Market Update + Stimulus Package

It’s time to take a breath… the ASX 200 will (*should) be OK.

It was absolute carnage on the share market this week – no other words for it. The S&P/ASX 200 Index (ASX: XJO) started off the week at 6,216 points on Monday. By Friday, we were sitting at 5,539 points. All in all it was an 11% swing in one week – enough to make any investor with a heart tremble in their boots.

It could have been even worse too – at one point on Friday, the ASX 200 had cratered by over 8% and broke under the 5,000 point barrier for the first time since 2016.

But now it’s the weekend, it’s a great time to take a breath… and reassess what’s actually happening.

Yes, the coronavirus is now at pandemic level and is resulting in worldwide travel bans and a seizing up of the global economy.

It’s a truly dreadful time for us all.

But it will likely pass, like it usually does.

SARS, MERS and Swine Flu were all very serious global diseases, but we got through them – as we will with Coronavirus.

And the stock market got through them too. In fact, just last month, the ASX 200 was at record highs.

It should get there again (although it’s hard to say just when).

Instead of trying to understand what happened in the last week, we’ve included some links to some articles that should help you understand what is happening, and assist in your decision making over the coming weeks.
 Click the button at the bottom of this email to give us a call to arrange a time for a review if you would like us to take a look at your full situation.
 

Information provided by The Motley Fool

March 14 / Aussie share market’s death spiral halted on stunning rebound

March 13 / Britain Cuts Rates and Australia Announces Fiscal Stimulus

March 11 / Market Volatility: An Overview


Please note our General Advice Warning and our Accuracy & Reliability of Information at the bottom of this email.
 

Government Stimulus Package

The government has announced a range of measures to support the economy, business and employment in the face of the coronavirus health crisis. The measures include the below.

Direct payment to individuals – the government will make a one-off payment of $750 to around 6.5 million social security, veterans and other income support recipients and eligible concession card holders residing in Australia.

Cash Flow Boost for employers – employers with an aggregated annual turnover of under $50 million (based on prior year turnover) will receive a payment of $2,000 to $25,000 from the government to help with cash flow. Eligible businesses will receive a payment equal to 50 per cent of taxes withheld from employees’ salary and wages up to $25,000.

Eligible businesses that pay salary and wages will receive a minimum payment of $2000, even if they are not required to withhold tax.

The payment will be delivered as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements. Where this places the business in a refund position, the ATO will deliver the refund within 14 days.

Increasing the instant asset write off – the government is proposing to increase the threshold for the instant asset write off from $30,000 to $150,000 and expand access to businesses with an aggregated annual turnover of up to $500 million (up from $50 million). The increase will only be available from 12 March to 30 June 2020 for new or second-hand assets first used or installed ready for use by 30 June 2020.

Accelerated depreciation – the government is proposing an accelerated deprecation deduction for eligible assets acquired from 12 March and first used or installed by 30 June 2021. Eligible taxpayers will receive a deduction of 50 per cent of the cost of the eligible asset on installation, with existing depreciation rules applying to the balance. Eligible businesses are those with an aggregated turnover below $500 million. Eligible assets are those that can depreciated under Division 40 of the Income Tax Assessment Act 1997 (that is plant, equipment and specified intangible assets, such as patents), but does not apply to second-hand Division 40 assets, or buildings and other capital works depreciable under Division 43.

Apprentice and trainee wage subsidy – the government will offer employers a wage subsidy of 50 per cent of an apprentice’s or trainee’s wage from 1 January to 30 September 2020, capped at $7000 each quarter per each eligible apprentice or trainee. Businesses with less than 20 full-time staff will be eligible, however employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will continue to be eligible for the subsidy.

ATO support measures for those affected by coronavirus outbreak

The ATO will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.

Businesses impacted by the coronavirus are encouraged to get in touch with the ATO to discuss relief options. Options available to assist impacted businesses include:

  • deferring by up to four months the payment date of amounts due through the business activity statement (BAS, including PAYG instalments), income tax assessments, FBT assessments and excise
  • allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
  • allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the April 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
  • remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
  • working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

Employers will still need to meet their ongoing super guarantee obligations for their employees.

Unlike the bush-fire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented.

Anyone impacted by COVID-19 should contact the ATO to request assistance on its Emergency Support Info-line 1800 806 218.

 

General Advice Warning

The information contained on our web site and in this email is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nationwide Business Solutions interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Accuracy & Reliability of Information

Although every effort has been made to verify the accuracy of the information contained in this web site, Nationwide Business Solutions, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained on this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

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