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Covid-19 Implications On Deferred Loan Repayments and What It Means For You. The Big Question?

Covid-19 Implications On Deferred Loan Repayments and What It Means For You. The Big Question?

With the initial sixth-month deferral period ceasing soon, lenders are commencing to contact customers who deferred their home and business loans due to the direct impact of Covid-19.

These borrowers make up for at least 260,000 mortgage deferrals and 105,000 business loan deferrals. More than 900,000 loans have been deferred in total since the beginning of this global pandemic.

But what does it mean for you? If you have deferred your repayment and are yet to resume paying it then, please read the following options:

 

  • If you are in a position to resume your repayments, by way of currently being employed or running a business that is coping well, you will need to start making these repayments which, possibly is a good thing. This is because lenders can capitalise unpaid interest from your deferred payments into the balance of your loan. So, the longer you defer your payments, the more unpaid interest will accrue. You could end up with a higher loan balance – and higher repayments – than when you started the deferral. Speak to one of our professional financial advisors to discuss this in greater detail.
  • If repaying the loan amount in full, is not a feasible option available, financially, fret not, there still might be a way around restructuring the loan, resorting to interest-only payments for a set time, or extending the loan term. Please bear in mind, these options are specially curated to decrease the impact of your repayments in the short-term, which might be the greatest relief you need, to get through this pandemic. However, greater care should be exercised as there may be long term ramifications. Always practice your due diligence and ask your lender what you will end up paying over the life of the loan. And if you are in any doubt, please contact us for a piece of professional financial advice before making any major decision.
  • Some mortgage holders who are still caught in a deep financial rut may be eligible for a further four-month extension to repay their home loans. However, it should be noted that this may be assessed on a case-by-case basis only. It is worthwhile discussing your current situation with your lender and unravel how a few months buffer may enhance your repayment plan. But once again, don’t forget to find out how much more you will repay over the life of the loan and what it would look like.
  • If you are facing a severe financial crunch and repaying your home loan looks like a distant dream, speak to our experienced and highly accomplished financial team, here at Prime Advisory, to understand your best options and map out a recovery plan for the future.

 

 

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NSW State Budget 2020-21

NSW State Budget 2020-21

The New South Wales (NSW) Government delivered the 2020-21 State Budget on 17 November 2020. The Budget forecasts a deficit of $16.0 billion in 2020-21 and a return to surplus by 2024-25, with net debt to return to around 7 percent of Gross State Product over the medium term.

Tax-related announcements include:

  • Reduction in payroll tax from 5.45% to 4.85% from 1 July 2020 to 30 June 2022, which is less than or equal to the lowest headline rate across all Australian jurisdictions (except for Queensland which has a rate of 4.75% for employers or groups who pay $6.5 million or less in wages).
  • A permanent increase in the payroll tax-free threshold to $1.2 million (up from the already introduced increased threshold of $1 million) from 1 July 2020.
  • A $500m “Out and About” program to stimulate spending in the local economy – including restaurants, visitor sites, and cultural attractions. Every adult resident will be eligible to claim up to $100 in digital vouchers for spending on entertainment and eating out.
  • For those small and medium businesses who do not pay payroll tax, each business will have access to a $1,500 digital voucher to be used towards the cost of any government fees from April 2021 to 30 June 2022. This will be available through the MyService NSW Portal and will operate as a rebate, where a claim can be made after fees have been paid.
  • Reform of stamp duty and land tax – the Government has announced a consultation process to tackle inefficient property taxes and will seek feedback from the public on a possible transition away from the current transfer duty and land tax regimes to a single property tax model, such as an annual property tax, that will reduce the up-front cost of acquiring homes and other properties.

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Why giving feedback in your personal relationships may not get the result you want and what you can do about it.

Why giving feedback in your personal relationships may not get the result you want and what you can do about it.

When you partner or someone close to you asks, “Can I give you some feedback?” how do you react? If you are human, your stress response will immediately switch on as you instantly brace yourself for what no doubt will be feedback on how you have messed up.  In the same moment, you start worrying about the impact of the feedback, how you will need to justify your actions and perhaps retaliate with some feedback of your own.

This is a sign that your primitive brain, responsible for your survival flight, fight or flee response is switched on and in the driver’s seat. With its seatbelt securely fastened, the primitive brain has detected a threat (i.e. incoming feedback) and initiated a cascade of stress hormones to be dumped into your system.  It also switches off all those parts of the brain (i.e. our thinking brain) that require either too much energy to run in this perceived crisis or may try and prevent it from fighting, fleeing or freezing.  This allows the primitive brain to focus on one thing and one thing only – getting away from the danger in front of it. Yes, that means that our primitive brains cannot differentiate between a perceived threat of receiving feedback to a real threat of being eaten by a lion! The kind of life-threatening event that occurred back when we lived in caves and gathered nuts, fruit and seeds for dinner.

Your brain and feedback.
Logically, getting feedback from someone is not life-threatening. Even if the feedback is hurtful, spiteful or maybe even has a ring of truth to it, you are not going to die. You are still alive and kicking once the words are said. However, most of us have not developed the ability to receive feedback without feeling a level of anxiety. Our first jump is often to the negative and that this feedback is probably a personal attack on who we are or what we have done. Even feedback that may be constructive and resourceful to the relationship. All the primitive brain perceives is a threat, and it responds in the same way it would have 100,000 years ago when we were faced with a real threat, such as a hungry lion.

Understanding our primitive brain’s default position and need to keep us safe and out of danger provides essential context for the person giving the feedback. Let’s assume your goal is to help improve your relationship rather than intentionally be critical and undermine the other person. Even if you’re coming from a loving place that is well-intentioned and genuinely invested in the relationship, it doesn’t mean the other person will be open to receiving your feedback.

The minute the person you’re offering the feedback to gets that you are about to deliver negative or critical feedback, their sympathetic or flight, fight or freeze nervous system switches on like the lights on a pokey machine when you’ve just pulled a winning four cherry combination. This activation serves the purpose of preparing their body for intense physical activity, the kind of action you need when you are running away from someone who is chasing you down a dark alley with a machete. In the process of preparing for the sprint of a lifetime, the person’s ability to thoughtfully receive and consider the feedback you’re offering, no matter how well intended, has gone walkabout.

Their brain literally can’t handle it. And this is the reason why giving negative feedback has been shown time and time again to have very little correlation to improving relationships. Even if your partner looks like they are fine on the outside as you string some well-intended sentences together, their brain is not in the right state to effectively receive, consider and apply your input.  All the required resources to do this have already shut down at the mention of ‘feedback’. It’s like the hamster wheel is turning but the hamsters not home.

More positive feedback isn’t the answer either.
Let’s face it, receiving feedback at the best of times is not a pleasant experience. The reason why we have this visceral negative reaction to feedback is that we’ve learnt growing up or been trained to believe that most if not all feedback is usually critical, and seldomly positive. Years of being reprimanded by parents or teachers have left their mark. Particularly if you grew up in the 1960s where physical punishment at school was commonplace, and teacher’s seldomly gushed with compliments.

Looking at your personal relationship perhaps providing positive feedback when your partner does something great is also not commonplace. So what if you suddenly start showering them with tons of positive feedback? Will this teach them that not all feedback is negative and therefore tame their primitive brain from climbing into the driver’s seat when they hear the word ‘feedback’? Unfortunately, this tactic still has its problems.

By all means, give out all the praise and recognition you can muster in your relationship. Make sure it’s authentic and honest, with no trace of sarcastic undertones, because most of us can spot ‘phoney’ a mile off. This, in itself, will probably improve your relationship. However, research shows that it requires at least five pieces of positive feedback to adequately balance one negative piece of feedback. That’s a heck of a lot of positive feedback in my opinion! It is also a tough habit to create and maintain, not because you lack the desire to do it but because we are focused on so many other things during the day that takes up our energy and time.

Making a sandwich of feedback.
Something I learnt in my corporate days was this concept of sandwich feedback. What it essentially means is that you sandwich crappy feedback between two fresh and yummy ‘slices’ of positive feedback. So, it may go something like this… “I love how hard you work to help put food on the table, however, please put the toilet seat down after you pee, but overall you are a great hubby.” Sorry to tell you but this doesn’t work either because of what psychologists call conditioning.

The reason being is the person you’re giving feedback to gets used to the fact that after every piece of positive feedback, negative feedback is likely to follow.  Like the lingering stench after you have emptied the bins on bin night but not washed out that liquid residue at the bottom. So even when you are complimenting them on the beautiful dinner they just cooked, they have become so conditioned to expect negative feedback to follow, their pokey machine lines up another four cherries and starts glowing like a Christmas tree. Within milliseconds the primitive brain climbs into the driver’s seat, and you know what happens after that. Worse yet, the two separate pieces of great feedback you so carefully planned, have lost their impact and the primitive brain is already changing lanes and heading for the hills.

There’s a better way of giving negative feedback.
To really make an impact in your relationship, you need to evolve the way you give negative  feedback from feedback being merely to correct or punish, to feedback that inspires growth and wanting to change. This is the difference between saying, “Don’t you dare get in my face again!” and “How could you approach me differently next time?” The first way may trigger some memories of you being dragged into the principal’s office to be reprimanded with a cane (only in my schooling days), while the latter takes a more collaborative and constructive approach. We are in this together.

Why does this approach make all the difference? Remember that critical feedback leads to our sympathetic nervous system lighting up and sending us into survival mode. However, when we focus on non-judgemental and ‘future looking’ statements, the primitive brain does not feel under threat.  Instead of the sympathetic nervous system switching on it stays nice and quiet, and the parasympathetic nervous system turns on instead. This is the rest and digest nervous system, which has the opposite impact on how receptive we are to the feedback message. The parasympathetic nervous system is responsible for calming us down and opens up our minds to receive the message, consider new possibilities and grow from the experience.

Below are several examples of what you could say:

  • Instead of saying, “I wouldn’t have done it that way,” say, “What do you reckon might happen if we tried XYZ?”
  • Instead of saying, “You need to improve how you talk to my mother,” say, “Based on what you know about my mum, how could you approach her differently to help her be more open to what you have to say?”
  • Instead of saying, “Your plan clearly didn’t work,” say, “I’d really like to get this done by the end of the month. How do you think we can get there?”
  • Instead of saying, “I don’t understand why you can’t get the garage sorted it looks like a bomb hit it,” say, “It will be so great when we have the garage done don’t you reckon? What do you need to make sure the garage gets sorted?”

This is the difference between demanding and collaborating. It opens up a conversation about how things can get done versus focusing on past failures. The aim is to get the other person to commit to a different behaviour moving forward that will positively impact your relationship. If they renege on their commitments, it opens up an opportunity to have a tougher conversation. It also indicates to them that you consider yourself to be in this together, and are willing to support them as needed.

There’s still a place for tougher conversations.
When you frame feedback in this way, you set the expectations for future behaviour in your relationship. This doesn’t however mean the other person will meet that expectation. They may not rise to the occasion or follow through on the commitments they have made. When this happens again and again, it is absolutely okay to take the conversation to the next level and create a firmer demand for what you need. How these conversations unfold is a different article for a different day, however, here is the key takeaway: those tougher conversations should not be step one of the process of improving your relationship.

By approaching feedback in this way, your create more space for your partner, family member or friend to have a constructive conversation, effectively hear and synthesise what you have to say and be clear on what your expectations are. If you do this well, you will potentially eliminate the need for more challenging conversations to take place later on.  The more open and honest we are upfront about what we are feeling or what we need helps create healthy relationships where conversations can be had, and we feel heard and appreciated.

Author: Leanne Wall
E: Leanne@drleannewall.com
W: www.drleannewall.com

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JobMaker hiring credits allow 450,000 Aussies to go back to work.

JobMaker hiring credits allow 450,000 Aussies to go back to work.

The government has given young Australians a leg up which will see employers given funds to subsidise eligible employee’s wages as a hiring credit. This $4 billion wage subsidy scheme is designed to get around 450,000 unemployed Australians back to work after million were forced out of work as a result of COVID-19.

The JobMaker Hiring Credit will be available to eligible employers over 12 months from 7 October 2020 for each additional new job they create for an eligible employee.

Eligible employers will receive:

  • $200 per week if they hire an eligible employee aged 16 to 29 years or
  • $100 per week if they hire an eligible employee aged 30 to 35 years.

The JobMaker Hiring Credit will be paid quarterly in arrears. It will be available for up to 12 months from the date of employment of the eligible employee with a maximum amount of $10,400 per additional new position created.

Employers will need to demonstrate that the new employee will increase overall employee headcount and payroll.

To be eligible, the employee will need to have worked for a minimum of 20 hours per week, averaged over a quarter, and received the JobSeeker Payment, Youth Allowance (other) or Parenting Payment for at least one month out of the three months prior to when they are hired.

For more information please call your PrimeAccountant on 02 9415 1511 or email reception@primeadvisory.com.au.

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Personal income tax cuts

Personal income tax cuts

As widely predicted, the Government has brought forward stage 2 of its planned income tax cuts by two years. Originally intended to apply from 1 July 2022, the tax cuts will come into effect from 1 July 2020 (subject to the passage of the legislation). The Treasurer the Hon Josh Frydenberg anticipates more than 11 million taxpayers will get a tax cut backdated to 1 July this year.

At a cost of $17.8 billion over the forward estimates, bringing forward the tax cuts is a controversial move. The Government argues that the measure will “boost GDP by around $3.5 billion in 2020-21 and $9 billion in 2021-22 and will create an additional 50,000 jobs by the end of 2021-22.” Others in Parliament believe the measure rewards higher income earners and the money could be better spent elsewhere. The Senate will decide whether the Government’s plan comes to fruition.

Stage 3 of the Personal Income Tax Plan that simplifies and flattens the personal income system remains scheduled for 2024-25.

  Tax thresholds
Tax rate Current From 1 July 2020 From 1 July 2024
0% $0 – $18,200 $0 – $18,200 $0 – $18,200
19% $18,201 – $37,000 $18,201 $45,000 $18,201 – $45,000
30%   $45,001 – $200,000
32.5% $37,001 – $90,000 $45,001$120,000
37% $90,001 – $180,000 $120,001 – $180,000
45% >$180,000 >$180,000 >$200,000
LITO Up to $445 Up to $700 Up to $700

Bringing forward the personal income tax plan will:

  • Increase the top threshold of the 19% tax bracket to $45,000 (from $37,000)
  • Increase the top threshold of the 32.5% tax bracket to $120,000 (from $90,000)
  • Increase the low income tax offset from $445 to $700

In addition, the LMITO (low and middle income tax offset), which provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000, will be retained for 2020-21. This measure was to be removed at the commencement of stage 2 of the reforms from 2022-23.

If you need any assistance please contact your PrimeAccountant on 02 9415 1511 or email reception@primeadvisory.com.au.

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