4 important upcoming business deadlines

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Interested in a $10,000 business grant? How about buying a much-needed asset and immediately writing off the cost? Here are four looming deadlines your business may need to start moving on ASAP.

We understand that navigating the challenges of COVID-19 is probably taking up your every waking hour at present (and possibly the non-waking hours, too).

But there are several fast-approaching deadlines for accessing COVID-19 support that you may want to start turning your attention towards if you haven’t already.

Fortunately, few things make a person move faster than a looming deadline – so you’ve got that on your side (and us!).

$10,000 COVID-19 small business grants

Small businesses struggling as a result of the COVID-19 pandemic can apply for much needed help through the Small Business Relief Fund, managed by the Council of Small Business Organisations Australia in partnership with Salesforce.

But here’s the catch: applications are only open for a week and close at 5pm (AEST) on Monday June 1. You can apply here.

There are 67 grants of $10,000 each designed to assist businesses that are recovering from the effects of the pandemic.

Most states are also offering $10,000 support grants and assistant packages you can apply for with a June 1 deadline, including NSW, Victoria, WA and SA.

$150,000 instant asset write-off

Time’s ticking for your business to make use of the $150,000 instant asset write-off before the end-of-financial-year June 30 deadline.

A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.

Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent threshold increase – heavy vehicles, tractors and machinery.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

This is something you’ll want to get moving on as soon as possible though, as the asset needs to be used, or installed and ready for use, before EOFY to be eligible.

If you’d like to find out more, feel free to get in touch or visit the scheme web page here.

Coronavirus SME loan guarantee scheme

SMEs in need of working capital due to the coronavirus outbreak can access unsecured loans through the government’s $40 billion Coronavirus SME Loan Guarantee Scheme.

Because the government will guarantee 50% of the value of each new loan, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.

Participating lenders are already accepting applications from SMEs, so if you’re looking to bridge a gap in your business’s cash flow, please give us a call.

We’re more than happy to discuss your eligibility, more features of the scheme, and how you can apply before the 30 September 2020 deadline.

2018-19 tax return

Due to the coronavirus pandemic, the ATO has extended the lodgement date for 2018-19 income tax returns lodged through a tax agent to June 30, 2020. The extension applies to individuals, companies, partnerships and trusts.

But while it might feel you have a full month left to lodge your return, remember that there will be a bottleneck when it gets to crunch time, and your accountant has a lot on their plate at the moment.

So, as with the deadlines above, it’s imperative to get the ball rolling on this now to avoid the $850 late lodgement penalty.

Get in touch

If there’s any way we can help you beat any of the above deadlines – in particular, the instant asset write-off scheme and loan guarantee scheme – then please don’t hesitate to get in touch. We’re here to help you and your business any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Wait, the bank can do that!?

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Every now and then a bank does something that bucks the trend and takes customers by surprise. Today we’ll look at two cases that recently made national headlines and how you can reduce your chances of getting caught out.

While the below two examples may not relate to your home loan specifically, they do serve as important lessons nonetheless.

Why? Because there’s every chance banks will make other changes to loan products in the months ahead as COVID-19 continues to put pressure on the economy.

MEa culpa

The first example we’ll discuss today is ME Bank’s decision to reduce limits on its customers’ redraw accounts without giving any prior warning.

The move came as a complete shock to customers, with many publicly expressing their anger at no longer having access to thousands of dollars needed to help them get through difficulties they were facing due to COVID-19.

While ME Bank says it stands by the decision, it admits it messed up and didn’t do the right thing by its customers in terms of communicating the move.

“The job we did to explain a complex product, what we were doing and why we were doing it, was simply not good enough,” ME Bank said in a statement.

“Please accept our most heartfelt apology.”

The financial regulator APRA has since gotten in touch with ME Bank to request a “please explain”, as have the trustees and chief executives of major super funds that are ME Bank’s shareholders.

So, what’s the take-out?

Well, redraw accounts certainly have their benefits.

But like most products, they can come with certain terms and conditions that can catch you out, such as the example highlighted above.

So when you’re deciding on a home loan product for you and your family, we can inform you of any catches buried deep within the T&Cs that you should be mindful of.

CBA automatically reduces monthly repayments

The other big move made by a lender this month is Commonwealth Bank automatically reducing repayments for 730,000 of its customers to the minimum required under each loan contract.

The bank recently sent an email advising its customers of the change, saying customers must opt-out if they wanted to continue to make repayments above the minimum amount.

This goes against the grain of what usually happens, which is where the onus is on the customer to contact the bank and ask for their monthly payments to be reduced when interest rates fall.

Now, on the face of it, it kinda looks like good news, right?

After all, CBA says the move will release an average of $400 a month for customers and inject up to $3.6 billion cash into the economy over a 12-month period.

But as ANZ CEO Shayne Elliott pointed out in November, he strongly believes in not automatically reducing the repayment amount because it allows customers to repay their debt sooner, and pay less interest over the life of the loan.

“It’s the responsible thing to do, as a bank. It’s in [customers’] best interest in the long term to repay their debt,” he says.

Put yourself first

CBA and ME Bank justified their moves by saying they were implemented to “help” and “protect” customers.

But the best way to truly help and protect yourself is by being proactive and informed – not relying on the banks to roll out one-size-fits-all policies they say are in your best interests.

For families doing it tough right now, CBA’s decision to automatically reduce payments will come as a welcome relief.

But if you were meeting your monthly repayments fine until now and would like them to stay as they were, then it’s important to let CBA know so you don’t pay more interest on your loan over the long run.

If you’d like a hand reviewing your loan and exploring your options in light of COVID-19, please don’t hesitate to get in touch – we’re always here to help when you need us.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Bank loyalty can cost existing borrowers: ACCC report

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Loyalty is an admiral trait when it comes to our friends, family and loved ones. But if you’re extending that virtue to the banks, then there’s a good chance it’s costing you thousands of dollars.

That’s the takeout from the ACCC’s latest Home Loan Price Inquiry interim report.

It shows that although interest rates charged by the big four banks on home loans fell during 2019, existing customers were stung by higher interest rates compared to newer customers, in no small part due to a lack of price transparency.

Price comparison confusion

The report found that the big banks’ home loan pricing practices make it pretty darn difficult for borrowers to compare different mortgage products.

That’s because the headline rates you see when you do your initial research don’t accurately reflect the price most big four bank customers actually pay for their home loans.

Indeed, the ACCC found there’s little difference in the headline variable rates of the big four banks, which on face value quickly deters borrowers from switching it up and refinancing to a lower rate.

But in reality, close to 90% of big four banks home loan customers receive discounts off the headline variable rate. And many of those receive non-transparent discretionary discounts.

So how big are the discounts?

We’re talking pretty big differences here, especially compared to advertised rates.

For example, a borrower with an average-sized principal and interest mortgage of $386,000 could save about $5000 on interest payments in the first year if they went from having no discount to receiving the big four banks’ average discount of 128 basis points.

The report also found the big four bank customers whose principal and interest loans were greater than five years old were paying an average 40 basis points more than those with similar new loans.

That means for a loan of around $200,000 (the average size of a loan more than five years old), a borrower who refinances could save around $850 in interest in the first year.

So what’s the next step?

That’s easy: you owe the bank nothing – in terms of loyalty – so it’s time to see what your options are.

And we can help because we know what rates lenders are really offering – despite what their “headline” rates say.

So if you’re keen to find ways to save interest on your home loan, please get in touch. We’re happy to walk you through your refinancing options any time.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Making the most of the instant asset write-off before the EOFY deadline

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Two months and counting (down). That’s how long your business has to make use of the $150,000 instant asset write off before the end-of-financial-year June 30 deadline.

Early last month, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.

Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent threshold increase – heavy vehicles, tractors and machinery.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

Is your business eligible?

Not only was the threshold increased, but the scheme can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million).

Assets that could be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business.

But it’s not enough to simply purchase the asset to be eligible. The new or second-hand asset must also be first used, or be installed and ready for use, this financial year.

Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.

Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.

Bruce’s tractor: a case study

Say ‘gday’ to Bruce, who runs Fair Dinkum Farms in the Darling Downs and has an aggregated annual turnover of $25 million for the 2019‑20 income year.

In May, Bruce finally splashes out and purchases the second-hand tractor he’s had his eye on for a while now for $140,000, exclusive of GST, for use in his business.

Under the new $150,000 instant asset write‑off, Fair Dinkum Farms can claim an immediate deduction of $140,000 for the purchase of the tractor in the 2019‑20 income year.

This is $136,101 more than he could have immediately claimed under normal arrangements, as Bruce would have only been able to claim $3,899 using the diminishing value method over a 12 year period.

At the company tax rate of 27.5%, old mate Bruce will pay $37,427.78 less tax in 2019‑20 than he would have if the instant asset write-off scheme wasn’t in place.

This will improve Fair Dinkum Farms’ cash flow and help Bruce’s business withstand the economic impact of the coronavirus.

Limits relating to cars

Now, there’s a limit relating to cars that we should note.

If you purchase a car for your business, the instant asset write-off is limited to $57,581 (the business portion of the car limit) for the 2019-20 income tax year.

You cannot claim the excess cost of the car under any other depreciation rules.

Also, say the vehicle will be used 80% of the time for business purposes and 20% for personal usage, you can only claim deductions for 80% of the asset.

Getting finance that’s right for your business

When purchasing an asset under this scheme, it’s crucial to select the correct finance product.

And that’s where we can help out. We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.

So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch this month well ahead of the deadline – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

4 ways we can make your life easier right now

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You don’t need us to tell you how much the world has changed – there’s been no shortage of news bulletins updating you on that. So rather than telling you about more changes, today we’re going to explain how we can help.

While we can’t babysit your child so they stop shouting out and interrupting that important call you’re trying to make in your new home office, we might be able to reduce the number of important calls you need to make instead.

Here are four ways we can take a load off your shoulders right now.

1. We can help you stay inside (and sane)

As you’re probably aware, many bank branches around the country have recently closed temporarily.

And the ones that are open? Well, it’s not really a great time to visit them in-person about your mortgage or business loan.

Bank call centres aren’t much help either – they’re inundated. A whopping three-hours on hold is pretty much the standard wait time at the moment (that’s enough elevator music to drive anyone crazy!).

Now – we’re not huge fans of on-hold music either – but we’re more than happy to jump on the phone to your lender to help sort out any matters relating to your loan at this time.

2. Need to refinance or consolidate your loans?

When was the last time you did a home loan review?

If it was more than a year ago, now’s a good time because the finance and lending landscape has undergone several big changes over the past 12 months – including five RBA cash rate cuts.

So if you’re having trouble meeting your monthly repayments reach out to us and we can discuss some of your refinancing options.

And don’t forget to consider consolidating your debts – including your credit card, car loans or personal loans – so you have fewer debts to keep track of each month.

3. Need to pause your loan repayments due to hardship?

If COVID-19 has impacted your income to the point where you may need to pause your loan repayments, then we can help break down your lender’s deferral policy and support package policy for you.

Six-month loan repayment deferrals are available for both business loans and mortgages (but it may depend on your lender’s hardship policy for the latter).

We can also talk you through some of the other options that might be available to you to reduce your home loan repayments each month.

4. Want a pretend work colleague for a few minutes?

This one is a little left-of-field, but no less important in the current climate.

For many people, this is their first time working from home and we brokers know better than most that making that transition can be a tough gig.

So, if isolation is getting you down and you just want to chat to someone friendly for a few minutes, feel free to pick up the phone and give us a call.

Not only can we share some tips with you when it comes to nailing work/life balance in a home setting, we promise not to put you on hold for three hours beforehand.

And hey, it’s all good with us if the kids are running amuck in the background!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.