Has COVID-19 impacted your property in super?

Author: Jason Roccasalvo, Partner, TAG Financial Services

These are difficult times. No one is immune.

For SMSF (Self Managed Superannuation Funds) Trustees, in addition to the ATO’s recent announcements some additional complexities may occur where:

Property rented to a related party

 Your SMSF may own commercial property, leased to your business. The ATO has provided some clarity that temporary rent reduction is permitted due to the impact of COVID-19, and they will not be taking compliance action around this.

However, SMSF Trustees should not be cavalier in their approach. Make sure you properly document the decisions and act as you would act if you were dealing with someone you don’t know.

Every SMSF will still need to be audited for the current year and a documented approach is crucial to display “commerciality” of the arrangement to the Auditor.

SMSFs with Borrowings

For SMSF’s with borrowings, the impact of a rental reduction may be even more severe.

Trustees should speak with their bank about assistance with repayment terms as should all clients concerned about their cash flow in these times.

If the SMSF has borrowed money from a related party, then ensuring the loan continues to comply with the ATO’s guidance is vital. In some instances, maintaining rent at normal levels may help meet the repayment back out to you as the “bank”.

Lower contributions due to reduction (or even loss of) employment may also impact (negatively) the Fund’s cash flow needs.

Commercial loan arrangements should be in place and continue, unless there are means to justify this reduction which are both commercial given the Coronavirus’ impact, and documented.

SMSFs should always act in a commercial manner when it relates to dealings with fund members or their business. Ensure documentation and reasoning can be shown to the auditor to assist the fund in staying compliant. Go the extra yard.

If you need help re-financing a loan, please don’t hesitate to reach out to our Finance and Loans team and discuss your individual circumstances by calling 03 9886 0800 or emailing loans@tagfinancial.com.au.

If you have any other questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Loan Options in Uncertain Times

Author: Sal Cinque, CEO, TAG Finance & Loans

We hope you and your families are well and please know we are here to assist in all matters financial.  As a consequence to the Australian Government’s measures to control the spread of COVID-19, many people are feeling the effects of reduced income.  This is creating concern, particularly those with home and business loans.

The banks have been quick to respond and are providing relief in a number of ways.  There is much media commentary about Repayment Pauses, unsecured loans to SMEs and other measures but little detail relating to eligibility, qualifying parameters, additional costs and potential consequences.

We encourage you to contact us if you have any questions, as we are well positioned to help guide you through the options and ensure you are best placed to secure your desired outcome.  Listed below are the key areas we are here to assist you with:

 

  • Loan Repayment Pause
  • Negotiating a lower interest rate
  • Restructuring your loan to Interest Only repayments
  • Extending the term of your loan
  • Refinancing your loan for additional funds  

Wishing you, your families and colleagues good health and safety and please don’t hesitate to reach out if we can assist by calling 03 9886 0800 or emailing loans@tagfinancial.com.au.

 

 

Disclaimer: The information contained on this page is general in nature. Professional advice should be sought before acting on any aspect on this page. TAG Finance and Loans Pty Ltd ABN 25 609 906 863 Credit Representative Number 483873 National Mortgage Brokers Pty Ltd ABN 88 093 874 376 Australian Credit License 391209

TAG is working remotely

Due to the impact COVID-19 is having on our community the TAG team are now working remotely.

We would like to reassure you that our team are available to be contacted as usual, and we will remain available to you to address any questions.

  • Emails –  will be actively monitored and responded to. If you can email us your query, please do so.
  • Phone – our office phone is being diverted to our friendly team. If our phone does go to voicemail, please leave a message so we can get back to you.
  • Meetings – scheduled meetings will be carried out either via telephone or video conference.
  • Scanning Documents – please scan and email documents where possible instead of mailing. We will have limited access to mail during this time.
  • Invoices – we ask that invoices are paid through our online portal, go to: https://www.tagfinancial.com.au/pay-my-invoice
  • Where possible, our service standards will be maintained. Where required, services will be prioritised.

We understand that these are challenging times for everyone. The actions we have taken will ensure we continue to deliver a great level of service to our highly valued clients, whilst also minimising any risk to the health and wellbeing of our team and clients. We will continue to update you regarding our working arrangements.

We wish everyone the best of health during this difficult time.

Email: team@tagfinancial.com.au
Phone: 03 9886 0800

JobKeeper Payment Stimulus – Friend or Foe

Author: Tony Rule, Partner, TAG Financial Services

Hope is important at any time, but is critical to get through this dynamic and fast moving crisis.  However, false hope can be very dangerous and in these times could easily have a business drive off a cliff.  When a business drives off a cliff, gravity brings everything down including other businesses, a lot of employees and the life-savings of a business owner.  These losses will add to the pressure on already strained financial and health support systems.

The JobKeeper Payment is a moving feast, having been announced on Monday and being updated daily.  As of yesterday, the status is as follows:

Should employers participate in the JobKeeper Payment?

The answer is yes – if you are eligible.  Short of the business being dead and buried, the benefits are worth the administration.

Every business is in a different situation, but here are some important points to note about the JobKeeper Payment:

Is my business eligible for the JobKeeper Payment?

Most businesses are expected to establish that turnover has fallen by 30% (or 50% if more than $1b) compared to the same period last year.  The “period” is now the “natural activity statement reporting period of that business” which we assume will be how often you report your GST on your BAS – this will be either monthly or quarterly.  For businesses with turnover more than $20m, you should be lodging BAS’s monthly.  For most businesses under $20m, your BAS will be quarterly.

Your business will then either be comparing sales to the same month last year (if monthly BAS) or the same quarter last year (if quarterly BAS).  Assuming your business is quarterly, you will then need to consider what your income will be in the June and September quarters and if it is expected to be reduced by 30% (or 50%) or more, then you qualify for the payment.  If you are wrong, the government note that “there will be some tolerance where employers, in good faith, estimate a greater than 30% (or 50%) fall in turnover but actually experience a slightly smaller fall”.

Where a business was not in operation a year earlier or where turnover from the previous year is not representative of “usual or average turnover”, the ATO will “have discretion to consider additional information that the business can provide to establish that they have been significantly affected” by the Coronavirus.

Whilst not defined, we expect that turnover will be sales of the business as indicated on the BAS and would not include interest earned, rent received and other non-operating income.

How much will I receive, how much will I pay and when?

You will receive $1,500 per eligible employee per fortnight for up to six months – which equates to a maximum of $19,500 per employee.  This will be treated as income in your business and whilst not stated, it is expected that this income will not be exempt from tax.

You will need to pay employees at least $1,500 (before tax) per fortnight, even if they normally earn less than that amount each fortnight.  It is important to factor these additional wages into your cash flow budgeting, because you cannot just assume that your wages cost will remain the same.

Employers will have the option as to whether to pay superannuation on any “additional wage” paid because of the JobKeeper Payment or not.  We take additional wage to be the increase from what the employee was earning pre-Coronavirus versus the $1,500 per fortnight or more amount over the next six months.

Whilst not confirmed, we would expect that the JobKeeper payment will be treated as normal wages for all other considerations (eg. workcover remuneration, payroll tax, etc.)

Payments that will need to be paid to employees under various circumstances include:

Employee ordinary income per fortnight Payment to employee under JobKeeper Payment
$1,500 or more Continue to receive regular income according to their “prevailing workplace arrangements”
Less than $1,500 Minimum payment of $1,500 per fortnight, before tax
Employee stood down Minimum payment of $1,500 per fortnight, before tax
Employed at 1 March, ceased and then re-engaged by the same employer Minimum payment of $1,500 per fortnight, before tax

It is unclear whether “prevailing workplace arrangements” represent the employees ordinary income pre-Coronavirus or an agreed remuneration in the current environment.

Regardless of whether you are a quarterly or monthly BAS business, all payments are due to be paid by the ATO to businesses monthly in arrears.  This means that business will need to pay out the wages before they will receive the JobKeeper Payment from the ATO in the following month.

The Latest Information

The Government are continuing to update how the JobKeeper Payment will work.

For the latest information for employers and empoyees – please go to this link – https://treasury.gov.au/coronavirus/jobkeeper

So is it a friend or a foe? 

We advise all to proceed with caution on what looks like silver and gold.

We should highlight that this initiative will do some good but please monitor your expectations – it is only and can only be a lifeline.  The JobKeeper Payment is designed to assist and motivate the employer to not let their great people go and to keep pressure off a welfare systems that is already struggling.   It also ensures that people stay away from the poverty line as the survival of all is the prime objective.  Then when things start to get better, businesses and their teams will be able to get up and running faster.

Be aware that the JobKeeper Payment will not fund your rent or the other large fixed costs of your business through this difficult period – so you must continue your cost control and cost cutting measures where needed.  As Scott Morrison advised us – we need to negotiate and we all must share the pain.  Not everyone is going to understand that at this point.  We had a client commence discussions with the landlord regarding rent assistance and got the feedback “pay your rent – you’ll be fine, you’ll get plenty of JobKeeper money!”  One of Australia’s wealthiest men, Solomon Lew showed us with his actions last week that rents will cripple your business if they are not addressed.

The JobKeeper Payment will be administered by the ATO (if that organisation gets any bigger it will outgrow the country).  After the press conference on Monday afternoon announcing the JobKeeper Payment, there were 60,000 applications received by midnight.  The first of the JobKeeper payments will commence on 1 May.  Let’s hope the systems don’t crash during the application process like they have before.

This is real money, flowing into real bank accounts for real businesses and real people to use and it will make a substantial difference and most importantly creates hope.

The JobKeeper Payment is definitely a new friend that you need to be a little wary of. And make sure that it’s not your only friend.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Clarification of the “Cash Flow Boost”

Author: Tony Rule, Partner, TAG Financial Services

The Cash Flow Boost announced in the second stimulus package by the Federal Government on 22 March 2020 has understandably created some confusion amongst business owners.

The Cash Flow Boost is not a payment to the business owner – it is actually a credit that is processed to the ATO account.  The credit simply means that the business has a reduced amount to pay to the tax office and is not a payment to the business.

As a reminder, the credit is based on 100% of PAYG withholding up to a maximum of $50,000 (and a minimum of $10,000) on the March 2020 BAS and then the same amounts spread over the June and September BAS’s.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

 

The JobKeeper Payment – an economic vaccine?

Tony Rule, Partner, TAG Financial Services

In a bold move Scott Morrison and the Australian Government have announced the shot in the arm that Australian business was calling for to battle the impact of the Coronavirus.  The JobKeeper Payment will help many employers retain employees over the next six months to keep business and the economy primed and ready to take off in a hopefully post COVID-19 Spring.  For some businesses however, this incentive will be too little too late.

Businesses with a turnover of less than $1b that suffer a 30% or more decline in sales relative “to a comparable period a year ago (of at least one month)” will be eligible to receive $1,500 per fortnight for each eligible employee for that month.  The business must then pay at least $1,500 per fortnight to each eligible employee (defined as full-time, part-time or long-term casual employees of the business as at 1 March 2020) for a maximum of six months.

To receive the JobKeeper Payment, employers must:

  • Register with the ATO that they have or will experience a 30% decline in turnover (or a 50% decline if turnover is more than $1b),
  • Provide information to the ATO on eligible employees including the number of employees at 1 March 2020 and the current number of employees through Single Touch Payroll,
  • Ensure each eligible employee receives at least $1,500 per fortnight (before tax) which includes topping up those employees that were earning less than $1,500,
  • Notify eligible employees that they are receiving the JobKeeper Payment, and
  • Continue to provide monthly information to the ATO on the number of eligible employees employed by the business.

Eligible Employees will be:

  • Currently employed by the employer (even if stood down or re-hired),
  • Were employed by the employer at 1 March 2020,
  • Are full-time, part-time or long-term (more than 12 months) casual employees,
  • Are 16 years or older,
  • Are Australian citizen, a permanent visa holder, a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder living in Australia for more than 10 years or a Special Category Visa Holder, and
  • Not in receipt of a JobKeeper Payment from another employer.

The key points of the JobKeeper Payment are:

  • The receipt of the JobKeeper Payment amounts will be treated as income in the business and payments to employees will be treated as wages expense.  The JobKeeper Payment amounts will not represent a loan from the government.
  • The payment will be made to employers monthly in arrears with the first payment occurring from 1 May 2020 and will be available for a maximum period of six months.
  • Employees that earn less than $1,500 per fortnight will be increased to $1,500 per fortnight under the scheme and employers will have the choice of whether to pay more than $1,500 per fortnight to employees that are normally earning more than that amount.
  • The eligibility is determined by a 30% drop in revenue (if under $1b) based on a comparable period (of at least one month) from a year ago.
  • This announcement should help most business owners to survive even if in “hibernation” for the next six months.

This program is estimated to be worth $130b – the biggest ever announcement of its type in Australia and whilst we expect that we (as a country) will be paying for this expenditure for many years to come, it is a move that will get as many businesses as possible through the next six months.

 

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Message from our Managing Director

Mark Templeton, Managing Director, TAG Financial Services

These are challenging times.  It will at times be frightening and it will be a fight for survival.

At the commencement of this crisis I met with our Board and we immediately enacted our disaster management strategy.


This strategy has 3 points of focus:

1 | Health and Safety
We are ensuring the health and safety of our team and our clients. We are open for business and abide and where possible exceed required health standards. Please note we are being very strict regarding these rules!

2 | Maintaining employment
We are taking actions and putting in place measures to ensure we survive. We believe plans need to ensure businesses and individuals can get through a very difficult 6 months, which may even be longer.

3 | Payments to employees and service providers

Economies must have the flow of money. We will continue to monitor cashflow and ensure all parties are treated fairly with payments allowing business to be done and ensuring employees can meet required payments such as rents and mortgages.


This is a significant crisis and while it is important that we all focus on the virus and contribute to reducing its spread, we must also be mindful and be preparing for a financial crisis and the health consequences that come with that. It is not a time to panic but it is not a time to put your head in the sand and hope it goes away. Now more than ever is a time to think, communicate, plan and act.

TAG Financial Services will survive, and we will be available to ensure that you, your family and where applicable your business survives. We are attempting to communicate with you all, but where we have not gotten to you and you need us, please contact us. We will prioritise service needs and please remember to read all our emails and blogs. These blogs are carefully written for quick reading and immediate implementation by individuals or businesses.

We have plans in place where a full shut down occurs. While this may slow our response times or alter the way we communicate with you, we will still be there for you.


A Word of Warning:

In these times of uncertainty – be very careful about who you think you can rely on to survive from a financial perspective.  I would have a mindset that you’re in it alone – and then be grateful for those that can and do support you.

Be careful if you are relying on the Government to come in and save the day.  In my view, despite the talk, the government at all levels have delivered little that we foresee will make a meaningful difference to business.  The “stimulus” offered so far is a tax deduction for an item that none of us will be buying at this point in time and a deferral of tax that we pay them. In our view, it amounts to nothing!  We are in communication daily regarding the $250,000 working capital loans and that is looking like a debacle as every hour passes.  I fear that once they are able to outline what they are offering, it will take weeks to process and then I am sure the banks will work out a way to rip anyone off that can actually get a loan. That leads me to the banks (the classic wolf in sheep’s clothing) – negotiate hard with them knowing what they can do and offer, but remember they are not your friend.

The good news is that now and during this crisis you will find people you can rely on. They will come from places you would expect such as business partners and service providers including all of us at TAG.  You will also see some great results from your team standing up to another level with future leaders emerging.  You will take yourself to another level.


What is my view of how this will play out?

No one can tell you exactly what will happen, but when we had Christmas lunch in December, we would have never thought the world would be where it is now.

My view is that we have another 2 to 3 months of downward spiral as we fight and contain the virus.  This will exacerbate the impact for business and personal finances. Then we will have another 3 months for those that have survived the downward spiral to fight their way back to safety.  This will involve sorting out the financial carnage, getting people back to work and getting what businesses are left up and running.  Those of us back in business and those with a job will then enjoy the pleasure of working hard together to get back to some level of normality in the years to come.

It will be a new normal – we will treat each other better; we will treat our environment better and we will treat our bodies better.

I do hope I am wrong, not with the new normal but with the consequences of this pandemic.  I hope I look back in 3 to 6 months and smile to myself with how I overreacted.

Do not be complacent about your health, your finances or your business but do not panic – act!

The sun will come up tomorrow!

When this crisis is over, and it will end, what will you have gotten out of it?

If you have any questions, please contact us on 03 9886 0800 or via email.

 

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Webinar Now Available – minimise the impact of COVID-19 on your business

Q&A PANEL DISCUSSION:
MINIMISE THE IMPACT OF COVID-19 ON YOUR BUSINESS

This is a really uncertain time for business owners and a lot have gone into panic mode.

This is completely understandable but it can often have a negative effect on your business as you may make rushed and possibly wrong decisions that will cost you in the long run.

We have assembled a panel of business experts in different fields to help cut through the noise and provide some clarity and guidance in these worrying times.

Are you doing everything you can to help your business survive? Do you have all the information before making important decisions with your business?
If the answer to these questions is no then you should make sure that you are properly informed. Whether by this webinar or your business network.
Our panel of business experts is here to help you be informed and prepared and make the best decisions you can.

To watch the webinar click here.

Investment Update – focus on the long term

Author: Leigh Jobling, Partner, TAG Financial Services

The last 2 weeks have seen fear around Coronavirus (COVID-19) reach new heights with the World Health Organisation officially declaring the condition as a Pandemic.

Equity markets are being heavily sold off due to the potential expected impact on economic activity and world growth. Naturally, corporate profits will be negatively affected which in turn erodes investor confidence.

As we noted in a previous Investment Update blog, given the breadth and length of this issue is not fully known or understood, it’s typical that markets react negatively to such uncertainty.

Share market volatility has been exacerbated by the steep fall in the oil price as Russia and the Middle East flood the oil market with excess supply.

There’s no doubt what we are experiencing and seeing on the news is somewhat confronting, with many countries taking isolation measures and limiting the movement of their citizens and travelers and seeing images of long queues and empty shelves at supermarkets.

Leaders across the globe are making decisions on an hourly and daily basis protecting their borders and the health status of their people with financial stimulus to ensure their countries and the world financial systems continue to function.

This is a health crisis – with an undeniable negative impact on economic activity, corporate and personal incomes and balance sheets and market performance.

This is not akin to the Global Financial Crisis when global liquidity froze and took years to recover to a more normal position. When COVID-19 passes, increased economic activity is likely to increase as people book holidays, go back to the shops and business invest in growth. Governments and central banks are already acting to support economic activity.

No doubt some businesses will fail and many individuals will suffer financial distress. These impacts will take some time to overcome. Depending on the level of loan defaults, it’s possible that a financial crisis may ensue. Again, stimulus packages by Government and reserve banks to support businesses, jobs and livelihoods will be critical.

Its important to focus on the long-term and stay the course. Resist the temptation of following the herd. 

Contemplate the following chart. It clearly demonstrates the risk around selling out and trying to time re-entry.

 

 

 

 

 

 

 

 

 

The chart below shows the rebound of markets (US share market) 150 days after the initial on-set of a significant negative market event.

 

 

 

 

 

 

 

Should you have any queries or wish to discuss your investment strategy, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

10 Practical Tips for Business Survival

Author: Tony Rule, Partner, TAG Financial Services

In times of crisis, it is important for leaders to stand tall and lead. There is no doubt that the current Coronavirus pandemic and the resulting impact on the Australian and International economies are serious matters. As a business owner, now is the time for you to lead your business decisively and with purpose. This will give your business the best possible chance of survival.

The top 10 tips for surviving the Coronavirus financial disruption are:

1 | Cash
Determine how much cash you have available today. This may include your fighting fund, loan redraw facilities, personal funds and other cash amounts. Cash (more than ever) is king.

Ensure you understand the impact on sales receipts, supplier payments, and overheads such as rent. At this point, we recommend this be calculated and estimated on a weekly basis for the coming months. If you are not already in this habit, and need assistance to put processes in place, please contact TAG Financial Services.

2 | Income & Expenditure
What is your income looking like? How reliable is it? Is it based around one large client, or many small ones? How will your industry be impacted?

What is your expenditure looking like for the next six months? What is discretionary? What can be turned off now?

3 | Manage staffing needs
If your business is suffering a dramatic reduction in staffing requirements, limit your use of casual staff and the hours of part-time staff, and implement your full-time staff across the business as necessary. Keep in mind that you will likely need these staff again once the crisis is over. Most people will be supportive of a reduction in hours of work to support the business and preserve their position. Keep in mind your obligations – Fair Work Australia has some guidance here.

Consider how your staff are managing the crisis. Managing relationships with your staff is one of the most critical elements of any business in the best of times, let alone now. With many people under pressure in the community with family and other needs, ensure the mental health of your staff is being considered and supported.

4 | Look ahead
How long would your cash reserve last if only 50% of invoices were collected? How long would it last if there was no income?

5 | What can you change? Start now!

a) Rent – negotiate with your landlord – or failing that does your lease have “force majeure” clause?
b) Wages – is it time to stand-down idle employees or will there need to be some redundancies?
c) Suppliers – communicate with suppliers about extended payment terms – we need to work together to get through this.
d) Customers – how will you be working together in the future? What will need to change?

6 | What assistance is available?

a) Deferral of Activity Statement and other ATO liabilities of up to 6 months.
b) Payroll tax refunds (wages under $3m).
c) Refund of PAYG Instalments from earlier quarters.
d) Apply for the $250k unsecured working capital loan
e) Refer to Summary of Announcements for Businesses: COVID-19 blog for the major initiatives at the time of writing.

7 | What if my business is locked down?

Ensure you are technically able to operate with a lock down. You should have the mindset of when not if. Consider:

a) What tasks can be done at home?
b) Which team members do you need at the moment?
c) Is this break an opportunity to re-design the business model?

8 | Is it time to wind up the business?
Sometimes an early call is better than a late call.

9 | Seek good advice
Get good advice from the appropriate advisors to help you get through this.

10 | Remember
Set aside your emotions, clarify your purpose, communicate your steps and then implement your actions.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

Tips to Reduce Spending and Manage Your Affairs Now!

Author: Leigh Jobling, Partner, TAG Financial Services

In these challenging times, the COVID-19 pandemic will have a significant financial impact on most of us over the coming months. There are many things that we can’t control but we can take a serious look at our spending habits. Below are some tips on reducing your spending that you can implement now.

Review your expenditure

Review discretionary expenditure
To identify discretionary expenditure sit down and list all the things you spend money on and pay for. If you pay most of your bills on credit card review the last 6 months of statements and make some decisions. Ensure you are never spending more than you earn. Visit the government MoneySmart website has some great tips on budgeting.

Review and eliminate all “lazy” expenditure
Look at all subscriptions and memberships that are being direct debited from your account. Ask yourself if you are using them or if you really need them.

Review Insurances
Shop around your car, house and contents or private health insurance – you may be surprised how much you can save. Personal life insurances or income protection insurance can often be purchased via superannuation. Speak with your super fund to see if you can obtain this in super instead of paying the premiums yourself. Speak to the experts in our Investment Advisory & Wealth team for some feedback on this if you need to, as all insurances are not the same.

Work with your bank

The 4 major banks have announced measures to assist customers
If you have a mortgage, some banks may let you move to interest only payments for a while. Others may entertain a repayment holiday for a number of months. Check with your bank directly and see how you qualify (many have a dedicated COVID-19 process you can follow). Many banks are also offering super low rates on 2-3 year fixed loans which may help if there’s an opportunity for you to re-finance some or all of your loan. Our TAG Finance & Loan team can assist with re-financing.

Review Credit Cards.
Save high interest costs on credit cards by considering using your redraw capacity on your home loan to pay off credit cards. Then reduce your credit limits or chop up your cards – don’t spend money you don’t have. If you have an issue with credit card debt then watch our Credit-cards-friend-or-foe webinar for more tips.

Avoid pay later schemes
Avoid temptation of using buy now pay later schemes to purchase goods at shops or on-line. The cost of not meeting the 4 regular payments is extreme and again you are spending money you don’t have and therefore may not be able to repay.

Protect your cash flow

Speak to your landlord
If you rent, speak with your landlord about reducing the rent temporarily. Most property investors would rather retain a great tenant than not earn any income at all on their investment property.

Increase Frequency of Payments
Contact service providers that issue large annual or quarterly invoices (council rates, insurance companies, energy providers, etc) and see if you can move to monthly payments. Beware of any fees or extra costs.

Know what help you can access

Government payments, benefits and concessions
The government has announced various benefits in response to the COVID-19 pandemic, for example, Jobseeker payments will be doubled for those who are now out of work. A good summary can be found at: https://moneysmart.gov.au/covid-19-financial-assistance

Speak to your family about the situation and what measures you want to put in place and why. You will need to pull together to help and support each other at this time.

If you have any questions, please contact us on 03 9886 0800 or via email.

 

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).

COVID-19: Superannuation Announcements

by Jason Roccasalvo, Partner, TAG Financial Services

The Federal Treasurer announced yesterday (22 March) the following measures that have a direct impact on superannuation:

Pension Reductions

The immediate reduction of pension minimums for the 2019/20 and 2020/21 financial years.

Some may recall a similar measure during the GFC between 2009 – 2013.

The announced reduction is a 50% reduction, reducing minimum percentages to:

Age NEW reduced minimum Previous minimum
Under 65 2% 4%
65-74 2.5% 5%
75-79 3% 6%
80-84 3.5% 7%
85-89 4.5% 9%
90-94 5.5% 11%
95+ 7% 14%


Early Release of Super

Individuals in financial stress as a result of the Coronavirus (COVID-19) will be able to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

Eligible individuals will be able to apply online through MyGov for access of up to $10,000 of their superannuation before 1 July 2020.

They will also be able to access up to a further $10,000 from 1 July 2020 for another three months.

They will not need to pay tax on amounts released and the money they withdraw will not affect other Government payments such as Centrelink or Veterans’ Affairs payments.

If you have any questions, please contact us on 03 9886 0800 or via email.

Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).