Perrier Ryan blog

WorkCover Queensland today released important information on legislative amendments that came into effect 1 July 2020.

The Queensland Government's five year review identified a number of recommendations to ensure the WorkCover scheme is "well placed to respond to emerging issues into the future".

Matters identified are:

  • Reporting of injuries and payments even if a claim is not made
  • unpaid interns are now covered under workers' compensation
  • Details, qualifications and training of your RRTWC are now required

The information they've prepared about the changes that you may need to make to ensure you have up-to-date practices, can be found here.

An ABC news report has come out today regarding TAL LIfe adding COVID-19 exclusions to NEW insurance policies. 

We have spoken to TAL and to clarify:

The exclusion is not being placed on any EXISTING polices and is not being placed on all new policies as a blanket exclusion. It is only being applied for those who may be in a higher risk area of contracting COVID-19. 

Whilst this seems unfair for any clients in these categories the rationale behind it (and no,I am not defending the position entirely, but can understand it) is that for the clients who already have cover with TAL Life if they (TAL) had an increase in claims on policies for COVID then this would force premiums up (further) in the future. Therefore they are trying to protect the existing clients from paying for the new disease.

Will other insurers follow suit? They are all considering it for new business, however all may not go to the same extremes. The pressure actually comes from the re-insurers to place the exclusion on the new policies. This is because the re-insurers are global and they are exposed to possible massive claims due to COVID so they to are trying to flatten their curve....

If you have any questions regarding this please do not hesitate to call Ben, Cara or Stuart in the financial planning team.

APRA and ASIC announce new regulatory approaches amid COVID-19 pandemic

Given the ongoing COVID-19 pandemic, the prudential and financial services regulators have announced new regulatory approaches including attitudes to payment holidays.

Commonwealth Bank also makes an announcement about payment deferrals for eligible small business loans.

See out latest update.

Update at 24/3/2020 - new Payroll Tax measures and other Coronavirus support

Banking industry moves to support SME and distressed mortgage customers + Payroll tax deferral package announced - see our latest update (posted 20/3/2020)


Announcements by the Federal Government with regard to the Coronavirus stimulus package have been released with full details of the package to be tabled to Parliament on 23 March 2020. The Queensland State Government has also released details of their measures. BCC have just released details of various fee waivers. Read a summary here - and remember to call us with any queries or questions.

updated 19/3/2020

So, what's going on ...

Recent developments

March has seen the market volatility of late February continue, but with even greater intensity. In the first two weeks of March, the ASX200 and S&P500 indices have fallen around 15%. This comes on top of their 7% - 8% falls in February. Developed country global equity markets are down 17% in March to date and emerging equity markets are down about 12%. Volatility is very high, with equity markets registering falls of 10% or more in a single day. These are some of the biggest single day declines since 1987's "Black Monday". Overall, this has so far been one of the fastest equity market corrections on record.

In other markets, government bond yields have fallen even further as investors price in further interest rate cuts. For example, in the US markets now expect the Federal Reserve to cut the cash rate from 1% to 0.1% at its meeting on 17-18 March. This follows the Fed's 0.5% rate cut just a few days ago. In Australia, markets expect the Reserve Bank to cut the cash rate to 0.25% in coming days. In response to this, 10 year government bond yields have fallen to 0.66% in Australia, and to 0.8% in the US. However, credit spreads have widened sharply as investor worry about corporate cash flows. 

Currency markets have also been affected, with the A$ falling to around US0.63, its lowest level for a number of years.

Global recession?

The causes of this market volatility have attracted many headlines: the overvalued state of global equity markets, the spread of Covid-19, and the oil dispute between Saudi Arabia and Russia. Of these, the first set the scene, the second started the fire and the third just added more fuel. Coming on top of each other, these events proved a toxic mix for risk assets. Markets have been alarmed by the spread of the virus outside China and the increasing use of travel restrictions in response, which will add to downward pressure on global growth. The WHO's announcement of a global pandemic hit markets badly.

Not surprisingly markets are asking if this is the start of a new global recession, or perhaps even a new GFC. The likelihood of a recession is higher than that of a new GFC, though the damage that could be done to confidence should not be underestimated.

Support and stimulus from fiscal and monetary policies are expected. As noted above, further rate cuts are likely in coming weeks. In addition, the markets expect central banks around the world, including the Fed and the RBA, to start new Quantitative Easing programs as soon as possible. These more relaxed monetary policy settings are likely to be kept in place through the rest of this year and into next year as central banks seek to plentiful liquidity for the smooth functioning of financial markets.

While the markets want to see this support from central banks, they are also acutely aware that there is little room left to cut interest rates. Fiscal stimulus is urgently required to moderate the impact of Covid-19 on global growth. Here in Australia, the Federal Government has announced a stimulus package which has been generally well-received by economists and commentators, but more stimulus is expected in the May Budget. In the US, markets are worried that the rancour between the White House and the Democrats will hamstring any fiscal stimulus over there.

The bottom line is that while the risks of global recession have gone up significantly, there will be policy support, albeit with some caveats on the ability of traditional policy measures to offset a pandemic. At the moment, most analysts expect any recession to be shorter rather than longer, but that we will not see recovery before the second half of the year.

When will it end?

This is a very hard question to answer with any degree of certainty. The best we can say is, not soon enough. There are two key timelines here. The first is the course of the virus as it spreads between and within countries. The second, is the pattern of the economic data as the impact of the virus and travel restrictions show up in economic activity.

The first of these timelines leads the second. That is, until we can see the peak in the infection rate, we cannot estimate the timing of the trough in economic activity. In the meantime, we are likely to see some very weak economic growth figures from around the world. Within these, the key data to watch will be the labour market figures, especially in the US. Signs of an uptick in the US unemployment rate would confirm market fears about recession.

It is also important to note that the virus is only just starting to spread in the US. Its impact there will be even more important than its impact in China.

The markets will be encouraged by evidence of the peak in the virus, but their concerns about the effectiveness of fiscal and monetary policy support means they may not be as quick to price recovery as they might otherwise have been.

In short, we cannot say when the world will turn the corner on Covid-19 and its impact on the global economy. However, it is likely to be a matter of months rather than years and we know what to monitor to keep up to date on key developments.

Investment implications

We are going to see more volatility in markets in coming weeks as more data comes to light. Some of that data will encourage markets, while some will be received badly. Equity markets have fallen sharply enough to suggest markets are already pricing a recession, and perhaps even a severe one. On the other hand, traditional metrics such as price/earnings ratios have not yet fallen far enough to say that equity markets are outright cheap.

In this environment we will continue to run our strategy of diversifying our portfolio exposures while monitoring very closely key data and developments. This has served us well so far. While the portfolios have experienced negative returns in March so far, these have been much smaller than the falls in the equity markets and less than those experienced by some leading portfolio managers. This reflects the de-risking of the portfolios we began last November and extended recently. While the reduced equity allocations have under-performed, the increased allocations to hedges in fixed income, gold and selected infrastructure assets have helped the portfolios significantly.


Many people I know, have left money to various charities in their Wills as either specific asset gifts or specific amounts to be paid out of the proceeds of the assets of the Estate.

It is certainly a wonderful thing to contemplate and these gifts are relied upon by the charities in undertaking the wonderful work that they do.

However – yes, there is a but - there is a reason why I would never leave specific gifts to a charity and why I always counsel against my clients doing it.

To appreciate the issue, you need some context:

I am currently a co-executor with the deceased's elderly sister. She lives in far north Queensland on a rural property so dealing with matters for her has been difficult.  The deceased left significant gifts to seven charities.

Unfortunately, there was an issue with the Will which required an application to the Courts for interpretation, which delayed the granting of probate. In this case, probate was required to allow us, as executors, to deal with the assets of the Estate. Consequently we had our hands tied for almost eight months from the date of death.

The Estate did not have sufficient cash assets to payout the gifts as per the Will, without selling assets - which we could not do until we had probate.

Within five months of being able to deal with the Estate assets we made payment to the charities of the specific gift amounts as provided for in the Will. However, this was 12 months after the date of death.

Queensland's Succession Act 1981 s52 provides that, from 12 months of the date of death until payment of the gift, the gift amount will accrue an interest amount at the rate of 8 per cent per annum. These charities within hours of receiving gifts, in excess of $150,000 in some cases, were sending me letters stating that they were expecting - in fact demanding - the payment of 8% on the funds.

I know and accept that many may well say that they are only doing their job, but as someone who has had to deal with it on many occasions - and often due to issues with realisation of funds to facilitate the gift - I find it difficult to come to terms with.

End result is: the funds going to the final beneficiary of the estate (an elderly women) are going to be $76,125 less and the charities are receiving an 8% return on their funds. I am not saying not to make a provision for a gift, but I am saying there are better ways of doing it that will avoid this issue, than putting it in your Will.

Greasing the wheels of commerce

Noel Whittaker recently published an article in The Courier Mail highlighting the link between credit and the wheels of commerce. He gives the example of a man of substantial means who was happy to go guarantor for his son, but was knocked back and then goes on to explain how the banks' approach to deal approval has shifted over time - making life particularly difficult for small business borrowers. Read the article in full here and contact us if you require any assistance with your borrowing or preparation of financials in readiness for an application.

provided with the permission of Noel Whittaker 19/2/2020

Annualised wage arrangements for Award-covered employees – not set and forget!

As of 1 March 2020, employers who have annualised wage arrangements in place for award-covered employees, will be faced with a number of new obligations resulting in more onerous notification, record-keeping and auditing requirements – yes, creating a significant administrative burden for employers.

So, the first thing to get straight is: what is an annualised salary (wage) arrangement? Essentially, it's an 'all-inclusive' annual rate instead of a rate that specifies all applicable award entitlements (such as overtime, penalty rates and loadings). Historically an annualised arrangement was used as a means of payroll convenience that allowed an employer to satisfy all award entitlements by paying an employee an annual salary (wage).

However, with the new ruling, any employers with employees covered by the relevant awards (there are more than 20 awards in total affected by this ruling) will be required to meet several new administrative obligations – being:

  • notification requirements to the employee about:
  • the amount to be paid as an annualised salary;
  • how the annualised salary was calculated; and
  • the entitlements the annualised salary is intended to satisfy;
  • Setting the 'outer limit' of hours worked which the salary will satisfy and ensuring payment of any hours which are worked exceeding this time;
  • Annual reconciliations/audits of the arrangement – which involves comparing the actual amount earned to the amount which would have been earned considering all of the hours worked;
  • Recording and keeping a record of each employee's start and finish times, as well as any unpaid breaks taken, for the purpose of carrying out the reconciliations.

NOTE: employers are also required to have employees sign this record (or acknowledge it in writing, electronically) each pay period or roster cycle.

Four 'model clauses' have been prepared and each of the >20 Modern Awards have one of these new clauses.

Cooper Grace Ward has a simple diagram on their website depicting which Award has adopted which Clause.

This new ruling will surely have employers reviewing whether an annualised salary arrangement is still a "convenient", viable option.

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