However, approaching people and situations with an open mind can bring you in contact with a diverse range of views and experiences.

Look beyond your differences and remember you all share the human experience. You may find yourself establishing great friendships and partnerships you otherwise would have missed out on.

It’s great to try new things

Kids are constantly exposed to new experiences as they grow and are generally pretty enthusiastic about trying something they haven’t done before. Yet as we grow older, we become more set in our ways and can be reticent to feel like a beginner again.

Trying new things is a fantastic way to challenge yourself and build your confidence. It can also help you recognise strengths you never knew you had and also pinpoint what you’d like to work on.

Don’t worry what others think

If you’ve heard the quote that begins with “You’ve gotta dance like there’s nobody watching …” (William W. Purkey), you’ll know that as adults it helps to be reminded its ok to let loose.

As our self-awareness and understanding of social conventions (where dancing in public can be looked upon as a tad eccentric!) grows, we can also lose the ability to block out other people’s opinions. Enjoying yourself without worrying about how you’re coming across is something kids excel at and adults can struggle with.

While you don’t have to take to tap dancing in the streets, simply letting yourself have fun and not being in ‘serious mode’ all the time can be very energising and uplifting. It’s a fantastic way to feel like a kid again!

So, channel and nurture your inner child – don’t be afraid to dream big and be open to new experiences and soon you’ll be viewing the world with the wonder and wide-eyed enthusiasm of a child.

i http://francisflynn.org/wp-content/uploads/2010/03/JESP2010-2.pdf