Superannuation Guarantee Changes

What were the changes?

From 1 July 2022, the following changes occurred to the Superannuation Guarantee (SG):

-       SG rate increased from 10% to 10.5% (and will eventually reach 12%)

-       The $450 per month eligibility threshold has been removed.

These new changes must be applied to all salaries and wages from 1 July 2022.

Please note: Although the $450 per month threshold has been removed, employees aged under 18 must still work more than 30 hours a week to be eligible for super.

What should you do?

Following the changes above, you should:

-       Ensure your payroll and accounting software have been updated to include the recent changes to SG. Most software should automatically update to the 10.5% SG rate

-       Calculate and pay the right amount of SG to all employees entitled to it

-       Pay SG liabilities by the due date. The due date is always the 28th day of the month following the end of a quarter. Meaning for the April-June quarter, super must be paid by July 28th.

If SG is not received by your employees superfunds by the due date, Superannuation Guarantee Charge (SGC) will apply.

What happens if you do not pay?

If you do not meet your SG obligations, you will need to lodge an SGC statement and pay SGC to the ATO.

This will always cost you more than paying the SG on time, and the SGC is a non-deductible penalty.

 Source: ATO

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au   

Nearing the Neutral Cash Rate

As we know by now, the Governor has estimated the neutral rate to be at least 2.5%. With the September rate hike of 50 basis point, we now have a cash rate of 2.35%. As of the most recent RBA statement they have removed the ‘normalisation’ phrase, meaning that the Board now believes they are nearing the neutral rate.

Outcome of Nearing Neutral Rate

Monetary Policy has moved very quickly to neutral. The cash rate is expected to increase further due to the tightness of the labour market, rising wages growth, and high inflation. These issues mean that the RBA will now want to move the cash rate from a neutral position to a contractionary position. However, it is unlikely that the urgency will be as high in this phase of the cycle.

It is widely believed amongst economists that the pace of rate hikes will decrease after the September hike. The RBA has meetings more frequently compared with other countries such as New Zealand (who meet 7 times per year), this leads to a very swift increase in interest rates.

What is the Final Result?

Economists now believe that with the current market conditions, the RBA will look to a cash rate of 3.35%. However, economists expect this target be reached early next year (meaning slower rate hikes).

Outlined in the recent RBA statement ‘the Board expects to increase interest rates further over the coming months’. Therefore, we do expect interest rates to continue rising at a slower pace until the beginning of next year. However, the good news for homeowners is that the bulk of the rate hikes are now behind us.

 For more information feel free to read the RBA Statement, on their reasoning behind the rate hikes, and their outlook on the economy.

 Source: Westpac    

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au    

Australia’s Current Account – June Quarter 2022

Highlights

Australia’s current account has recorded yet another surplus, leading Australia to a record of 13 consecutive quarters in surplus. The surplus has grown from $2.8bn in the March quarter, to $18.3bn in the June quarter (3.0% of GDP).

The key to this gain was a record trade surplus, increasing from $16.3bn in the March quarter, to $43.1bn (7.2% of GDP) in the June quarter.

Other Interesting Information

Export earnings increased dramatically in the first 2 quarters of the year, up 10.4% in March quarter and 14.7% in the June quarter. In the June quarter export volumes rose by 5.5%, meaning the remainder of the 14.7% gain was due to price increase.

Terms of trade has increased 7.5% over the year, and 4.6% in the June quarter alone. Terms of trade is currently sitting at a record level, which is 77% above the long-run average. This has significantly boosted the export earnings shown above.

The volume of service imports has risen massively in the first half of the year, with a 27.6% rise in March quarter and a further 14.3% in the June quarter. Since the end of 2019 (pre-pandemic), we have had a decline in the volume of service imports of 32.4%. Therefore, the gains above demonstrate an erosion of that decline in service imports. The main catalyst is a return to international travel, caused by the reopening of the Australian border.

Service exports have increased 5.3% in the March quarter and 13.7% in the June quarter. However, service export volumes are still down 38%  from pre-pandemic levels. This is caused by a slowdown in exports such as tourism and education.

Manufactured goods exports are still down 14.7% from pre-pandemic levels. This is due to the struggles in the global supply chain as the pandemic came to an end.

 Source: Westpac

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Appointing an Auditor for SMSF

SMSF auditors are required as part of your lodgement and reporting obligations. The job of a SMSF auditor is to review your fund’s financial statements and make sure super laws have been complied with.

Appointments should be done at least 45 days before the SMSF annual return is lodged. Failure to appoint an auditor in time could lead to an overdue lodgement.

Who to Appoint?

A SMSF auditor must be:

• Registered with ASIC. They should appear on the SMSF auditor register

• Registered SMSF auditors will have a number, this number will be required on your SMSF annual return

Any auditor you chose must be independent. Meaning they should not audit any fund in which they hold a financial interest in, or a personal relationship with the members or trustees of the fund.

When is an Audit Required?

An audit is always required to be done annually by an approved SMSF auditor. The audit must be done even if no contributions or payments are made in that financial year.

Audit Report / Dealing with Contraventions

Your SMSF auditor will provide the trustees with an Independent Audit Report (IAR) within 28 days of completing the audit. This report should be read carefully as it will contain any issues or contraventions found in the fund. The information from the report can then be used to populate Q6 of your SMSF Annual Return.

If found, the trustees must rectify as soon as possible, or develop a plan to rectify any contraventions found in the fund. Depending on the contravention, your SMSF auditor may be required to report certain contraventions to the ATO, and if the contravention remains unrectified you’re encouraged to make a voluntary report to the ATO.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au  

ATO Update on Most Recent Scams

July 2022 – Tax Refund SMS Scam

The SMS will claim that you are owed a tax refund. In the SMS there will be a hyperlink that sends you to a form in a webpage they have made to replicate the real ATO page. This is where they ask for your personal information, such as credit cards details.

 The best practice to avoid this scam is to never click on any SMS links claiming to be the ATO. The ATO will never contact you through SMS with links to their website or MyGov.

June 2022 – 2022 Tax Lodgement Scam

This is known as an email phishing scam and claims that your 2022 tax lodgement has been received. The email contains asks you to complete a to do checklist inside a link. This link will take you to a fake Microsoft page where they will ask for your personal information.

 Best practice again is to avoid the link. The ATO will never email you with a link to login to their online services.

April 2022 – Fake ABN/TFN Application

This scam will advertise that they can help you get a TFN for a small fee. Instead of helping people obtain a TFN, they will take you to a fake website and steal your personal information.

 Please remember that applying for a TFN is free. If you apply for a TFN through a tax agent, you should ensure that they are registered with the ‘tax practitioners board’. 

Statistics on Recent Scams

In June 2022, the ATO received 1,166 reports of ATO impersonation scams, with $1,500 being lost. This is a 96% drop from June 2021. However, it is important to remember that these are only the numbers that have been reported to the ATO and there could be many more people affected.

Summary of Advice to Prevent Scams

Be careful when sent a text or email claiming to be from a government agency such as the ATO, particularly if the message contains a link to an online service.

 If you have any concerns, you should call the ATO directly on 1800 008 540 and ask them about the issue raised in the email or SMS.  

Source: ATO

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Fourth Consecutive Cash Rate Increase

What is the Current Cash Rate?

At the August RBA meeting on the 2/8/2022 the cash rate was once again increased by 0.5%. This follows an increase of 0.25% in May and 0.5% in both June and July. The cash rate is currently 1.85%.

This cash rate is 1.75% higher than the cash rate of 0.1% throughout 2021. However, in historic terms in is still quite low.

What is the Cost?

The increased monthly cost of repaying loans by size is as follows:

   $500,000 loan – Will have a monthly increase of $144 and the May-August increase will be $472

$750,000 loan – Will have a monthly increase of $211 and the May-August increase will be $708

$1,000,000 loan – Will have a monthly increase of $281 and the May-August increase will be $944

Outlook on Inflation

Inflation is widely expected to reach 7.75% later in the year. However, the inflation forecast for 2023 is lower. Therefore, many households will be on a tight budget over the next 6-12 as inflation increases to 7.75% at the same time interest rates are increasing.

It is then hoped that the higher interest rates will kick in and slow inflation.

Future Rate Rise Expectations

Westpac and ANZ believe that the cash rate will reach 3.35% around the beginning of 2023. This would imply another 1.5% worth of rate rises. The RBA has stated that the neutral rate is in the region of 2.5%. This leads Westpac to believe that the September rate rise will be 50 basis points (nearing the neutral rate), followed by four rate rises over the following months of 25 basis points.

It is the view of many analysts that the Board will need to slow the economy to a 1% growth rate in order to control inflation. This is well below the average of just over 3% growth Australia usually puts out. In global terms, this growth rate is quite good as countries such as the US have experienced negative quarterly growth.

Ideas

Ideas include:

-       Refinance your home loan/ shop around – new customers almost always get lower rates

-       Increase your credit score – this will allow you to negotiate lower rates

-       Make extra repayments – to lower the amount of interest calculated

-       Use offset accounts – to lower the amount of interest calculated

-       Take advantage of rising interest rates and shop around for higher interest savings accounts. Many savings accounts are now offering interest rates above 2% and some even above 2.5%. This number will only increase as the cash rate increases.

Source: Westpac

Government Flood Assistance

The recent floods in NSW have been declared a natural disaster by the Federal Government.

Revenue NSW has provided an update for its flood impacted customers on 4 July 2022, which is summarised below.

Federal Government Assistance

Commonwealth Government support for people impacted by floods include:

-       Australian Government Disaster Recovery Payment

-       Disaster Recovery Allowance

These payments can be applied for through the Services Australia website. Additional information is available through the National Resilience and Recovery Agency website.

NSW Government Assistance

Revenue NSW have put measures in place to assist customers who are struggling to pay their financial obligations. Examples include:

-       Extension of payment and lodgement timeframes

-       Putting debts on short-term hold

-       Waive additional costs if you were prevented from acting during to the floods

-       Wages paid or payable to an employee for flood assistance activities are exempt from payroll tax

For more information on this visit the https://www.revenue.nsw.gov.au/news-media-releases/natural-disaster-relief webpage.

Other Important Links

• NSW State Emergency Service – For updates and information relating to the floods

• Service NSW – Disaster assistance can be found on this page

• NSW Government flood information and support services – financial support, information and assistance for people and businesses affected by NSW floods

• NSW Government floods grants and other support – financial assistance for individuals, businesses, NFPs, farmers and primary producers impacted by storms and floods in NSW

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

RBA Board - 50 Basis Point Rise

As many experts had predicted, the RBA board has decided to increase the cash rate by 50 basis points to 1.35%. The cash rate has now increased from 0.1% in April to 1.35% in July. This comes as most major economies continue to struggle with inflation.

 What is expected in the coming months?

The main goal of monetary policy is to keep inflation at 2-3%. Interest rate policy during COVID was highly stimulatory at 0.1%, in order to keep spending higher and prevent a recession. The RBA is looking to move toward a neutral interest rate, as inflation has increased over the previous quarters.

The RBA’s opinion on the neutral rate is critical to understanding where interest rates may go. The RBA has previously mentioned a number around 2% would be neutral, however this will be affected by the changing market conditions after these statements. Given interest rates are currently 1.35% they would still be considered stimulatory.

Most analysts expect inflation to still be quite high for the June quarter and this would be followed up by another 0.5% rate rise in August. If the analysts are correct regarding the next rate rise, the interest rates would then be 1.85%. Considering how fast rates have risen since April and the fact that we are approaching what the RBA believes to be the neutral rate, interest rate rises will likely begin to cool off later this year. This all depends on the quarterly reports on inflation and the labour market, as we will see interest rate rises slow after low inflation data.

For more information refer to the RBA meeting notes: RBA Meeting Statement  

Source: Westpac

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

RBA Cash Rate Increase

What has happened?

The RBA Board has increased the cash rate by 50 basis points this Tuesday at the June Board meeting. This follows the 25 basis points increase at the May Board meeting and means an increase in the cash rate from 0.1% in April to 0.85% today.

Rates have now been increased by more than analysts’ predictions for the last two Board meetings. This shows that the RBA is moving towards more contractionary monetary policy more quickly.

What is the impact of this?

The cash rate is the rate banks use to lend to one another in the short-term money market. This is important because it determines the costs that banks will incur to funds the loans they provide to borrowers. These costs will inevitably be passed on with higher interest rates on loans.

After Tuesdays hike you will be paying about:

-       $133 more per month on a $500,000 loan

-       $159 more per month on a $600,000 loan

-       $199 more per month on a $750,000 loan

-       $265 more per month on a $1,000,000 loan

Note: this does not include the previous rate rise of 0.25% in May, meaning these increases would be 50% higher if you included both rate rises.

Why are interest rates increasing?

Interest rates are increasing almost solely due to inflation. When interest rates increase it has a couple of important effects.

A higher interest rate lowers the levels of spending and increases saving, leading to a decrease in the money supply in the economy. These factors lead to lower demand in the economy and therefore prices should decrease assuming supply stays the same.

As money becomes less ‘cheap’ people will have less purchasing power, leading to people buying less or buying more basic products. This will lead to a decrease in the overall level of prices in the economy.

What will happen in the future and what can you do?

Analysts believe that the next rate rise in July with again be 50 basis points, while Philip Lowe (the RBA governor) has indicated that the neutral interest rate would be in the region of 2.5%. For this reason, most analysts believe the cash rate will reach 2.35% in the earlier months of 2023.

Ideas to combat rising interest rates include:

-       Refinance your home loan – loyalty does not pay, most new customers pay considerably lower interest rates compared to long-term customers.

-       Check out your credit score – with a higher credit score you will be able to negotiate lower rates more easily. If you have a low credit score you should work to increase it.

-       Use an offset account – money in an offset account will decrease the interest calculated on your loan.

-       Commit to extra repayments – reducing your principal will help you reduce interest expenses and will be beneficial if you decide to refinance your loan.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Director Penalty Notice Escalation

In March, the ATO has begun contacting directors to inform them that they could potentially be held liable for company tax debts under the Director Penalty Notice (DPN) program. Directors will receive this letter if the company has not met debt obligations, specifically regarding Superannuation Guarantee Charge, PAYG Withholding and GST.

What to expect?

If the ATO identifies your company for not meeting its debt obligations, you will receive a notice outlining their intention to issue you with a DPN. Once a DPN is received you may be held personally liable for the debts of your company. The ATO intends on making directors aware of their personal liabilities if they do not engage with them. Once the ATO reaches out to you they will provide options to you and assistance to prevent any escalations.

Note: if you decide to use a payment plan, the general interest charges will continue to any debt. To prevent this charge, you are encouraged to bring your account up to date.

What can you do?

Within 21 days of receiving a DPN a director must do one of these four options:

1.     Completely pay the liability

2.     Put the company into administration

3.     Appoint a Small Business Restructuring Practitioner (SBRP)

4.     Put the company into liquidation

 For more information you can go to the ATO website here.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Disclosure of Business Tax Debts

What is it?

The ATO has begun writing letters to businesses that may meet the criteria to have their tax debts disclosed to Credit Reporting Bureaus (CRBs). This letter is being sent to businesses with tax debts and meet the ATOs criteria for disclosure. In the letter there will be information regarding how to effectively manage the debt with the ATO. Disclosure to CRBs can be avoided by making full payment or entering a payment plan.

What steps will the ATO take?

Businesses that do not take steps to manage their debt will remain eligible for disclosure. A formal Intent to Disclose Notice will be provided just before the ATO discloses any tax debts. If you receive a formal Intent to Disclose Notice, it will say ‘Act now or your tax debt or your tax debt will be reported to credit reporting bureaus’. You will have 28 days to contact the ATO to avoid the debt being reported, and the ATO will help you along with your accountant to manage the debt and understand the next steps.

What can you do?

The most important step is to get into contact with the ATO and your accountant before the debt becomes unmanageable. There is also information on the ATO website and options to set up payment plans.

It is important to note that the general interest charge will continue to apply to all balances. You will want to bring your balance to zero to prevent any further interest charges.

 For more information you can go to the ATO website here.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Australia Federal Budget 2022-23 – Highlights and key measures

The Federal Government presented its 2022-23 budget last night, headlined by a range of cost of living measures, a temporary cut to the fuel excise for 6 months, and a Skills and Training / Digital Technology boost for business.

IN BRIEF

• a strong economic recovery is well underway, notwithstanding the COVID-19 pandemic and new shocks, such as the recent floods and the Russian invasion of Ukraine.

• economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending.

• the unemployment rate has also fallen to 4%, and is expected to reach 3.75% in the September 2022 quarter

The Government expects to record a deficit of $79.8bn for 2021-22 and $78.0bn for 2022-23

Since the Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2021, the underlying cash balance is expected to improve by $103.6bn over the 5 years to 2025-26. Net debt of $714.9bn for 2022-23 is forecast to rise to $864.7bn in 2025-26

KEY POINTS

Tax-related measures announced

The major tax-related measures announced in the Budget included:

1. LMITO increased by $420 for 2021-22

A one-off $420 cost of living tax offset for the 2021-22 income year will see the low and middle income tax offset (LMITO) increased up to a maximum of $1,500 for 2021-22 only (up from $1,080). Importantly, the Government did not announce an extension of the LMITO beyond 2021-22 when it is legislated to cease.

2. Personal tax rates

No changes were made to the personal tax rates for 2022-23. The Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.

3. Small business 20% deduction boost: skills training and digital adoption

Businesses with turnover less than $50m will receive a 20% uplift on deductions for eligible expenditure on external training courses and digital technology. The 20% boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).

4. Patent box income extended

The concessional tax treatment for eligible corporate income associated with new patents in the medical and biotechnology sectors will be extended to corporate taxpayers who commercialise their:

(i) eligible patents linked to agricultural and veterinary chemical products; and

(ii) patented technologies which have the potential to lower emissions.

5. Employee share schemes

For company law purposes, the investment thresholds for unlisted companies will be changed so that ESS participants can invest up to $30,000 per participant per year (accruable for unexercised options for up to 5 years), plus 70% of dividends and cash bonuses. Participants will also be able to invest any amount if it would allow them to immediately take advantage of a planned sale or listing of the company.

6. Carbon credit and biodiversity certificate income

The proceeds from the sale of Australian Carbon Credit Units (ACCUs) and biodiversity certificates generated from on-farm activities will be treated as primary production income for the purposes of the Farm Management Deposits (FMD) scheme and the tax averaging provisions from 1 July 2022.

7. Digitalising trust income

All trust tax return filers will be given the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes. The measure is proposed to apply from 1 July 2024 (subject to advice from software providers).

8. PAYG instalments option

From 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software (with some tax adjustments).

9. Taxable payments data reporting

From 1 January 2024, businesses will be provided with the option to report Taxable Payments Reporting System data on the same lodgment cycle as their activity statements, via accounting software.

Superannuation

The superannuation measures include:

1. Super pension drawdowns

50% reduction extended to 2022-23 - the temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to the 2022-23 income year.

2. Super Guarantee rate

The Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23.

Other measures

1. Fuel excise temporary reduction

The fuel excise will be reduced by 50% for 6 months, starting from midnight on Budget night.

2. $250 cost of living payment

The Government will make a $250 one-off cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and concession card holders.

3. Apprentice wage subsidy extension

The Budget confirmed the extension of the Boosting Apprenticeship Commencement (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies by 3 months to 30 June 2022.

The 2022-23 Budget Papers are available from the following website:

Budget 2022-23 - https://budget.gov.au/

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Source : Chartered Accountants ANZ

NSW announces $50,000 grants for flood impacted businesses and NFP

Grants of up to $50,000 will be available to eligibile small business and not-for-profit organisations directly impacted by the recent floods.

See link for more information

https://www.service.nsw.gov.au/campaign/storm-and-flood-assistance-businesses

Penalties for overdue Taxable Payments Annual Report (TPAR)

From 23rd March the ATO will be issuing failure to lodge penalties to those who:

·        did not lodge their 2021 or prior year TPAR

·        have already been sent 3 non lodgement letters about their overdue TPAR

·        do not respond to the ATO follow-up phone call about their overdue TPAR

Manufacturing Economic Trends in Q1 2022

Prices and Inflation

In the March quarter, 46% of manufacturers reported higher input costs. This is the highest since 2008. Labour and materials have been outlined as the biggest constraints to output at the highest rate since 1974 (due to the 1974 oil shock). Business profitability is being eroded by these higher reported costs. Currently, 44% of manufacturers expect costs to rise further in the coming period.

Profit margins are being squeezed as manufacturers are only partially passing on higher costs to customers. Only 19% of manufacturers reported increasing their selling prices, which is substantially lowing than the 46% of manufacturers that reported higher input costs. Currently, 26% of manufacturers believe they will raise selling costs as input cost pressures continue.

Labour Market

A net 7% of firms have increased employment in the quarter, up from a -1% result in the previous quarter. This is interesting, as all expectations predicted much higher employment outcomes than either of these two results. This is said to be caused by labour shortages, exacerbated by COVID. Currently, 31% of firms intend to increase employment in the next quarter.

With employment increases being constrained in conjunction with rising output, this has influenced overtime outcomes. A net 25% of firms increased overtime in the current quarter. While 26.3% of manufacturers believe it is harder to find labour.

Investment and Profitability

Investment intentions are beginning to rise, but not yet reaching the level reached at the beginning of 2021. A net 12% of firms are looking to increase plant and equipment investments, down from the 27% at the beginning of 2021.

Building projections for the year show respondents are planning a net decrease in building by 1%. Indicating the need for firms to rein in excess capacity.

In terms of profit expectations, only 5% of manufacturers are expecting higher profits in the future, this is compared to the long-run average of 20%. The low profit expectations are evidence of higher input costs and supply issues squeezing profitability.

Activity and Orders

Output reduced in the second half of 2021 due to delta. However, in Q1 16% of respondents have increased output. Expectations of output in future periods remain high as 26% of firms expect output to increase in the coming quarter.

Exports fell by 8% in the March quarter. This marks three consecutive quarters of export reductions. This is caused by factors such as shipping availability, freight costs and inconsistent export demand. Currently, a net 6% of respondents surveyed expect exports to increase in the next quarter.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Major Changes to Director Penalty Notices

Over recent times the ATO has been lenient when handing out Director Penalty Notices (DPN), due to COVID lockdowns and the effect it had on business. However, they have made some major changes to DPNs, specifically making it harder for directors to avoid them.

What are the changes?

A director could previously enter the company into a payment plan, to pay off any outstanding tax or super guarantee debts. Entering a payment plan would prevent a director form receiving a DPN.

However, entering a payment plan will no longer prevent a director from receiving a DPN. Therefore, directors will remain personally liable for the debts (SGC, unpaid PAYG withholding, or net GST).

What can a director do?

Within 21 days of receiving a DPN a director must do one of these four options:

1.     Completely pay the liability

2.     Put the company into administration

3.     Appoint a Small Business Restructuring Practitioner (SBRP)

4.     Put the company into liquidation

It is important to remember that even if you are no longer a director of the company, you may still be liable for penalties equal to the amount of the unpaid liabilities of the company.

What is the effect of this?

It is expected that removing the option of payment plans will lead to more directors receiving DPNs. This will inevitably lead to more companies either going into administration, liquidation or appointing a SBRP.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

NSW Government Assistance Available to Help Flood Affected People

Housing support

The ‘Temporary Housing Support Package’ is available for people who will need accommodation in the coming weeks and months. This package will provide:

-       Motorhomes for people who are currently living in motels/hotels or evacuation centres

-       Temporary accommodation pods for rural landowners

-       Temporary accommodation in recreation clubs

-       People who are being assisted by the Red Cross will be allocated to Airbnb hosts offering low cost or free accommodation

The ‘Rental Support Scheme’ is available to people that have homes that are uninhabitable due to flooding. The scheme provides a maximum of 16 weeks rental support for flood victims to find temporary accommodation. The amount paid under this scheme scales up depending on the number of people in the household.

Financial Support

The ‘Disaster Recovery Payment’ is provided to people who have had their home severely damaged or destroyed or have been seriously injured. The payment is equal to:

-       $1,000 per eligible adult

-       $400 per eligible child

The ‘Disaster Recovery Allowance’ provides up to 13 weeks of income assistance for people who can prove that they have lost income as a direct result of the floods in NSW.

The ‘Disaster Relief Grant’ is provided to people who:

-       your home (primary place of residence) was damaged by a natural disaster 

-       you do not have insurance for the damage

-       you are a low-income earner with limited financial resources

-       it has been less than 4 months since the disaster.

There is also ‘stamp duty relief’ for people who are buying a new vehicle as a result of their vehicle being written off during the floods.

What should you do?

To receive any of the above grants you should check your eligibility on Service NSW and follow the applications steps set out on their website here.

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

RBA Broadens Measure of Wages Growth

Many people believe the RBA should begin raising interest rates due to the high inflation rate. The RBA usually has a target inflation rate of 2-3%, compared to the December quarter which was 3.5% on an annualised basis. During 2021, the RBA stated that they would only raise the cash rate if the Wage Price Index (WPI) increases by 3%.

What has happened?

Wages growth has remained below the 3% target to raise interest rates, while inflation remains above the target. The concern for the RBA Governor (Philip Lowe) is that increasing the cash rate could slow wages growth even further compared to inflation. The goal is to let wages catch up to inflation before any rate rises. In the latest RBA statement, the target was changed from “wages growth at a rate consistent with inflation”, to “labour costs at a rate consistent with inflation”.

Is the WPI increasing by much?

Over the past twelve months wages in Australia have increased by 2.3%. This is slightly below the 3% target. However, wages do seem to be growing at a faster rate and analysts have predicted this trend to continue.

What is the difference between WPI and labour costs?

The WPI purely tracks the increase in wages on an aggregate level. Labour costs includes the increase of wages, the social contributions payable by the employer and other costs such as taxes on labour, training costs, recruitment costs, etc.

Theoretically, it should be easier to reach the 3% target when using the labour cost method.

What does this mean?

It appears the RBA is looking to free themselves from the constraint they set last year, a 3% WPI increase before we see any rate rises. The RBA stressed that they must be patient in how the cash rate rise, which is understandable as the world deals with supply chain issues and the events occurring in Ukraine.

The first-rate rise is predicted to occur around August. This is possibly as minimum wages in most award agreements increase on the first of July each year.

Source: Westpac

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

Omicron Support Package for Business (NSW)

The NSW Government announced a new support package for small and medium businesses and the performing arts sector in February following the escalation in COVID cases in recent weeks due to the Omicron COVID-19 strain.

The support measures are summarised below:

Criteria for eligible businesses

• Aggregated annual turnover between $75,000 and $50 million for the year ended 30 June 2021; and

• Decline in turnover due to either public health orders or impact of Omicron variant of COVID-19 of more than 40 percent during bother

• The month of January 2022, compared to January 2021 or 2020 and

• 1-14 February 2022, compared to the same fortnight in February for the two years prior to 2022

• Maintain head count from the date this scheme was announced (30 January 2022).

Support eligible business will receive

• 20 percent of weekly payroll for the month of February as a lump sum payment

• Minimum payment of $750 per week and a maximum payment of $5,000 per week

• Businesses without employees with receive a flat rate of $500 per week $2,000 for the month of February)

• Businesses can apply through Service NSW from mid-February

Small business Fees, Charges and Rapid Antigen Test (RAT) Rebate

• The existing small business rebate has increased from $2,000 to $3,000

• The rebate has been expanded to cover half the cost of RATs

• The funds can be used not only to offset the cost of RATs, but also other Government fees and charges such as food authority licences, liquor licenses, trade person licenses, event fees, outdoor seating fees, council rates and road user tolls for business use

• Business that are already registered for this rebate will receive an automatic top up of $1,000 new applicants will receive a rebate of $3,000

Commercial Landlord Hardship Grant

• The protections under the Retail and Other Commercial Leases (COVID-19) Regulation 2021 (the Regulation for small retail and commercial tenants will be extended for an additional two months, to 13 March 2022

• Grants of up to $3,000 per month (GST inclusive), per property, are available for eligible landlords who have provided rental relief waivers to affected tenants. Rent relief waived must comprise at least half of any retail reduction provided.

• Landlords who claimed the 2021 land tax relief can claim it for the 2022 year

• Under the Regulation stated above landlords are prohibited from certain actions (such as lock out or eviction) unless they have first renegotiated rent with tenants and attempted mediation.

Performing Arts Package

The package provides financial support to relaunch the performing arts sector, in line with the NSW Governments roadmap to recovery which is now been extended to April 2022.

To be eligible for funding, the applicant MUST be one of the following:

• An eligible venue (list published by Create NSW)

• A producer of an eligible performance scheduled to perform at one of the eligible venues

• A promoter of an eligible performance scheduled to perform at one of the eligible venues

Funding is then provided to eligible performances staged between 19 September 2021 to 30 April 2022.

The funding amount per performance will be calculated using a formula of average ticket price multiplied by the number of tickets available for sale (capped at 10,000) and a specified percentage (“Agreed Percentage”) as detailed below (up to a maximum of $12.5m)

For further information please see below links:

nsw.gov.au/covid-19/business/financial-support/grants-and-loans

https://www.service.nsw.gov.au/transaction/apply-2022-small-business-support-program

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au

SMSF Quarterly Statistics – September 2021

The ATO produces a report on SMSFs every quarter. There are some interesting takeaways within the most recent report.

 How many Self-Managed Super Funds are there?

Over the last 4 years establishments of SMFS have increased and wind ups have decreased, meaning we now have more SMSFs and members than ever with 25,760 new funds being created last year alone. There is now 598,452 SMSFs and 1,123,949 members of SMSFs in Australia.

 What assets are people investing in with their funds?

The top 3 investments within SMSFs include listed shares ($238Billion), cash and term deposits ($149Billion) and unlisted trusts ($112Billion). Meanwhile, residential property investments have increased from $28Billion to $47Billion in the last 4 years. People may also find it interesting that there was no money in cryptocurrency through SMSFs as recently as March 2019, and there is currently $228Million in cryptocurrency.

 How many members does the average funds have?

The majority of SMSFs have 2 members, which you may assume is made up in large part by couples. Currently, 69% of all funds have 2 members and it has been around this percentage for many years. This leaves 23% of funds with just 1 member and only 6% of funds have either 3 or 4 members. This shows that married couples are much more attracted to opening a SMSF, mainly because they can pool their assets and invest in a tax effective way.

 What age are members of funds?

The data shows that people become members around the age of 50. The age ranges containing the highest percentages of members are between 50 and 84. Interestingly, the 60–64-year-old bracket makes up 13.1% of total members and is therefore the age that is most heavily invested in SMSFs. This is most likely because SMSFs don’t become cost effective until you have a balance of $250,000 or more and people below the age of 50 will be unlikely to have this amount of money as an initial balance.

Between males and females there is not too much difference. 52.8% of fund members are male and 47.2% of members are female.

 What is the income of the average SMSF members?

Most members of SMSFs have taxable incomes between $0 and $60,000. Members in the $0 to $60,000 income range make up 52% of all SMSF members. This number could include a large amount of people who have retired and are currently living off the income of their SMSF. Outside of this, the $100,000 to $150,000 income range is the next highest at 11.5%, beyond this income the number of members decreases.

 What is the size of most SMSFs?

Most funds fall within the asset range of $500,000 - $1Million, with 25.8% of funds falling in this category. Almost 90% of all funds have between $200,000 and $5Million in assets. Not many funds have lower than $200,000 in assets.

Source: ATO

For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au