New working from home tax rate.

New working from home tax rate.

On 7th April 2020, the Australian Taxation Office (ATO) announced 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 an increased rate of 80 cents per hour for all their running expenses incurred during the period 1 March 2020 to 30 June 2020, including;

  • Electricity expenses associated with heating, cooling and lighting the area at home which is being used for work.
  • Cleaning costs for a dedicated work area.
  • Phone and internet expenses.
  • Computer consumables (e.g., printer paper and ink) and stationery.
  • Depreciation of home office furniture and furnishings (e.g., an office desk and a chair).
  • Depreciation of home office equipment (e.g., a computer and a printer).

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 and now you will only be required to keep a record of the number of hours worked from home. The new rate does not prohibit people from making a working from home claim under existing arrangements, where you calculate all or part of your running expenses. Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the new rate, and must use the pre-existing working from home approach and requirements. For more please click here.

As always, please don’t hesitate to contact the team 02 9415 1511 or email us reception@primeadvisory.com.au to see how this may apply to you.

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Commercial leasing code of conduct.

Commercial leasing code of conduct.

On 7 April 2020, the National Cabinet announced a mandatory code of conduct the ‘Commercial Tenancies Code’, to be legislated and regulated by each of the State and Territory Governments. Please see link below for the release document.

Click here for the Commercial Tenancies Code

The Commercial Tenancies Code is intended to mandate a set of good faith principles to be applied to commercial, retail and industrial leases where the tenant is eligible for the Commonwealth Government’s JobKeeper assistance and is a small or medium sized enterprise (with an annual turnover of up to $50 million).

The objective of the Commercial Tenancies Code is for a landlord and tenant to share the risk and financial impact during the COVID-19 crisis, whilst seeking to balance the interests of the landlord and tenant. It is expected that a landlord and each eligible tenant will negotiate in good faith, on a case by case basis.

The following leasing principles should be applied in negotiating and enacting appropriate temporary arrangements between a landlord and tenant under Commercial Tenancies Code. These apply during the COVID-19 crisis and for a reasonable recovery period:

  1. A landlord must not terminate a lease for non-payment of rent;
  2. A landlord must not claim on upon a tenant’s security (bank guarantee, security deposit or personal guarantee) for non-payment of rent;
  3. A landlord must freeze rent increases. This includes fixed and market reviews;
  4. A landlord must not impose any penalties or prohibition against the tenant reducing its opening hours or ceasing to trade;
  5. A landlord must offer the tenant a rent reduction proportionate to the trading reduction in the tenant’s business over the course of the COVID-19 crisis, through a combination of waivers of rent and deferrals of rent (Rent Relief);
  6. Waivers of rent must account for at least 50% of the Rent Relief;
  7. Deferrals of rent must be covered over the balance of the lease term and in a period not less than 24 months following the COVID-29 crisis;
  8. A landlord must not charge any fees, interest or other charges to the tenant with respect to waivers and deferrals of rent;
  9. A landlord must pass on to the tenant (with appropriate proportionality as applicable under the terms of the lease) any reductions in statutory charges, such as land tax, council rates and insurance. This will be seen through a reduction in outgoings costs;
  10. A tenant must honour the terms of the lease, as amended in accordance with negotiations under the Commercial Tenancies Code. If the tenant breaches the substantive terms of the lease in a material way, the tenant will forfeit any protection provided to the tenant under the Commercial Tenancies Code;
  11. A tenant should be provided with an opportunity to extend its lease for the equivalent period of the waiver or deferral period. This is intended to provide the tenant with additional time to trade on the existing lease terms during the period after the COVID-19 crisis;
  12. If negotiated arrangements under the Commercial Tenancies Code involve repayment by the tenant, this should occur over an extended period to avoid placing an undue burden on the tenant;
  13. This Code is effective April 3rd, 2020 until such time as the Job Keeper Program is concluded.

If a landlord and tenant cannot reach an agreed position on alternative leasing arrangements as a direct result of COVID-19, the matter should be referred to a binding mediation process overseen by the relevant State or Territory Government.

As always, we are here to help so please reach out if you have any questions 02 9415 1511 or email reception@primeadvisory.com.au.

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Superannuation guarantee amnesty September deadline

Superannuation guarantee amnesty September deadline

The long-awaited superannuation guarantee amnesty bill has now passed both houses and received royal assent. Employers will have until 7 September to disclose historical non-compliance before tougher penalties apply.

  • One-off opportunity to fix historical SG problems
  • What to do and when to do it
  • Avoid higher penalties that apply if you don’t use the amnesty

As previously spoken of in a blog on 29th of October the Superannuation Guarantee (SG) Amnesty has now officially passed legislation in Parliament and received royal assent. This SG amnesty provides for a one-off amnesty to encourage employers to self-correct historical SG non-compliance dating from 1 July 1992 to 31 March 2018.

The amnesty period will begin from 24 May 2018 to 7 September 2020, giving employers six months to get their SG affairs in order before a 100 percent minimum penalty applies. The new legislation will also impose minimum penalties on employers who fail to come forward during the amnesty period by limiting the commissioner’s ability to remit penalties below 100 per cent of the amount of SG charge payable.

Around 7,000 employers have since come forward to voluntarily disclose historical unpaid super since the amnesty was first announced on 24 May 2018. Treasury estimates an additional 7,000 employers will come forward during the six-month amnesty period, returning $230 million of superannuation to employees who may have otherwise completely missed out.

Given the complexity of the SG system and how difficult it can be to determine whether a worker is an employee, we expect many businesses are likely to have SG problems but don’t know it yet. As the amnesty period will end six months after receiving Royal Assent we urge you to get in touch with your accountant to begin taking advantage of the amnesty before harsher penalties apply.

Please contact us on 02 9415 1511 or email reception@primeadvisory.com.au.

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The effects of the Coronavirus

The effects of the Coronavirus

Since the outbreak of Coronavirus (COVID-19) on the 24th January 2020 there have been 4,027 deaths as of 10th March 2020 with 114,422 confirmed cases in 115 countries and territories. This has caused mixed results globally from a nationwide toilet paper shortage to extreme market volatility.

As the spread of the virus widens, we are seeing the effects globally, causing a lack of clarity and doubt for global investors. This is also impacting domestic businesses with supply deficiencies caused by China’s slowdown in production.  As the world’s manufacturing superpower accounting for 29% of production globally this was bound to have an impact.

We have seen the stock markets fall 14.98% year-to-date (at the market close on 9 March 2020) with GDP expected to slow by billions of dollars. This also encouraged the Reserve Bank of Australia (RBA) to announce its decision on the official cash rate for March slashing an already historically low interest rate by 25 basis points to 0.5%. AMP’s Capital chief economist Shane Oliver says, “Rate cuts won’t kill the virus or solve supply side constraints but they will help ease the pain for borrowers through this uncertain period and will help boost growth once the virus is under control.”

So, what should you do? Until more is known about the virus, we won’t fully understand the real economic and medical impacts of COVID-19 however we expect the volatility will continue. Please remember that our advice at times like these is to focus on the portfolio’s timeframe, generally years and decades, rather than weeks.

Should you have any concerns or questions you wish to discuss regarding COVID-19 and its impact on your finances please get in touch with your advisor on 02 9415 1511 or email reception@primeadvisory.com.au

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Health & Wealth

Health & Wealth

Talk about a vicious cycle. Money is one of the most significant causes of stress; unrelenting stress can lead to severe issues with our health, and severe health issues can affect our ability to do our jobs; resulting in even more financial struggles. The connection between health and wealth is why it is critical to develop and maintain lifelong plans to manage both.

Given my area of expertise, I will share some of my thoughts on what a long-term health plan should include at a minimum.

Exercise

Any physical activity is better than none. Research shows that exercise is one of the best short-term strategies for managing stress. It decreases our risk of developing heart disease and diabetes, thereby reducing the opportunity for stress to worsen these conditions. In general, exercise makes us feel good, improves our mood and increases our sense of self-efficacy and achievement. Some evidence even shows that exercise makes for a smaller stress response to some psychological stressors.

Getting active by walking at least 3-4 times per week will make a significant difference and help you manage your stress levels. Remember that exercise needs to occur regularly to give us the stress-relieving benefits, so put it in your schedule, and get moving. Don’t overdo it though and if you spent most of the past few years lounging on the couch with the TV remote close at hand, then see your doctor before you start pounding the pavements.

Sleep

Getting enough shut-eye is paramount to managing our stress levels and overall health and wellbeing. Although our brains are on average 3% of our body weight, they need 25% of our energy supplies! Research shows that deep sleep is essential for energy regeneration and if we don’t get enough deep sleep, we become more stressed. Research shows that 75% of insomnia is triggered by significant stress. Again, a vicious cycle: stress stops you sleeping, and no sleep makes you more stressed!

Cleaning up your sleep routine will have a significant impact on your stress levels general wellbeing. We need at least 8-9 hours of sleep a night, be device-free for at least 1-2 hours before we fall asleep, in a room dark enough that you cannot see your hand in front of your face and running a temperature of around 21 degrees Celcius.

Relaxation

Deliberately relaxing through meditation, breathing exercises, or mindfulness practices is important to switch off our sympathetic (fight or flight) nervous system and switch on our parasympathetic (rest and digest) nervous system. It also does wonders in reducing the amount of stress hormones that are circulating in our bodies.  The key is to do them regularly (15-30 min/day). There are so many apps available that can be used to help centre our breath and stay in the present.

Nutrition

Like cars, we cannot run on empty tanks or crappy fuel. Current nutritional guidelines call for eating a variety of vegetables and whole fruits; whole grains; low-fat dairy; a wide range of protein sources including lean meats, fish, eggs, legumes, and nuts; and healthy oils. By focusing on what we eat can make a massive difference to how our energy tanks are filled.

An 80:20 ratio of nutritionally valuable to nutritionally less valuable or junk food is a possible way to go. For those who feel they need to lose some extra kilos, try a 90:10 ratio during the week and 80:20 over the weekend. A word of advice if I may. Don’t be too strict when it comes to food, because we need to make it a way of life and our eating habits need to be sustainable.

When it comes to living a financially healthy life, recommendations are not quite as straight forward because it depends mostly on our individual circumstances. A long-term financial plan is, however, a must and I will leave this advice to our financial experts in next month’s newsletter.

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