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[av_heading heading=’The News Brief_20210113′ tag=’h1′ style=’blockquote modern-quote modern-centered’ subheading_active=’subheading_below’ show_icon=” icon=’ue800′ font=” size=’6vw’ av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’20’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=’custom-color-heading’ custom_font=’#000000′ icon_color=” margin=’0′ margin_sync=’true’ padding=’0′ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthlodo’ admin_preview_bg=’rgb(34, 34, 34)’][/av_heading]

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[av_heading heading=’Treasurer details tax-free coronavirus grants’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthm8nj’ admin_preview_bg=”][/av_heading]

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Last month, legislation was passed to make certain grant payments non-assessable non-exempt income so that these payments are not subject to income tax by the Commonwealth.

The law requires the Treasurer to declare that a grant program is eligible by legislative instrument if he is satisfied that it is in response to the economic impacts of the coronavirus pandemic, and if it was first announced on or after 13 September 2020.

Mr Frydenberg has since moved to declare that six Victorian grant programs are eligible for the non-assessable non-exempt income treatment:

Only entities with an aggregated turnover of less than $50 million will be eligible for the concessional tax treatment.
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[av_heading heading=’COVID accelerates home ownership intentions’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthmrh2′ admin_preview_bg=”][/av_heading]

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According to research commissioned by Mortgage Choice and conducted by CoreData in October 2020, 45 per cent of the 1,023 respondents said they were more likely to purchase a home due to the coronavirus pandemic.

While the majority of respondents (85.9 per cent) said they had changed saving and spending behaviour since the pandemic (with 70 per cent saying they intend to maintain these habits), young people were found to be particularly keen to save.

According to the research, saving money is now rated as the highest priority for young people. In order to buy a house sooner, 60.2 per cent of respondents said they were reducing their spending, 58.5 per cent were contributing more to their saving accounts, and 43.4 per cent said they were applying for first home buyer government grants.

A similar proportion were feeling optimistic about achieving their home ownership goals, the research found.

However, while optimism was high, almost a third (32.4 per cent) of first home buyers were found to have minimal confidence in understanding and choosing home loan features, while one in 10 said they were not confident at all.

Correspondingly, brokers were found to be the key professionals relied upon for home buying, with respondents claiming they would seek out professional advice to help reduce mortgage-related costs and financial worry, as well as to achieve greater control and understanding.

Speaking of the findings, Susan Mitchell, chief executive of Mortgage Choice, said: “COVID-19 has given us all a wake-up call, and for young people, this is to focus their attention on their financial goals.

“Despite the challenges of getting into the property market, young people are not giving up on the great Australian dream. In times of uncertainty, it is human nature to want stability, and this is what investing in property can provide.”

The findings echo recent comments made by Raine & Horne CEO Andrew Brien, who recently suggested that the closure of international borders, along with more affordable entry points and government stimulus, could encourage younger Australians to start their real estate journey earlier.
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[av_heading heading=’Common mistakes that stop you getting a loan’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthnoqv’ admin_preview_bg=”][/av_heading]

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When the time comes to apply for a home loan, many would-be borrowers are shocked to learn that a few simple mistakes have cost them the chance to get finance.

Lenders have several checks they run on all applications and if you’ve made these errors you might be out of luck.

Fortunately, there are some things you can do to turn these things around and get approved.

Not paying bills on time

When you go to apply for a loan one of the first things a lender will do is look at your credit score.

If you pay bills late, you might find yourself with a number of defaults. This is when a payment is well overdue. Defaults will hurt your credit score and can make a lender less likely to lend you money.

It’s also important to note that there is so much data available to credit agencies these days, that they can tell just how efficient you are at paying your bills. If you are always late that doesn’t bode well for them, when the time comes for you to pay them back.

Too many credit cards

These days, just about anyone can get a credit card. In fact, many banks will send out letters offering to increase your credit card limit or give you another credit card.

The problem is that while it might be great to have a $50,000 credit card limit when the time comes to borrow money from a bank, this limit will impact your chances.

The bank assumes you have maxed out your card and will reduce your borrowing capacity accordingly. 

These credit card limits are often the difference between getting approved or coming up short.

Short-term loans

While it might be nice to drive the latest car or take out a personal loan for a holiday, these types of debts could be weighing you down.

Personal loans, car loans and credit card debt all attract high interest rates and those monthly expenses add up and can really hurt your borrowing capacity. 

Lenders also don’t like to see these types of debts as they suggest you’re not someone who has good money management skills.

Applying for too many loans

Credit is often available to those people who need it the least.

If you’ve been applying for loans regularly and even worse, if you’ve been applying for loans and getting declined often, that is going to make it much more difficult to get a loan when you really need it.

Every time you apply for credit it shows up on your credit record which lenders can easily access. Getting rejected or making lots of small applications for credit is viewed negatively by lenders and also tells them a lot about your money management habits.

The best thing to do is to seek a pre-approval before officially applying for a loan. That way your mortgage broker can quickly and easily tell you how your application is looking and suggest changes to the way you’re managing your finances, if a loan is unlikely.

If you can clean up your finances for a few months, a lender will be far more willing to take you on, as opposed to someone with a patchy credit record and lots of short-term debt.
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[av_heading heading=’Businesses from ‘accountants to zoos’ demanding end to JobKeeper: Acting PM’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthq7l5′ admin_preview_bg=”][/av_heading]

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Speaking from Narrabri in North West NSW, acting Prime Minister Michael McCormack said a wide range of businesses had told him that the wage subsidy should not be extended beyond its 28 March expiry date.

“They’re telling me that JobKeeper and the other arrangements that we have in place need to be tapered off,” Mr McCormack said.

When pushed on which industries had called for an end to JobKeeper, Mr McCormack said: “You could start at A, accountants, and you could work right through to Z, zoos and everything in between. There are jobs available in regional Australia right now from A to Z.

“Some businesses in some areas, yes, I appreciate will still be hard hit. But we cannot keep the assistance going forever. The great assistance that we have provided in the order of hundreds of billions of dollars, it can’t go on because it’s borrowed money.

“It comes from Australian taxpayers, it comes from other borrowings. It can’t go on forever, the assistance. You have to draw the line somewhere. We’ve made that decision.”

Treasurer Josh Frydenberg also reaffirmed the government’s decision to wind down the program, despite continued coronavirus outbreaks forcing snap lockdowns and border closures in recent weeks.

Mr Frydenberg said economic recovery in the form of 2.2 million workers and 450,000 businesses dropping off JobKeeper after September justified the decision to end the program by March.

“JobKeeper was always intended to be a temporary program. It was initially legislated for six months, and as you know, we extended it for another six months. But it is a program that goes to the end of March,” Mr Frydenberg said.

“You’ve seen the same reports that I have, where some businesses have asked for an extension, others, as we’ve heard from today, are seeing jobs coming back, and are seeing the customers coming back.

“But my job, as the Treasurer, is to put in place an economic plan which will create jobs, and which will save jobs, and which will get Australia to the other side of this crisis. And our economic plan is working, and you can see that in a whole range of numbers that have come out about the economy in recent months.”

Mr Frydenberg also revealed that personal income tax cuts that were backdated to 1 July 2020 have since increased household incomes by around $7 billion.

“$7 billion has flowed through the tax cuts to the pockets of Australian families over the last six months and more than $1 billion a month will be flowing over the next nine months,” Mr Frydenberg said.
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[av_heading heading=’‘Consistent approach’ critical to reforming SMSF advice model’ tag=’h1′ style=” subheading_active=” show_icon=” icon=’ue800′ font=” size=” av-medium-font-size-title=” av-small-font-size-title=” av-mini-font-size-title=” subheading_size=’15’ av-medium-font-size=” av-small-font-size=” av-mini-font-size=” icon_size=” av-medium-font-size-1=” av-small-font-size-1=” av-mini-font-size-1=” color=” custom_font=” icon_color=” margin=” margin_sync=’true’ padding=’10’ icon_padding=’10’ link=’manually,http://’ link_target=” id=” custom_class=” av_uid=’av-kjthsaak’ admin_preview_bg=”][/av_heading]

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In November last year, the government stated that it would support, in principle, a recommendation from the review of the Tax Practitioners Board (TPB) to initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.

The final report of the TPB review noted that providing advice on establishing an SMSF is advice about a structure, and in the same vein as advice on establishing a company or trust.

The release of the TPB review also follows ASIC’s consultation paper on affordable advice aimed at exploring some of the impediments to providing scaled or limited advice.

Speaking to SMSF Adviser, BT head of financial literacy and advocacy Bryan Ashenden said the discussion around whether the regulatory burden around certain types of strategic advice, including advice for SMSFs, is an important one, particularly if it helps more consumers to get advice.

“As long as it’s good advice, then that’s a good thing and we shouldn’t shy away from that, but we need to ensure that it is good advice that people are receiving and part of that is around the training for the people providing that advice, the type of documentation and the level of documentation that is provided to a client,” Mr Ashenden said.

“I think what’s really important is not so much whether it’s an accountant or a financial planner providing this type of advice; it’s that a consumer has a consistent experience. So [whether] you go to a financial adviser or an accountant for the set-up of an SMSF, I think the consumer should receive the same level of documentation and the same level of protection, so still getting a statement of advice, [for example].”

He noted that when ASIC granted relief to enable affordable advice for the COVID-19 early access to super scheme, its approach was consistent across both the financial advice and accounting professions.

“I don’t think as many people took up that opportunity from ASIC as was expected, but I think ASIC was doing the right thing by saying that we need to have a consistent approach [regardless] of whatever regime you’re operating under,” he said.

Mr Ashenden said that if further types of strategic advice are opened up to accountants, this could still be managed under their responsibilities and their duties with the Tax Practitioners Board, but it should be the same approach taken by other regulators.

“It’s not that they have to be subject to another regulatory scheme, in the same way that advisers don’t want to be subject to too many, but for these sorts of things [to work], you need to have consistency, so you want those different regulators making sure that they talk to each other,” he explained.

Separating strategic advice from the advice regime, he warned, could potentially present some risks which would need to be managed.

“There’s a risk that you could provide a whole lot of strategic advice and the client then runs away and does their own product piece. With an SMSF, for example, they’re the trustees, so they’re making the decisions and they might go off and do that, but does that mean you lose the connection between having really good strategic advice and the right product advice to go with it?” he questioned.

“Putting that aside, there are some great benefits to separating them for people looking to start their journey from an advice perspective because they’re able to dip their toe in the water and say I actually just need some strategic advice here, and if that’s a good way just to get people to experience what advice is actually all about, then I think we’ve got to try and see how we can get this to work.”
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Sources: The Adviser, Accountants Daily, SMSF Adviser and CFH Partners
Disclaimer: This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product. The Content provided herein has been prepared for informational purposes only. The Content does not constitute tax, legal or accounting advice and should not be relied upon as such. You should seek tax, legal or accounting advice before acting or relying on any Content.

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