Coronavirus – Time For Panic Or Opportunity?

Coronavirus – Time For Panic Or Opportunity?

Coronavirus – Time For Panic Or Opportunity?


The headlines over the last few weeks and in particular, over the last few days have looked something like the following:

  • Global Markets Fall for Fifth Consecutive Day
  • Stocks Fall Again as Coronavirus Spreads
  • Coronavirus has Major Impact on the Stock Market
  • Coronavirus Market Sell Off
  • Another Bad Day in the Markets as the Coronavirus Spreads

As you can imagine, this has had many investors selling their shares in a panic and running for the woods.

Never in human history has information been so freely available to us due to social media and the internet. For the most part, this is fantastic. However, with so many opinions and news headlines around, we can sometimes get caught up and begin to believe everything we read.

Now, I am not saying that the Coronavirus is not something we should be worried about at all. Many people have died from this illness and it has been a tragedy for those affected.

What I am saying is that this is not the first time (and likely not the last time) that we will see a major global epidemic impact investment markets.

The below table shows some past epidemics and the change in the US market following the outbreak.

Epidemic Epidemic End 6-Month % Change of S&P 12-Month % Change of S&P
SARS April 2003 14.59% 20.76%
Avian flu June 2006 11.66% 18.36%
Swine flu April 2009 18.72% 35.96%
Ebola March 2014 5.34% 10.44%
Measles/Rubeola June 2019 9.82% N/A
Source: Dow Jones Market Data

As can be seen from the above, following recent outbreaks, the US market has managed to rebound not only quickly, but also quite substantially.

Therefore, it is important not to forget some key fundamentals when it comes to investing.

Firstly remember, we invest for the long term and therefore short-term fluctuations and market events should not worry us.

Secondly, why did you start investing in the first place? Has the outbreak of Coronavirus changed your investment goals? If not, then why panic and sell because of a new media headline? If your investment goals remain the same, then so should your investment plan.

I am not saying to buy now because the market has dropped, the market may continue dropping over the next few days and weeks. We do not know where the bottom of the market is and neither does anyone else.

What I am saying is that it is important to stick to your plan and continue investing rather than selling in a panic because the markets have dropped and media headlines are in a frenzy. 

To summarise, ultimately the market’s reaction to the Coronavirus will come down to the severity of the virus and just because markets have managed to rebound following outbreaks in the past doesn’t mean that will be the case this time. It is however important to keep a clear head when it comes to selling your shares and to not let media headlines and social media panic cloud your judgement.

One final thought, remember what Warren Buffett, arguably the greatest investor of all time, once said:

“Be greedy when others are fearful, and fearful when others are greedy”

Need more help or information?

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Award Changes – Annualised Wage Agreements

Award Changes – Annualised Wage Agreements

Award Changes – Annualised Wage Agreements


Modern Awards have now been updated to include the below changes around Annualised Salaries/Wage Agreements. These changes are effective from 1st March, 2020.

An annualised wage agreement may also be defined as where a flat fixed pay rate is applied for all time worked.

There are some critical thought changes here, reflecting the volume of common law cases and the impacts of those decisions on award interpretation.

What is included in the changes?

  • The employer must advise the employee in writing of the salary and keep a record:
    1. Of the salary payable
    2. The award provisions satisfied by the salary (what is actually included for example specific allowances or loadings, by default anything not listed would be an additional payment)
    3. The method of calculation and
    4. The maximum number of overtime hours it is in satisfaction for (the outer limit).
  • If the employee works in excess of the maximum number of overtime hours, the employer is obligated to make a separate make-up payment.
  • Review the salary arrangement every 12 months and amend any shortfalls in 14 days.
  • Keep appropriate records of employee working times including unpaid meal breaks. Such a record should be acknowledged by the employee, either physically or electronically.

What do I need to do now?

  • Make sure you & your employee keep a record of all time worked and that this record is acknowledged by the employee. This could be as simple as a book showing start & finish times then signed by an employee.
  • Review any existing contracts and make appropriate adjustments as soon as practical.

Need more help or information?

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Market Insights – 24/02/2020

Market Insights – 24/02/2020

Market Insights

24th Febraury 2020

Top Stocks

CBA $88.80 -2.19%   NAB $27.41 0.37%
BHP $38.22 -0.73%   TLS $3.74 -0.80%
WBC $25.81 0.27%   WES $46.02 1.14%
RIO $97.69 0.14%   CSL $336.40 0.81%
ANZ $27.24 2.29%   WOW $43.45 1.57%

Market and Exchange Rates




All Ords




US Dollar


Dow Jones



















Oil (WTI)






Iron Ore



Major Market Announcements

– U.S. stocks sold off and the Nasdaq had its worst daily percentage decline in about three weeks on Friday as a spike in new coronavirus cases and data showing a stall in U.S. business activity in February fueled investors’ fears about economic growth.

– Mayne Pharma says it is repositioning itself into the areas of women’s health and dermatology after posting a $17.5 million half-year loss amid strong competition in the US generic drug market. Mayne’s revenues for the six months to December 31 were down 17 per cent to $227.2 million compared with the same period in 2018.

– British media group ITV Studios is in talks with Seven West Media about buying the in-house production business that makes Home and Away and My Kitchen Rules.

– A triple whammy of bushfires, floods and the coronavirus outbreak will hit takeover target Village Roadshow’s earnings in the second half. The theme park and film production company flagged the impact on Friday as it told investors its Gold Coast theme parks, which include Wet ‘n’ Wild, Sea World and Paradise Country, were doing well and the momentum had continued into January.

But bushfires, a two-day closure due to floods and a drop in international tourists due to the coronavirus outbreak would likely reduce earnings before interest, tax, depreciation and amortisation by $3 million, its said.

– A Queensland coroner is poised to hand down his long-awaited findings from the inquest into the deaths of four people on a ride at Dreamworld more than three years ago.

Cindy Low, Kate Goodchild, her brother Luke Dorsett and his partner Roozi Araghi died in October 2016 when a water pump on the Thunder River Rapids malfunctioned at the theme park.

Confronting evidence emerged during six weeks of evidence in 2019 and Coroner James McDougall will deliver his findings on Monday in the Brisbane Magistrates Court.

Police recommended no criminal charges against Dreamworld staff over the fatal incident, but the coroner could still recommend prosecutions or substantial fines for the company and its executives.

– A multi-billion-dollar Federal Government program to deal with traffic congestion has become the latest scheme at the centre of pork-barrelling accusations. Labor claims the Coalition’s Urban Congestion Fund unfairly benefited the government ahead of last year’s federal poll.

Opposition infrastructure spokeswoman Catherine King said Labor’s analysis of the way the money had been spent showed 83 per cent of the funds went to Government and marginal Labor seats.

Market Update

The Australian share market is expected to decline when it opens this week due to fears coronavirus is spreading across Asia and will increasingly impact global economic activity.

United States and European markets fell on Friday on the back of increasing concerns over COVID-19 as more companies face disruptions and issue profit warnings.

“People are increasingly concerned about the number of cases outside of China particularly in places like Korea and Japan,” AMP Capital chief economist Shane Oliver told AAP.

“There’s a concern that if there are more cases in Asia that will further hit global economic activity.”

The Dow Jones fell 227.6 points or 0.8 per cent at the close on Friday and the S&P 500 declined 1.1 per cent while European shares shed 0.6 per cent.

As a result, futures trading in Australia has declined 47 points or 0.7 per cent.

Dr Oliver expects the local market will open down more than 40 points on Monday after hitting a record high on Thursday despite the global jitters over COVID-19.

Local construction data out on Wednesday for the December quarter will probably show a fall, the economist predicts.

Business investment figures to be released on Thursday are more likely to be mixed but still soft overall. Both sets of figures will be watched closely because they’ll suggest how GDP performed in the December quarter.

Credit data published on Friday could be boosted by the pick-up in housing lending.

Reporting season continues domestically with Rio Tinto and Woolworths among those to reveal their earnings this week.

Dr Oliver says if the results are better than feared it could again help support the Australian market.

The benchmark S&P/ASX 200 index closed 0.3 per cent lower at 7,139 on Friday but recorded its third weekly gain benefiting from company earnings and domestic expectations for monetary stimulus.

Share Watch

Hunting for Income: Consider your options. . 

With interest rates likely to be lower for longer, investors are seeking yield from potentially riskier investments.
Record-low interest rates pose a challenge for income-oriented investors. That challenge is particularly acute for those living off the income from cash investments.

Although, shifting from cash to a different asset class involves much more than just switching to a higher-yielding investment. It’s important to take a whole-of-portfolio view as not all risk is the same.

Your Risk Profile and Asset Allocation is one of the most important factors we consider when deciding on suitable investments for you. Once this has been worked through, we recommend an investment strategy based on your appetite for risk, in doing so, we will endeavour to spread your investments across various sectors in order to best diversify your portfolio. 

The purpose for investing and your timeframe for your investment objectives are also important in determining the best asset mix for you. The below table sheet outlines how investment markets have behaved over the past 30 years.

As can be seen for the above table, shares generally return around 10% (income and growth) on average per year. Constructing a portfolio with a mix of all of the above asset classes, plus sector exposure within each asset class will provide you with a good spread of investments for the longer-term return. 

In life, time can be a great healer for a broken heart. In investments, it can equally work wonders for the health of your portfolio.

Contact our office for a free financial planning consultation.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

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New Calculation Of Personal/Sick Leave

New Calculation Of Personal/Sick Leave

New Calculation Of Personal/Sick Leave


The Mondelez Decision

On 21 August 2019, the Full Federal Court of Australia handed down a decision dealing with how paid sick and carer’s leave accumulates and is taken under the National Employment Standards (NES).
The decision said that:

  • full-time and part-time employees each get 10 days of paid sick and carer’s leave for every year of employment
  • paid sick and carer’s leave accumulates in days, not hours.
    This entitlement applies from the employees start date of employment.

The company & government have appealed this decision. However, until this is heard the above isthe law.

What does this affect?

Whilst an award, agreement, contract can set out different entitlements to leave, they can’t be less
than the minimum entitlement in the National Employment Standards (NES).
The NES minimum entitlement is based on the decision above and allows for 10 paid days leave per
employee per year of service.
How is it calculated?

  1. Find out how many Calendar days in the employees year of service
  2. Find out how many Calendar days (or part days) count as service. Unpaid leave does not count as service.
  3. Calculate the amount of leave accumulated
    Multiply the number of days from step 2 x 10 then divide by the number of days in step 1.

What happens if an employee takes a part day of leave?

A part day of leave is calculated as a fraction of the ‘ordinary hours’ of work the employee would
have worked that day.

What if an employee works different hours on different days?

If any employee works different hours on different days this doesn’t affect how their leave is
accrued. This is because leave is accrued in days, based on service with the employer. A day is an employee’s ordinary hours of work in a 24 hour period.

Working different hours on different days, does affect what the employee gets paid when they take

i.e. employee works 2 weeks on a 4 on 4 off basis of 12 hrs. Then for the following 2 weeks they
work 5 days at 8hrs per day.
If sick, in weeks 3 (working 8 hrs per day) they get paid 8 hrs.
This is really applicable to shift workers who will now get paid according to the hrs on the shift of the day they would have worked, not the standard base rate hrs of 7.6 per day. Employee’s aren’t paid for any overtime hours they are rostered to work.

Is an employee entitled to back pay if an employer only paid them for 7.6 hours of leave on the days they would’ve worked 12 ordinary hours?

If the employee would have normally worked 12 ordinary hours on a day they took paid sick and carer’s leave, they should be paid for those 12 hours at their base pay rate.
If they were previously only paid for 7.6 hours but should have been paid for 12, the employee is entitled to back pay for the difference.
They may also be entitled to extra superannuation contributions and interest.

What happens to accumulated paid sick and carer’s leave if an employee changes from part-time to full-time employment with their employer?

Nothing changes.
Full-time and part-time employees each get 10 days of paid sick and carer’s leave for each year of
A part-time employee would have accumulated 10 days of leave for each year of service while part time.
If they become full-time, they accumulate leave at the same rate.

Does the decision impact our advice on annual leave or other types of leave?

The decision doesn’t impact annual leave or other forms of leave under the NES. It only applies to
paid sick and carer’s leave.

What should employers do now?

Employers should review their leave or payroll systems and records to make sure they’re calculating
leave in days, not hours.
As part of this, employers should consider issues such as:

  • In addition to employees’ NES entitlements to paid sick and carer’s leave, do their employees have a greater entitlement under their registered agreement, award or employment contract?
  • Are they required to make any back payments and/or additional superannuation
    contributions and/or interest payments in relation to the leave?

Need more help or information?

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January/February Practice Update

January/February Practice Update

Practice Update – Jan/Feb 2020 Edition


Lifestyle Assets Continue To Be An ATO Audit Target

The ATO has revealed it will request a further five years’ worth of policy information from over 30 insurance companies about taxpayers who own marine vessels, thoroughbred horses, fine art, high-value motor vehicles and aircraft.

The ATO expects to receive information about assets owned by around 350,000 taxpayers from 2016 to 2020 as part of its data-matching program.

This information (provided by insurers) is intended to be used by the ATO as part of its compliance profiling activities.

For example, ATO Deputy Commissioner Deborah Jenkins said:

“If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a three million dollar yacht then this is likely to raise some red flags.”

She clarified that the data will not be used to initiate automated compliance activity.

“Taxpayers selected for compliance activities are identified through other methodologies. The data is made available to our compliance teams to support their risk profiling of the selected taxpayers. Existence of an insurance policy may or may not prompt the compliance officer to pursue a particular line of enquiry.”

Aside from helping identify taxpayers who may be understating their income, the data from insurers may be used by the ATO to identify taxpayers who have made capital gains on the disposal of certain assets but who have not declared this to the ATO.

It will also be used by the ATO to identify incorrect claims for GST input tax credits where taxpayers are incorrectly claiming GST credits as if the (private) item was a business asset.

Additionally, SMSFs the ATO suspects may be acquiring lifestyle assets purely for the personal enjoyment of the fund’s trustee or beneficiaries are also likely to be looked at by the ATO.

Insurers are required to provide the ATO with policy information where the value of assets is equal to or exceeds the following thresholds:

  • Marine vessels $100,000
  • Motor vehicles $65,000
  • Thoroughbred horses $65,000
  • Fine art $100,000 per item
  • Aircraft $150,000

Editor: If you feel that you may be targeted by this latest ATO data collection activity and are concerned about the implications, please feel free to contact our office to discuss your individual circumstances.

Ref: ATO website, 18 December 2019

Disclosure Of Business Tax Debits – Declaration Made

Following the enactment of legislation in late 2019, the ATO can disclose certain business tax debt information to external credit reporting bureaus.

This information will primarily be used when issuing external creditworthiness reports in relation to relevant businesses, effectively treating tax debts in a similar manner to other business debts.

More recently, the Government issued a Declaration to determine exactly what class of entities may be subject to such disclosures, including entities that:

  • are registered in the Australian Business Register and are not a complying superannuation fund, a DGR, registered charity or government entity; and
  • have one or more tax debts totalling at least $100,000 that are overdue for more than 90 days, disregarding:

–   tax debts where the entity has an arrangement to pay the ATO by instalments (i.e., via a payment plan);

–     tax debts subject to an application for release on grounds of hardship; and/or

–     tax debts subject to dispute via an objection, AAT or Federal Court review that has not been finalised.

Additionally, the Declaration does not allow debt disclosure for taxpayers who have an active complaint concerning the disclosure of tax debt information that is, or could be, the subject of an Inspector-General of Taxation (‘IGOT’) investigation.

Importantly, if there is such a complaint, the ATO can only proceed with a disclosure of the debt where it is not aware of it after taking reasonable steps to confirm whether the IGOT has such a complaint.

Ref: Taxation Administration (Tax Debt Information Disclosure) Declaration 2019

MYEFO – 2019/20

Treasury has released its Mid-Year Economic and Fiscal Outlook (‘MYEFO’) for 2019/20 forecasting a surplus of approximately $5 billion.

Proposed New Record Keeping Course

One new tax-related measure of note in the MYEFO was the announcement the ATO would be provided with a new discretion to direct taxpayers (found to be lacking in their substantiation efforts under audit) to undertake an approved record-keeping course, instead of applying financial penalties.

This is yet another measure designed to tackle the ‘black’ or ‘cash’ economy.

Specifically, the Commissioner will be given the discretion to direct taxpayers to undertake the course where he reasonably believes there has been a failure by the taxpayer to comply with their reporting obligations.

The Commissioner will not apply this discretion to those who disengage with the tax system or who deliberately avoid their record-keeping obligations.

Editor: Such a proposal raises obvious concerns as to the onerous nature of having to comply with such a course, particularly for small business owners whose main priority is to run their business.

Interestingly, there is a precedent for similar ATO directions to taxpayers (i.e., to undertake an approved course), with legislation passed earlier this year allowing the Commissioner to require employers to undertake a superannuation guarantee obligations course where there has been a failure by an employer to comply with those obligations.

New ‘Gig’ Economy Reporting

Additionally, the MYEFO also announced the Government’s intention to implement a new third party reporting regime for the sharing economy. 

This will apply to businesses who operate via online platforms within the ‘sharing’ or ‘gig’ economy (e.g., Uber and Airbnb).

It is proposed to be introduced in two stages, starting from 1 July 2022 (for ride-sharing and accommodation platforms) and from 1 July 2023 (for asset sharing, food delivery and tasking-based platforms).

The online platforms will be required to report identification and income information for all its participating members (i.e., both the sellers and providers).

These reports will go directly to the ATO for data-matching (i.e., review and audit) purposes.

Ref: MYEFO 2019/20

The ATO’s Bushfire Crisis Response

In response to the devastating bushfires across large parts of Australia, the ATO has been keen to advise those impacted that it understands peoples priority is their family and community.  

If taxpayers live in one of the identified impacted postcodes, the ATO will automatically defer any lodgments or payments, meaning that income tax, activity statement, SMSF and FBT lodgments (and their associated payments) are deferred until 28 May 2020.

For those affected not in the current ATO postcodes list, assistance can still be provided, with impacted taxpayers encouraged to phone the ATO’s Emergency Support Infoline on 1800 806 218.

Editor: Please contact our office if you have been impacted by this or another disaster for assistance. Ref: ATO website, 20 January 2020 and ATO media release, 20 January 2020.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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