Yes, there’s an unexpected Covid upside. In fact, I can name a couple and when you think about it, you might even find a few of your own.
Unexpected Covid upside 1 – More cash in your pocket – very, very soon.
As recently announced in the October 2020 budget (and already passed into legislation), many working Australians will have a bit more cash in their pockets at the end of the (pay)day. In fact, the ATO is hurrying employers along to have this being processed and delivered to employees by no later than November 16, 2020.
Those earning $45,000-90,000 will net an extra $1080 across the year. Whilst those earning more than $90K will take home an extra $2,565.
Don’t forget these tax cuts will be back-dated to July 2020 – so you’re likely to see a little extra there too. And…don’t forget that the low-middle income offset of up to $1080 still applies in FY20-21, so you’ll likely get more of a boost once your return is processed.
Plus, if you’ve been working from home, you’ll still be able to claim the working from home allowance via the ‘shortcut method’ of 80 cents per hour worked until December 2020. Just make sure you keep a record of when you’ve been working from home (in a diary, on a computer, phone, etc). Now granted you might also be able to make a larger claim via the actual cost method, but that will require keeping detailed records of all your expenses and keep a 4-week diary showing your usual pattern of work in the space you’re claiming for.
What can you do with that ‘extra’ money? Well, the Treasurer would like to see you spend, spend, spend. And that’s all well and good. But maybe a slightly more prudent approach would be to spend some and pay down some debt or save some as we wrote about in Making the most of a tax refund windfall.
Unexpected Covid upside 2 – Greater engagement with your super
We’ve written quite a bit about Superannuation over the years, often about how disengaged Australians have been with it because it felt like one of those things too far off into the future to be bothered with for many people or because they’ve no control over it.
And as predicted, many people took advantage of the ‘early access to Super’ scheme offered as part of the Government’s Covid stimulus measures – most just to get through as best they could. Interestingly though, more men than women accessed their super as many financial groups urged women to “only access it if they absolutely had to”.
Of course anyone considering withdrawing Super early was urged to seek financial advice from licensed financial advisers and registered tax agents (which ASIC capped at $300). However not everyone did and that might make for some messy complications with the ATO later for those who weren’t eligible.
So how is this an unexpected Covid upside?
Well, for the first time since the advent of Superannuation in the early 1990’s, people finally felt like their Super was in fact their’s. It always was of course, but this year, people felt like they had choices (if they were eligible) as to whether they accessed it or not. People, especially those with more than a decade till retirement, possibly really thought about their super and their retirement for the first time ever.
The Colonial First State Retirement Realities Series research showed that an additional 40% of people had started checking their Super balances since the start of Covid. And that increased to 62% extra people conducting balance checks for those aged between 35-39.
If you’re one of those who’ve engaged or re-engaged with your super balances it might be time to consider whether the strategy your Super fund is pursuing is the right one for you. It’s all baby steps – but thinking about where you’re at, and where you’re heading in terms of retirement is a good place to start. A previous blog on reviewing Super strategies might also help.
Unexpected Covid upside 3 – Business benefits
So, if you run a business, 2020 might be one of those years you’d rather forget…forever. And there’s no doubting it’s been a truly tough year for a lot of business owners – although some of those pivots you came up with or innovations you tried, you might never have thought of otherwise.
And, if your business is robust, seasoned and surviving despite the conditions, you’re likely to have seen help with employee costs in the form of the Cashflow boost, JobKeeper and payroll exemptions. You might even have received a state Government grant into the mix that you might not have thought to look for if not for Covid.
Plus if you’d put your plans for growth temporarily on hold, but have access to capital, now might be a good time to invest in eligible asset purchases. Why? Because for a limited time, you’ll be able to write off the full value of those assets and here’s the interesting part, if you trade through a company you may be able to offset any losses your business incurs until June 2022 against profits you’ve ALREADY paid tax on over the last two financial years. Yes, you read that correctly. You can claw back tax you’ve already paid. That’s got you thinking hasn’t it.
So sure, 2020 has been a doozy so far, but when you look you can still find upsides and silver linings.
Of course, if this has sparked anything you think we might be able to help you work through, ie: any tax or business planning issues, we’d be delighted to talk further. You can call us on 02 6023 1700 or drop us a note via the form below.
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If you've got financial or business questions, or you just want to run something by us, we'd be delighted to really talk to you – in person, over the phone - call us on 02 6023 1700 - or you can use the form below and we'll get back to you.