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Coronavirus – Market Update from David van den Berg

In recent weeks, we have seen a major correction occur in the domestic and global share markets. This has been a direct impact of the coronavirus and the potential impact on company profits. In market terms, the Dow Jones is now down over 12% from the peak reached on the 12th of February as panic has caused huge sales across the markets.

We have seen significant impacts on tourism, education and manufacturing industries due to travel bans around the world. This impacts the global economy and the profits of many companies.

Sharemarket investors often respond emotionally to these events. Uncertainty and fear cause many investors to sell indiscriminately. This is not new. With the uncertainty of the Coronavirus, we have seen “the good the bad and the ugly” all getting sold heavily as investors are getting out of the market.

In volatile times, it is important to take a step back and consider:

  • The correction is happening when many share markets around the world have reached record highs on investor optimism of continued world growth, with many stocks arguably in over-valued territory. 
  • While the coronavirus is being taken very seriously by government authorities, so far, the virus has led to around 3,000 deaths. To keep this in perspective, it is worth noting a 2017 World Health Organisation study attributed between 300,000 and 650,000 deaths per annum from the annual influenza virus. 

Clearly this will be a bad month for investors with losses recorded in every sector. All share portfolios will also be negatively impacted by the current correction as all stocks get sold off heavily. Panic is rarely an appropriate response. It is important to keep in mind there have been many other times when the market has been impacted by a big event (as per the graph below). Over the long term, these events have been resolved and businesses continue.

When reviewing your position in the face of bad news it is important to remain objective and remember some key principles behind investing.

  • Maintain a cash reserve, volatility is nothing new; elections, Coronavirus, SARS (bird flu) and oil crises have all caused significant reductions in market. In most cases, the market recovers quickly. A cash reserve will prevent you from being forced to sell your shares at the bottom of the market.
  • Diversify your holdings. You don’t want to be overexposed in any one area. Having a good spread of your investments substantially reduces your risk.
  • When selecting which businesses to invest in, focus on good quality businesses. Avoiding businesses with high levels of debt with no buffer for the uncertainty.
  • Try to avoid stocks with unproven business models that have been optimistically valued by speculators. They usually perform much worse than companies with established operations.

It is impossible to determine when the current volatility will settle. However, when the share market does recover, good quality companies with real businesses and sustainable earnings and dividends will again be well sought by investors and should recover well.  

If you have any concerns, please do not hesitate to contact David van den Berg from Adrians Private Wealth.

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NSW Foreign Land Tax Surcharge

Changes to the rules surrounding NSW Land Tax back in January 2017 introduced a surcharge where the land is owned by a foreign person or legal entity.  This surcharge is levied on the value of the land over and above base land tax charges at a rate of two per cent.

Unintentionally, the wording of the legislation resulted in any discretionary trust being defined as a foreign entity, and as such, any NSW land owned in a trust subject to the land tax surcharge.

In response to this, the State Revenue Legislation Further Amendment Bill 2020 (NSW) has been passed and is ready for presentation to the Legislative Council. The Bill will amend the rules to ensure that, should certain conditions be met – a discretionary trust will not, by default, be considered foreign.

To ensure land that you own in a discretionary trust is not subject to the Land Tax Surcharge, you must meet the following conditions:

  1. No foreign beneficiary requirement. You need to ensure that your trust deed specifically excludes foreign persons as beneficiaries.
  2. No amendment requirement. Additionally, the terms of the trust should be such that no amendment can be passed to allow foreign beneficiaries in the future.

While NSW state revenue has recognised the issue, they do recommend taking relevant action as soon as possible to avoid undue fees.

If this Amendment Bill applies to you or you have any question about this, feel free to contact us and we will be happy to assist. You can call Adrians and speak to one of our managers or partners on 07 3832 7544 or email us at

Billy Halim


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Modern Award Changes Effective March 2020

What award do the changes apply to?

The changes apply to 22 different awards from 1 March 2020.  While we will not recreate the list now, some of the more common awards affected include:

  • Clerks – Private Sector Award 2010
  • Pastoral Award 2010
  • Manufacturing and Associated Industries Award 2010 

While the basic premise of the changes is consistent across the Awards, there are actually 4 different possible versions of the changes which may be used – so a “one sized fits all” approach is not possible.

It should also be noted that it has been decided to implement the changes to a number of other Awards but these are still under consideration by the Fair Work Commission.  These include Awards such as the Restaurant Industry Award 2010 and the Health Professionals and Support Services Award 2020.  We will let you know when changes to these Awards may be effective.

In Brief – what do the changes mean?

The changes will require Employers who use annualised salary arrangements under award conditions to administer working hours and payments differently.  They also require employers to review and reconcile all annualised salaries against the actual hours worked each year. Should this review find a shortfall between the payments received and those that should have been received as per the award, the shortfall will need to be paid to the employee.

What is an annualised salary?

An annualised salary is an arrangement under which an employee takes home a pre-determined (and unvarying) amount each pay period – expressed as an annual salary.  When this applies to award based employees, the salary can be calculated to include award wage rates, penalties, overtime rates and other monetary allowances that may be included in the award.

How might this affect your business or your clients?

The changes may apply to all employees on annualised salaries.

The specific clauses in Awards may vary, however, In general, the changes require:

  • Employers to advise employees in writing, and keep a record of the following:
    • the annualised salary that is payable;
    • specifically, identify the provisions of the Award which are covered by the annualised salary
    • identity the method by which the annualised salary has been calculated including details on how this impacts each separate component covered
    • the outer limit of ordinary hours which would attract the payment of a penalty rate or overtime in a pay period without the employee being entitled to a payment in excess of the annualised salary; and
    • if the employee works hours in excess of the outer limits identified, penalty and overtime rates will apply.
  • Employers must, every 12 months (or for the 12 months prior to termination), compare the amount of remuneration payable under award conditions to the amount of annualised salary paid and pay any shortfall to the employee within 14 days; and,
  • Employers must keep records of starting and finishing times of work, any unpaid breaks taken etc for all employees on annualised salary arrangements.

Employees on “Common Law” agreements to “roll in” award conditions

The Commission has actually indicated that Common Law Agreements that roll in Award Conditions are not automatically invalidated by these changes.  This means that arrangements in place between many Employers and Employees may not require change.  We are more than happy to assist clients to determine whether this is the case.

Our Recommendations to prepare for these changes

We can assist you with the alteration of employment agreements, communication with employees, the preparation of new templates and can advise on arrangements for timekeeping etc. As a minimum, we recommend you and your clients implement, or request our assistance to implement, the following:

  • Identify the employees covered under the Award who are paid an annualised salary
  • Review employment agreements to ascertain whether the employee’s annualised salary arrangements are based on award conditions.
  • Record in writing and advise the employee in writing the annualised salary amount and details as required by your Award.
  • Implement timekeeping processes for all employees that will allow you to track and audit salary-based employees on a regular basis,  
  • Understand and record the limit of ordinary hours, penalty rates and overtime hours your annualised salary will cover,
  • Ensure you consider these limits when rostering, and
  • Implement a process to review amounts paid and actual hours worked (this must be done every 12 months as a minimum).  

Should you require any assistance with the above actions please do not hesitate to contact our office for assistance.

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Employment Growth Rebate: Is your business eligible?

The Queensland Government has announced an employment growth rebate on payroll tax for eligible employers as part of the 2019-2020 State Budget. A rebate of up to $20,000 can be claimed in the employer’s annual return for the 2019-2020 and/or 2020-2021 financial year if they have employed more than their level of full-time employees.

Payroll Tax

All employers or groups of employers that exceed the annual exemption threshold of $1.3 million in total Australian employee taxable wages must meet the payroll tax requirements and lodge periodic returns of all taxable wages (unless exemptions apply). If the employer is eligible for the rebate, it will form part of the annual return. These annual returns are due no later than 21 July for the 2019-2020 and 2020-2021 financial year.

Are you eligible?

Employers may be eligible for the rebate if they are able to demonstrate all the following conditions:

  • Increase in new full-time permanent positions
  • Employed in Queensland for the 2019-2020 and/or 2020-2021 financial year
  • Must be employed for the whole period of the relevant financial year

If the employer is eligible for the rebate, the Office of State Revenue requires substantiating documents in relation to the employment growth to be provided as part of their annual return. The substantiating documents include records of employer’s total number of employees that are full-time and based in Queensland as at 1 July 2019 and a monthly count on the last day of the month of each employee (excluding employees that are not eligible for payroll tax).

The Rebate

The rebate will be based on the eligible net increase of employment and the employer’s payroll tax amount for the relevant financial year.

If you would like further information or clarification on whether you are an eligible employer, and how much you are eligible for, please do not hesitate to contact our office.

Jemma Whitby

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Sally Abercrombie joins Adrians as a Partner

We are thrilled to announce that Sally Abercrombie has joined the Adrians team as a Partner. Sally has over 25 years of experience as a Chartered Accountant and business adviser. She is an expert whose specialties include taxation advice, succession planning and business structures.

Sally has hit the ground running here at Adrians. Welcome aboard Sally!

Sally Abercrombie
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pricing with purpose

Pricing with Purpose

When was the last time you had a serious review of the pricing of your products or services? More than just ‘overall I make a profit at these prices’?

Pricing is a fundamental element of business operations and is often one of the most overlooked.

The amount that you charge for your products or services can have significant implication on not just your bottom line, but also growth, public perception and even opportunities for new markets.

There are a number of basic models and strategies that can be used to determine the price of what you sell,

  • Cost Plus
  • Going Rate
  • Value-Based Pricing
  • Penetration Pricing (lower prices to get into the market)

These models are certainly helpful, and each come with their own benefits and drawbacks. For example, the Going Rate model can be especially dangerous, leaving your business open to hostile pricing battles for market share.

However, the pricing decision is so much more than just a simple arithmetic equation. It is the consideration of all the surrounding market & customer factors that will give you the perfect pricing point. Some of the questions you should be asking are:

  • Will a higher or lower price point stagnate or boost future demand?
  • How exclusive or differentiated are my products – how does this impact my pricing point?
  • What is my price elasticity of demand?
  • Will my products be perceived as inferior at a lower pricing point?
  • Will prestige boost demand if I price higher than the market?
  • Should I price based on product mixes (lower margins on one product to achieve higher margins on another)

These are just, but a few, considerations to review and analyse when determining your pricing points.

This is a process that should be completed annually at a minimum. The market is not a static place – and failing to keep your finger on the pulse can leave your business in the dust.

Here at Adrians, we would love to help you rethink your pricing practices. Contact us today to start the conversation.

Henry Googe

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