Newsletter - April 2020 Edition 4
Cents & Sensibility | Tax News | Views | Clues
Estate planning from a tax perspective – by Mei Wu
Making sense of it all by Ali Roshan – Dealing with the personal financial aspect of the Coronavirus
The rapidly evolving COVID-19 crisis is continuing to create severe political, social and economic uncertainty. Economist generally say, “The Stock Market Is Not the Economy” however, the measures taking place to slow down the spread of the virus has impacted every aspect of our lives. It is an eerie feeling walking along the usually hustling streets, the evidence that it is affecting every aspect of our lives is hard to ignore.
In order to soften the blow, there has been a number of measures provided by the ATO, the Federal & Victorian Governments to support Australians and the economy in response to the Coronavirus. You can read about these measures https://www.knp.com.au/COVID-19-updates-24-March.html
There are also some things you could do personally to help soften the blow:
- Banks are offering assistance which may include pausing repayments for a period. Communicating with your bank can be a way to relieve some of the pressures.
- You could reduce or pause salary sacrifice into super to boost your take home pay in the short term.
- You could withdraw a tax-free lump sum of $10,000 this financial year from your superfund. Another $10,000 can also be withdrawn next financial year (FY2020/21). Provided you satisfy one or more of the following:
- You are unemployed
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (including the single and partnered payments), special benefit or farm household allowance
- On or after 1 January 2020:
- You were made redundant
- Your working hours were reduced by 20% or more
- If you are a sole trader and your business was suspended or your turnover has reduced by 20% or more.
- Electing to take cash dividends from your investments rather than dividend reinvesting.
- If you are over 60 years old, you could commence a Transition to Retirement Income Stream (pension) and receive tax free income. This extra income could be used to help with living expenses and loan repayments.
- The government mandates a minimum percentage to be withdrawn from an account-based pension. Temporarily, there has been a reduction on minimum drawdown requirements for account-based pensions by 50%. This measure provides those with account-based pensions more flexibility as to how they can manage their superannuation assets, particularly during the current market volatility.
Ali Roshan is an Authorised Representative (ASIC No. 000378611) of Lifespan Financial Planning. ABN 23 005 921 735 AFSL Number 229892
No Advice Warning/General Advice
The purpose of this article is to provide general information only and the contents of this website do not purport to provide personal financial advice. knp Solutions strongly recommends that investors consult a financial adviser prior to making any investment decision.
The contents of this knp Solutions article does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions.
The information is selective and may not be complete or accurate for your purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation.
There is no coffee machine in a virtual office – by Norman Same
Many years ago, when the possibility of working remotely was discussed, I wrote an article based on my experiences with an IT firm I was working for overseas; planning and administering their firm’s strategic planning event. This company had already been working as a virtual office, with each staff member working from home – 7 staff, 7 different locations.
The firm was a diverse group, each bringing their own unique expertise to the firm and whilst they met face-to-face four times a year as a group, the remainder of their contact with each other was via email or telephone.
I have always been a huge fan of technology and was fascinated by a firm, some 10 years ago, working in such a way; productively and profitably. The boss was someone whom I considered a rather unique “IT geek”. This guy had personality, technical ability and a very warm human side.
So, what happened? During the event we were brainstorming some possible new strategic offerings for this consultancy business; blue-sky possibilities. One of the employees passionately described what she thought was a potential client offering. You could feel the rest of the room buy into both her passion and her insights. The boss was almost falling out of his chair with the excitement of what and where this could lead. I too was in awe of the idea and the possibilities. However, when I grabbed back control of my facilitator duties, I asked the boss, “So, who will lead this amazing initiative?” The boss, feeling the mood of the room, turned to the author of the idea and asked her to lead this initiative as it was her idea. However, what transpired, shocked me as well as the boss. Her head dropped and she said, “I can’t, I just can’t!” and became upset. “I am already working 20 hours a day.” It was a good time to take a break and let her compose herself and get some fresh air. When I asked the boss, why she was working so hard, he was completely taken aback as her timesheets only showed 9 hours a day as a maximum. When she was ready, I asked her if she would mind sharing with me what was happening in her world. In her self-assessment she thought she was failing as she was taking far longer with tasks than she thought. I realised that there was something missing that was not obvious to her and to the boss!
She was not being open and honest to the boss about her workload and her self-assessment/criticism. The boss was oblivious to her concerns as she responded to all his requests, she did not say “no” and was not aware of her self-imposed pressure. There were no face-to face discussions.
This situation made me reflect on what happens at knp Solutions. You see, hear and feel if something is not right in the office. Usually, I find the direct approach works and so will privately ask a staff member if everything is OK.
For the staff, they know there is an open-door policy and they can approach any manager at any time. However, another way is by sharing concerns with work colleagues and friends when the opportunity arises. This invariably happens when taking a break and or grabbing a coffee in the kitchen. Staff meet, talk, share, resolve, solve. It takes all those human characteristics to do it. A casual chat whilst getting a coffee or having lunch - but away from the desk and the work environment can be very useful to resolving both work and personal problems. But where does that take place when everyone is working offsite? There is no coffee machine in the virtual office!
Whilst some are enjoying the freedoms and flexibilities that go with working from home, it may not be the first choice for all, and it does come with its issues. In these very unusual times in which we find ourselves, both staff and managers must work to have open and honest communication. Whilst the video chat helps, I don’t think it is a substitute for face to face conversations. However, right now with self-isolation, it is as good as it gets. So please, take the time to regularly check in with each other, be open and honest when you are asked how things are going and share any issues that may be causing you to struggle.
Talking it through can help solve the problem.
Create your own virtual coffee machines so you can take a break and have that chat!
Human Resource Services
During the current pandemic, it is very important to look after your mental health. This can be done by establishing a routine, exercising, staying connected and at some stage of the day, turning off all devices.
However, if you feel you need to speak to someone about any concerns or issues, then knp Solutions may be of assistance. Our Human Resources Consultant, Anne Bartlett is also a Generalist Psychologist and is happy to offer a free, 30 minute, one off, confidential counselling session to our clients. Please note that this is not an ongoing counselling service however Anne can point you in the right direction if a long-term service is required.
Anne can be contacted on 0417 531 393 between the hours of 11.00am and 3.00pm on Monday, Wednesday and Thursday.
Other organizations which also provide excellent mental health services include BeyondBlue (1300 22 4636) and Lifeline (13 11 14). Both services are available 24/7.
Claiming your “working from home”
The ATO have introduced new rules for claiming your “work from home” expenses.
The Australian Taxation Office (ATO) is announcing special arrangements this year due to COVID-19 to make it easier for people to claim deductions for working from home.
The new arrangement will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for specific running expenses.
Multiple people living in the same house can claim this new rate. For example, a couple living together could each individually claim the 80 cents per hour rate. The requirement to have a dedicated work from home area has also been removed.
For greater details please follow the link below.
Coronavirus: Government announces new tax measures
The Government has announced a number of economic responses to the Coronavirus (or 'COVID-19') pandemic, including economic stimulus packages worth billions of dollars.
Some of the key tax measures include:
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions.
- This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
- Small and medium-sized businesses (and not-for-profit entities), with an aggregated annual turnover of less than $50 million that employ people, may be eligible to receive a total payment of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations.
- A new 'JobKeeper Payment' will be available to assist eligible employers (and self-employed individuals) who have been impacted by the Coronavirus pandemic to continue to pay their workers.
- Eligible employers will be able to claim a subsidy of $1,500 per fortnight, per eligible employee, from 30 March 2020 (with payments commencing from the first week of May 2020), for a maximum period of six months.
ATO's support measures to assist those affected by COVID-19
The ATO will also implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.
Options available to assist businesses impacted by COVID-19 include:
- Deferring the due dates for income tax payments, Fringe Benefits Tax payments ('FBT') and excise payments up to 12 September 2020 for businesses in financial difficulty; and
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
However, note that employers will still need to meet their ongoing super guarantee obligations for their employees.
Please contact our office if you need any advice or assistance during this difficult time
Clients should not act solely on the basis of the material contained in Cents & Sensibility. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Cents & Sensibility is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Please contact us if you wish to discuss how the points raised in this edition specifically affect you.
The knp Team