Talk Around Town

Talk Around Town

This year has started off with a few issues, namely the fires and now the current threat, the Coronavirus, but there is enough written about those without having to re-cap.

I want to say how proud I am, how proud the whole team at Transport Finance is to be working not only within the Transport sector, but with Civil, Construction and not to mention our Pharmacy clients. I big thank you and congratulations on continued service to all.

The work ethic that we have encountered over the past 6-8 weeks in a time of difficulty for the country, amid State based restrictions, State borders closing, Social distancing and home lockdowns – the spirit our customers that has simply rolled up its collective sleeves and marches on has been fantastic.

We have continued to work from the office/s that we all work from – quiet frankly we have experienced the busiest three months just gone than we have for nearly 2 years.

There is a range of offers from both State & Federal Governments on offer to assist all businesses – I have highlighted some of these available in this newsletter. They are a moving target with new offers of assistance announced almost every 48 hours – these listed here are a guide but will NOT be all that is available – please go online and research these for yourself or contact your accountant for advice.

Also, the Banks are offering deferment options on a range of loans, home loans, equipment loans and business loans ranging from 3 or 6 months at this stage.

Government COVID-19 Stimulus Plan: Tax-related Measures

Note: current as of 25 March 2020

Federal Government 

Stimulus MeasuresEffective Date
Support for businesses
Instant asset write off 
Instant asset write-off threshold for depreciating assets under $150,000 for businesses with aggregated annual turnover of less than $500m

The depreciable assets applies to both new and second hand assets first used or installed ready for use from 12 March 2020 to 30 June 2020 

The instant asset write off will revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020 
12 March 2020 to 30 June 2020                                                   
Business accelerated rate of depreciation 
Immediate deduction of 50% for eligible expenditure that does not fall within the above instant asset write-off, either because the item exceeds the $150,000 threshold, or the item is not first used or installed ready for use by 30 June 2020 for businesses with aggregated annual turnover of less than $500m 

Eligible asset are new depreciable assets acquired after 12 March 2020 and first used or installed by 30 June 2021

This incentive does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43
12 March 2020 to 30 June 2021
Cash payments for SMEs employers and charities
Businesses and not for profit organisations with turnover less than $50 million will receive cash flow boost payment between a minimum of $20,000 and up to $100,000

Eligible employers that withhold tax on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000 for each phase of the payment

The payment will be made in two periods, firstly the quarters ending in March 2020 or June 2020 and secondly the quarters ending June 2020 and September 2020 for quarterly BAS lodgers and the relevant monthly periods for monthly BAS lodgers

It will be generated automatically and will be a tax free amount. It will be included as credit on the relevant entity’s Business Activity Statements

Entity must have held an ABN on 12 March 2020 and have carried on an enterprise at that time
March 2020 BAS to September 2020 BAS
50% subsidy apprentice wages
Wage subsidy of 50% of apprentice or trainee wages for up to 9 months from January 2020 to September 2020, maximum benefit is $21,000 per apprentice or trainee, for small businesses with fewer than 20 full time employees
January 2020 to September 2020
ATO concessions
PAYG concession SMEs can vary the PAYG instalment amounts to zero from the March 2020 quarter, and claim a refund for any instalments made for the September 2019 and December 2019 quarters taxpayers

BAS payment deferral: Taxpayers can request the ATO to allow deferral of payments of BAS (GST liability, PAYG instalments and FBT) for 4-6 months

Monthly BAS: taxpayers on quarterly GST reporting can opt into monthly GST reporting

Remission of interest and penalties: Remitting any interest and penalties incurred on tax liabilities on or after 23 January 2020 for taxpayers impacted by COVID-19
From March 2020 quarter determined per case
Support for individuals and households
Individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
From mid-April 2020 

State and Territory Governments

StateStimulus Measures

NSW
Payroll tax waived for the March 2020, April 2020 and May 2020 payroll tax returns  25% reduction on payroll tax payable in the payroll annual reconciliation due by 28 July 2020, for business whose total grouped Australian wage for FY19/20 is less than $10 million Payroll tax threshold increased to $1 million from 1 July 2020
ACTPayroll tax waived for 6 months for businesses in the hospitality, arts and entertainment industry Payroll tax deferral for FY20/21 for businesses grouped with Australian wages up to $10 million until July 2022
VICPayroll tax waived for FY19/20 for businesses with annual taxable wage up to $3 million. The eligibility threshold applies to each employer, so any member of a group that pays taxable wages of less than $3 million per annum will be eligible. Payroll tax deferral for first quarter of FY20/21 for businesses with annual taxable wage up to $3 million until January 2021 Land tax deferral for the 2020 land tax payment until 31 December 2020, for land owners with at least one non-residential property and total taxable landholding below $1 million. Payment will be required in full by 31 March 2021
QLD6 months payroll tax deferral for all businesses until 3 August 2020. Need to make online payroll tax deferral application 
WAPayroll tax deferral for FY19/20 for businesses with annual Australian taxable wage <$7.5 million until 21 July 2020. Need to make online payroll tax deferral application  An one off grant of $17,500 to be automatically paid to businesses with annual Australian taxable wages between $1 million and $4 million, paid from July 2020 Payroll tax threshold increased to $1 million from 1 July 2020
SAN/A
NTExtend the existing payroll tax exemption for hiring Territory employees to 30 June 2021
TASPayroll tax waived for the March 2020, April 2020, May 2020 June 2020 payroll tax returns for businesses in the hospitality, tourism, seafood industry businesses and businesses with annual payroll of up to $5 million 12-month payroll tax rebate for businesses that employ persons under 24 between April and December 2020

TALK AROUND TOWN

Tis the season for Elections it appears, between Victoria late last year, NSW and now heading in to a Federal Election in May.

The odd thing this time around it at appears in each one, the result is a forgone conclusion.

Despite which side of politics you may reside, the end result will either be a little more or a little less in your pockets. At the end of the day, business will roll on regardless with little or no change.

The final report from the Hayne Royal Commission in to Banking ended with a whimper not a BANG! The big Banks copped a caning and some humiliation in the public domain but are basically marching on unscathed.

The Banks have made some internal changes post reviewing their credit policies that have resulted in a far greater level of disclosure. We are still getting deals approved, but we require your help in doing so. We will be requesting more detailed information and providing Banks with a greater level of disclosure than ever before.

Interest rates are stable at the moment as they have been for some time now. I’m not Nostradamus but I don’t see any movement, up or down, before at least November 2019.

Infrastructure projects continue to roll on and these opportunities are creating demand for new product amongst our clients, which is a very positive thing

Talk Around Town

WOW… JUST WOW, The Banking Royal Commission has unearthed a raft of allegations against the major Banking institutions in the land. Alleged bribery, forged documents, repeated failure to verify customer’s living expenses before lending money and misselling insurances to people who can’t afford it.

All the four Banks; CBA, ANZ, NAB and Westpac have been caught up in the Royal Commission, not one has been spared and the evidence to date has been appalling.

In addition, last August Austrac (Australian Transaction Reports and Analysis Centre) announced it was suing the CBA Bank for 53,700 breaches of money laundering and counter-terrorism financing laws after the Bank failed to report $77m worth of suspicious transactions.

In November, the federal court-imposed penalties of $10m each on ANZ and NAB for attempting to manipulate the bank bill swap rates.

So how has this impacted the financial services industry and what does it mean for you, right now?

Every week a new revelation comes out of the Royal Commission, and the next week the Banks change their processes and terms of reference to try to stay ahead of any report or recommendation that will be handed down. The first interim report from the Royal Commission is due in November.

It means that transactions that may have been approved last week will no longer get the ‘green light’. It may mean that the level of information that we require from you to gain approval has increased 5-fold from last week to this week.

It means that pricing for each transaction changes as Banks realise that there is a greater cost on them to meet the new level of compliance required.

In some cases, each and every deal is subject to an audit after the transaction has settled…this has made the credit staff extremely nervous in a) making a decision and b) being able to justify why they made the decision…hence, every detail has to be correct and the applications we submit need to be complete and comprehensive.

I ask you to be patient with us as we work through the changing landscape of what is required and if we seem to be asking for more and more information to satisfy a loan approval, be rest assured it is required.

Our team is getting weekly updates from all banks & finance companies that we deal with (some 25 at last count) and we are perfectly placed to guide you through the ever-changing labyrinth of requirements to get you, our clients the best deal available – first time.

With over 22 years’ experience in funding trucks, equipment and machines, be rest assured we understand what is required and still maintain a + 90% success rate on all applications.

Talk Around Town

So just where are we at after 10 years of the GFC?

It would appear that some commentators are split…one stating we are heading for 8 interest rate increases in the next 2 years, and another stating that there would not be a change in 2017. Both statements made within a week of each other and both by former Reserve Bank board members.

What the RBA did say recently, the ‘normal’ for interest rates as they see it, is around 3.5% – we are currently sitting at 1.5%, so there is obviously ground to be made up to reach 3.5%. However, no time frame has been put around just when and how often we can expect increases.

If the AUD$ goes north of USD$0.80, which appears possible, I would not expect another cut. The only way from here is up, but we may not see the first increase until 2018.

Property price crash predictions have now been replaced by more conservative observations that property prices will not crash but slow to small single digit percentage increases year on year.

The one thing that most experts are agreeing with, is that within business the conditions we are seeing now and for the past 6-8 months have returned to where they were pre-GFC. This level of business confidence is a great sign of things to come.

Couple that with Government infrastructure spending and numerous big and small projects now on the go, especially prevalent in Victoria and NSW…we enter the new Financial Year with renewed vigour and enthusiasm.

(Below, reported on ABC News from NAB report, 12/7/2017)

Talk around Town

We continue to see the low interest rate environment dominate the current economic cycle. This shows no signs of abating any time soon. There are some economists predicting the next RBA decision on movement of rates will see a further reduction – personally I’m not so sure.

I can see the current rate held for some months to come, well in to 2017…

The rise and rise of house prices has been ongoing, despite experts predicting its demise. It will be an interesting watch and observe what eventually happens in this area.

Whilst the RBA has lowered interest rates to the lowest point in history, the Banks/Financiers are certainly holding firm on their margins when pricing equipment deals. With equipment lending offering fixed rates for the term of the loan, the lenders are making a decent margin on these transactions.

In fact, we saw lower interest rates offered on Cars and Equipment 12-16 months ago than we are seeing now. Don’t get me wrong, the rates on offer are still low by historical standards but the lenders are definitely maintaining some ‘fat’ or margin in these deals.

What we are seeing is our lending panel show some enthusiasm for doing/approving deals again and the number of settled deals month on month has been very strong. Overall we are seeing a confidence return too small and medium size businesses with Government infrastructure projects increasing and work beginning to flow through the transport and machinery sectors.