Australian Federal Budget 2022 – the AfterPay Budget – Vote Now Pay Later!

Australian Federal Budget 2022
The AfterPay Budget
 Vote Now Pay Later!

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Last night, Treasurer Josh Frydenburg delivered the Australian Federal Budget for the next 12 months. But in reality, with the election about to be announced – with an expected poll date of May 14, 2022, (the PM mentioned this date on 2GB this morning)  the budget’s main aim is solely to get the Government to that date, and, they hope, elected, despite all polling indications, for a further term of Parliament.  The key elements announced and widely reported relate to what the Government calls ‘cost of living’ support. With costs rising over the last few years and significantly in the last few months due to rising fuel prices, supply issues and a lack of wage rises for most Australians, a ‘correction’ in the economy, with an easing of the financial pressure that many have been feeling over the last few years is desperately needed. So what has been offered and forecast?      

 $250 one-off payment to those on the following payments:

• Age Pension.

• Disability Support Pension.

• Parenting Payment.

• Carer Payment.

• Carer Allowance (if not in receipt of a primary income support payment).

• Jobseeker Payment.

• Youth Allowance.

• Austudy and Abstudy Living Allowance.

• Double Orphan Pension.

• Special Benefit.

• Farm Household Allowance.

• Pensioner Concession Card holders.

• Commonwealth Seniors Health Card holders.

• Eligible Veterans’ Affairs payment recipients and Veteran Gold cardholders.  

The payments are exempt from tax and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under two or more categories outlined above.  The payment will only be available to Australian residents. This is a one-off payment and NOT an ongoing increase to any of these benefits. The ongoing discussion of the appropriate level of support for pensioners and Jobseekers has not been addressed In the budget. The payment will occur in April 2022 – i.e. after the election has been called but before the polling date.

Temporary reduction in Fuel Excise

The Government will help reduce the burden of higher fuel prices by halving the excise and excise-equivalent customs duty rate that applies to petrol and diesel, and all other fuel and petroleum-based products except aviation fuels, for six months. This measure will commence from 12.01 am on March 30 2022, and will remain in place for six months.

However, this may take 2-3 weeks to be seen ‘at the bowser’ as existing stocks are sold and then replaced. Ongoing fluctuations of the crude oil price, production costs and exchange rates may add to or diminish any benefit actually seen at the bowser.

Note that the calculation of indexation will continue to happen over the 6 month period that this ‘relief’ will occur, so when the excise is returned to its ‘normal’ levels in October, we may see a price increase that is well above the 22 cents per litre reduction that we are currently hoping for.

Increase in low and middle-income tax offset

For a number of years, there has been a ‘non’ cash refundable’ tax offset that has been continually extended for ‘one more year’. We have this situation again, but this time with a last ‘bonus’ of $420.

This is the “$420” relief payment that has been described as a ‘cost of living’ tax offset in the budget.

 It will apply to everyone who has a taxable income of LESS then $126,000, and its timing is dependent on the lodgement of your 2022 tax returns. i.e. it will NOT be paid before July 1, 2022, and may not be received by many until well into the second half of the year.

Note also that if your total tax payable is less than the total value of the rebate, you may not receive all or any of the benefits.

 What has not been mentioned is that this is – at this stage – the FINAL year of this offset, which has been extended year after year for some years now. With the stage 3 tax cuts due to be introduced in 2024-25, people on ‘middle incomes’ ($45,000 to $126,000) will face an effective tax increase in the 22/23 year (i.e. from July 1), So while anyone with an income under $126,000 will receive a benefit of an extra $420 after July this year, they face an additional tax take of $1,080 after July next year. The ‘Afterpay’ effect!

 

Changes effective for business – and ‘creating growth opportunities’

 

Skills and training boost.

The Government will introduce a skills and training boost to support small and medium-sized businesses to train and upskill their employees. The boost will apply to eligible Expenditures incurred from 7:30 pm (AEDT) on March 29 2022 (i.e., Budget night) until June 30 2024, by Small and medium-sized businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of Expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.

Some exclusions will apply, such as for in-house or on-the-job training and Expenditure on external training courses for persons other than employees. (Without any legislation, this is open to debate, but it may mean that directors of companies/self-employed business owners CANNOT claim their OWN external training. But until we get details, we cannot be certain. That is not likely to occur until after the election as the changes required for this are not likely to pass through Parliament before the election.)

But while this applies to eligible Expenditure incurred from today, the actual benefit (tax deduction) will not occur until June 30, 2023. i.e. Expenditure from today to June 30, 2022, can ONLY be claimed in the NEXT tax year.

So, using Frydenburgs example from budget night. If you spend $100 on training your staff ‘today’, you can claim a $120 tax deduction (which, with a corporate tax rate of 25%, gives a tax benefit of $30 in 2023 instead of $25 in 2022) and reduce your tax sometime after July 1, 2023

 

Technology Investment Boost

The Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses. The boost will apply to eligible Expenditures incurred from 7:30 pm (AEDT) on March 29 2022 (i.e., Budget night) until June 30 2023.

Small and medium-sized businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of Expenditure incurred on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems or subscriptions to cloud-based services).
An annual cap will apply in each qualifying income year so that Expenditures up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.

For eligible Expenditure incurred by June 30 2022, the boost will be claimed in tax returns for the following income year. For eligible Expenditure incurred between July 1 2022, and June 30 2023, the boost will be claimed in the income year in which the Expenditure is incurred.

Whether this applies to current subscriptions (such as Xero, office 365 etc.) that are being used or only ‘new’ acquisitions is unclear. And, in the same way, as the ‘skills’ boost, anything incurred that can be claimed in the current year will not be claimed – or provide a tax benefit – until the end of the 22/23 tax year – so the ‘financial benefit’ will not be seen until after July 2023.

Varying the quarterly tax instalments

For those who have ongoing PAYG instalment payments (company tax instalments, investment income or sole traders), the annual calculation of the instalment has often been based on ‘last year’s income plus 10%’ to work out the expected income on which the tax is calculated.

 For the next 12 months, the Government has reduced this ‘uplift’ to 2%, so the amount required to ‘cover’ the quarterly instalment will be lower.

While this will assist cash flow in the short term, the kicker is that if your business HAS increased its profit substantially in the year, it will have a LARGER year-end tax bill, as you will have paid less tax ‘as you go’.

The next change – proposed for January 2024 – is to base PAYG instalments on the ACTUAL quarterly performance “Where Business accounting software permits this”. i.e. we may be approaching the need to lodge ‘adjusted profit reports each quarter’ to calculate the tax instalment that needs to be paid. This may have some benefits where income and expenses are very ‘seasonal’ or where there is a large fluctuation in profit each quarter, meaning less tax is paid when times are harder and more paid when funds are flowing – but it will also require all businesses to be ‘on the ball’ with their accounts every month to keep track of their tax liabilities as they go. There will be more on this AFTER the election!

 

Apprentices and trainees

The Government has extended its support in boosting the apprenticeships scheme, providing A$5000 payments to new apprentices over two years and extending subsidies of up to A$15,000 for employers who take them on.
Frydenberg said the Government would also support an additional 800,000 training places with a A$3.7 billion investment. 
 
Will there be sufficient funding for the TAFE places required for these apprentices? And will they be limited to specific industries? We await more details.
 

Infrastructure 

The budget also makes commitments to several strategic infrastructure projects around the country.  
There are budget commitments for faster rail projects from Brisbane to the Sunshine Coast, from Sydney to Newcastle, Perth’s METRONET project, the North-South Corridor in South Australia, Great Eastern Drive in Tasmania, and Central Australian Tourism Roads in the Northern Territory.

There is also an investment in the Melbourne Intermodal Terminals to increase the efficiency of the national freight network, and more than A$500 million for local councils to deliver priority projects and A$880 million to better connect regional Australia with ports, airports and other transport hubs.

The worry here is the usual – announcements, not action. And As Leigh Sales on 7:30 last night stated – if you overlay the location of most of the announced plans with the electoral map, they are focused on marginal seats, or seats that the Government need to retain or win. Infrastructure Australia has approved only 12% of the projects, so the announcements don’t tie in with economic or social priority or need in many cases.

 Ok, so what are the costs and the losses?

Renewable energy

Federal government spending on climate change measures will decline every year for the next four years. This includes the spending on carbon credit purchases, the Clean Energy Finance Corporation, Australian Renewable Energy Agency and the Clean Energy Regulator. Spending will drop from $2 billion in 21/22 to $1.3 billion on 25/26. We are 7 years from the 2030 ‘threshold’, and the Government is reducing its activity in this area. Any change will need to come purely from the ‘market’ or state government action.

 

You would think that the Lismore floods, the bleaching great Barrier Reef, and the constant downpours in Sydney would have affected policy action.

The Rise and Fall of The Arts

It seems that far too many see this area as being ‘just a nice thing to have’, forgetting the size of the industries involved – Film, TV, Music, Theatre, galleries, pubs, clubs, dance etc. But it falls away for some when it comes to the economic factors. A $111.7 billion sector in 2018 – 6.4% of GDP. But not considered worthy of a separate ministerial portfolio in the current Parliament.

Total Federal spending is forecast to reduce by 20% in 22/23, with a $140 million reduction in the RISE funding – from $160 million to $20 million, and then no further after the 22/23 year. This funding supported the ‘rebuild’ of various festivals, tours, exhibitions etc., but needs to continue to help rebuild a sector that was decimated over the last 2 years. There is no growth (beyond marginal CPI increases) in any other part of the Arts funding either. In fact, the total funding is expected to fall from $799 million in 22/23 to $744 million in 25/26. Australian Music Administration spending drops from 6.3 million in 22/23 to nothing in 24/25. Regional Arts funding falls from $18 million to $7 million in 22/23.

At a time when Film Production and post-production, animation, gaming, and music production has the ability to grow and be globally significant, with an “Australian flavour”, the support to grow the sector in all parts of the country is being removed.
Do you wanna build a submarine, I mean a snowman? 

 

Ring the bell – its closing time…

With the ‘end of the pandemic’ and lockdown provisions, a number of the policies put in place over the last few years are now ending.

Temporary Full expensing will finish June 2022 – so if you want to claim a full 100% tax deduction ‘up front’ for your equipment or business vehicle purchase, it now MUST be ordered by this June 30 and installed for use by June 30, 2023. Any expectations that this would continue have now finished, and from July 1, 2022, the previous depreciation rates will apply again.

This may also have implications for other ‘instant asset write-offs’, which will need to be examined as regulations and legislation are put in place.

The forecasts!

The budget forecasts that a ‘strong labour market’ will mean an unemployment rate of less than 4%. They say that this will drive wages growth with a forecast increase of 3.25% in wages over the coming year.

But, Unemployment is being defined as Less than 1 hour of work per week. If we used the same definition as the last time Australia had a sub 4% unemployment rate, we would be looking at something closer to 16.3% taking into account the underemployed levels, so the expectation of wage growth, being based on ‘supply and demand issues alone’ has to be tempered by this factor. Wages won’t necessarily rise if a large pool of underemployed staff can simply have their hours extended instead of being paid ‘more per hour’.

Inflation is forecast to reduce from 4.25% to 3% 2.75% in 23/24, but this will be very dependent on commodity prices falling (including oil), supply change improvements, and exchange rate stability. Any or all of these factors could see inflation stay over 4% p.a. or climb higher – which may lead to interest rate adjustments happening sooner rather than later.

The deficit for the current year is now forecast to be $80 Billion – down by $20 Billion on last year’s forecast (due to higher commodity prices for what we dig up and ship overseas), and ‘stabilise’ at around $78 Billion for the 22/23 year. With ongoing tax revenue increases – arising out of wage and profit growth leading to more tax being paid – the budget is still expected to be $40 Billion in deficit in 25/26.

The Treasurer claims that we have ‘turned the corner’ because the debt peak will now be ‘not as high’ and ‘a bit sooner’ than previously forecast. This sounds like the “Back in Black” pronouncements in the year before the pandemic – which were already proven wrong before that nasty little virus shut most of us into our homes and 5 km walk zones for the last 2 years! A treasurer’s forecasts are often as accurate as the old Lou Richards Kiss of Death Football Tips, so we take much of this with a large pinch of salt.

Total Government spending is around 26% of GDP – It never peaked above 23% of GDP under the previous Labor government. Tax revenue is around 24% of GDP (also higher than the Labor years). So, currently, the Government has what is called a ‘structural deficit’ (in basic terms – it is spending much more than it is earning). While I won’t fall into the simplistic’ home budget’ comparisons, and there are many who will argue that it does not matter if a government runs deficits all the time (as who is going to bankrupt them?), it is much like developing a business – at some point in time, you DO expect that the revenue is going to be greater than the spending, and you recover some or all of the money that you have spent or invested in getting the business going. Repeated waste and inefficiency or politically motivated decisions make this harder to overcome, and governments need to improve their performance in this aspect regardless of their political colours. Much of the deficit could be recovered in this way. E.g. Defence spending, while overall being necessary, has seen so many examples of botched equipment purchases that have cost billions and produced nothing. This money could have been re-purposed for far better uses and saved considerable money and pain.

 In the words of Ross Gittens in the Age / Sydney Morning Herald:
This budget is not as fiscally responsible as the Government would like you to believe when it’s claiming to be the party of good economic management, but nor is it as fiscally irresponsible as it would like you to believe when it is claiming to have fixed your problem with the cost of living.

We await the Opposition’s reply, and let the election campaign begin!

The Director ID system is now in place. Please take action on this asap.

 

The Director ID system is now in place. Please take action on this asap.



The Federal government have now set up an identification system for all company directors in Australia.

 

Like your Tax File Number or an ABN, it is a unique identifier used with all entities in which a person holds a director’s position. i.e. the number is ‘attached’ to the person, not the company.

 

The intention is that this system helps to deal with false directorships or fraudulent director identities. It will also deal with the common situation of multiple names being used for an individual (such as middle names being included or excluded with different directorships.

 

The number itself is a 15 digit code that adheres to international standard ISO 3166. All Australian Directors will have a number that starts with ‘036’, followed by an 11 digit unique number and a ‘check digit’ that is used to determine the validity of the number being used (This is similar to the TFN and ABN numbers in terms of validity checking)

As of November 1, 2021, everyone who was a director has until November 30, 2022, to apply for a Director ID. Anyone who becomes a company director for the first time between November 1, 2021, and April 4, 2022 must obtain a director ID within 28 days of their appointment. You MUST have a Director ID after April 4, 2022, before you are appointed to your first company director position.

Ok, so what do you need to do to get a Directors ID? It’s simple.

 

1.       Register your details with MyGovID. You may have done this already to get your vaccination certificate, medicare details or tax information.
If not, you will need to supply various ID documents to verify yourself (such as drivers licence, passport, medicare details etc

2.       Apply for the Director ID via MyGovID.

 

To make the process easier, I will be sending all current directors on our corporate register system an email with the details of all the companies they are associated with and the direct links to apply for a Director ID. (Note that this includes companies that are solely trustees of trusts or superannuation funds.) It will generally only take a few minutes for you to complete the process.

When you have your Directors ID, could you please forward the details to me so that I can record them in our system? This way, it will ensure that the details appear on your company’s documents as required in the future.

If you have any questions or need more information on setting up your Directors ID, please feel free to contact us!

When your Oxygen supply becomes your water leak! Lessons in business from the fish tank of life.

 

When your Oxygen supply becomes your water leak!

Lessons in business from the fish tank of life.


Those of you who have been to my office, or perhaps seen the background on our Zoom chats, will know that I have a fish tank just behind my desk.

Freshwater Tropical Fish. 

They are relaxing to watch and provide a nice vista in the room.


Watching the freshwater mussel wander around the tank is fascinating!  (Who knew they moved around so much?)
 


Anyone who has kept an aquarium knows that regular maintenance is needed. Clean the tank, the filters, test and change a portion of the water. Feed the fish (of course!), re-vegetate or decorate the tank. And at times, deal with illnesses, or restock the tank.

A few weeks ago, after doing a water change in an evening, I came into the office the following morning to find a disaster had occurred. 


The oxygen pipe – which ‘bubbles’ Oxygen through the water in the tank – had come loose from its pump. 


The oxygen pipe became a water leak.


Instead of providing life, it was leaching it out of the tank.

And left 90 litres of water all over the floor, the carpets and the office floorboards. That was not something that could just be ‘sponged away’.
 

Some of the fish survived, barely breathing in the shallows under the ‘pipe’, but I also lost more than a few of them.





Thankfully, insurance helped deal with the carpet and floor damage (carpets removed, air dryers in the office for three days, running 24/7 to dry the floor.) And a small replacement tank used to keep a few fish alive while I ‘recovered’ – both mentally and organizationally.



Over the next few days, the incident made me stop and think, OK, what is this telling me?

In terms of the aquarium, it was “Check everything is right and tight,” i.e., all the pipes are connected and in place.  Filters cleaned and functioning correctly. All systems checked and working properly. Are there other leaks or concerns that I have missed?



Do I have the information in front of me, and am I regularly looking at it to take corrective action?

Having had the carpets replaced (finally – despite lockdown restrictions) and ‘refurnishing’ the office – When you go back to a bare room, it gives you scope to relook at the whole set-up – It made me think – In the context of business, what is the lesson from this?

 

As I see it, it is very easy for us to get caught up in ‘doing the do’ and not looking at “what” we do and “how” we are doing it.
We focus on the job at hand, not the follow-up, and then move on to the next job. Have we been paid for past work? Who or what do we owe? What information do I need to supply – (to the taxman, the bank, the accountant, etc.). Do I reallyknow how my business is going?
 
Did I check back with that client? Or follow up on that enquiry? Have I looked at my processes – are they efficient, or am I missing or taking more steps than I need to? Where am I at, and how easy is it for me to know how I am going?

 

Am I ‘making do’ until later instead of fixing things now?
 
For some, the Lockdown period has been an opportunity to reexamine things and how they do them. For others, it may have pushed these actions into the background, so now, as we start to open up again, we find that the ‘pipes are loose’, or the wheels are off-kilter.  There are gaps in our processes that need fixing.
 
From a business point of view, this means having an eye on the financial aspects of your business. Having the key data that you need to be aware of, to keep you on track.
 
With The Xero accounting system, there is a lot of information that is relatively easy to access in terms of how your business is going, and what needs to be done. But for some, the Infomation is presented too much like ‘accountants speak’ – too dry, and not clear enough for a quick understanding.
So, what if I could give you a system that looks at your data in Xero, and gives you simple summaries of information – like ‘how much do I need to pay next week? What is due to me from invoices outstanding? What is overdue? What is my profit for the month? How much ‘paperwork do I need to catch up on?

Packaged into easy, quick answers that look like tweets rather than another chapter of War and Peace?

Something that looks like this? And sent to you on your phone or tablet for easy access?


                                    


Or a web based dashboard that shows something like this:












As well as a rundown of items to be looked at. And an “Alexa/Siri” style ‘ask me’ facility to look over various items in the reports. Or to find out more information. And a portal to “ask me anything” as well.

Would this be useful to you? Would it help to focus on particular areas that we need to discuss – and take action on?

It is a web and app-based system called Aider, which I have been looking at as a ‘Dashboard’ system to help me look over client data. Many features have already been added, and more will come as they continue to develop the system. (Which I am involved in the review of currently)

This system can also capture information from other sources – like your social media marketing, point of sale systems, banking, and calendar systems- to be a quick ‘one stop’ for your information. It can connect up to 16 apps, lots of social media analytics and provide easy to digest information for you 24/7.

 

The idea, of course, is to focus on the key parameters. If you like, the ‘oxygen pipe’ allows your business to breathe and not leak cash, clients, activity, etc.

1. What have I invoiced for the last week/month?

2. What bills do I need to pay in the next week/month? What are my tax liabilities? DO I need to pay any super?

3. What jobs need completing? What projects need to be started/completed/invoiced?

4. Am I on track? Are my sales/expenses/cash at the bank at the level I expected for the year?

5. Is my system helping me or hindering me from keeping my finger on the pulse? What can I do about it to improve?

I believe that this system can help us get to these key elements quickly and easily – as well as helping us here to keep an eye on your accounts to see if we can help you with anything in your files. 

 

I will be rolling this out with a number of our clients and look forward to discussing the details further with you as part of our work with you.  Give me a call, and let’s see how this system can help you keep your oxygen pipe stay secure, unblocked and flowing free!


As for my fish – They are housed in a new tank (as further checks and tests found more than one problem that I had to deal with!) and living happily again.


Even Jasper approves of the new facilities.


And the office set-up is better than before – ready to accommodate face to face appointments soon!

 

 

For more information on Aider, go to www.aider.ai, or call me to discuss.

 

And a great Youtube site on keeping fish that I can highly recommend is “Lazarus the Fish Boy” 


Easy to follow and a great watch! And yes, he is the son of one of our hugely talented clients!  



Let’s keep the Oxygen flowing and breathe new life into your business!

I’ve got the Lockdown Blues – cause I can’t play to a crowd!

 I’ve got the Lockdown Blues – cause I can’t play to a crowd!


 

 

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With the series of lockdowns and curfews occurring in Victoria since May 27, 2021, one of the most affected areas, is the performing arts industry.
 
Singers, musicians, writers, actors, and also the associated crew and support, including technical, retail and merchandise, and event promotion staff and businesses have been shut down throughout the strate, with little or no support. Even as venues open, density limitations have meant that many places have cancelled performances that had been booked months in advance.

Many of the people affected have not qualified for the various business support grants, usually because they are not GST registered, are subject to more casual or intermittent work, and may not be as ‘structured’ as many other business operations. (We can do something about that – but that is the subject of a separate discussion that we are happy to have one on one with you)
 
The Victorian Government has provided a level of support – for both the individual performers and crew, as well as venues who have had gigs and performances shut down by the metropolitan or regional lockdowns.
 
There are two Support funds currently available to assist those affected:
 

 


 

1. Live Performance Support Program (Suppliers) Round Two

This provides support to ‘contracted suppliers’.

Who is a contracted supplier?
This is defined in the program as:
A contracted supplier to a live performance event is a business whose primary activity is the delivery of a featured or advertised performance or other goods and services to support the delivery of a live performance event. This may include performers, crew, venues, merchandise sellers, technicians and engineers, as well as the ‘on stage’ performers.

And it is not limited to music performances. It is a “Live Performance Event”, which presents creative/cultural content and may include but is not limited to music, singing, theatre, opera, dance, comedy or arena event. It does not include sporting, business, private or educational events in this grant scheme.  (Some of those businesses are covered in other Support funds currently being offered)
 
A Payment of $200 or $500 per event is possible (based on what the fee for the cancelled performance would have been)  with payment for up to 20 gigs (to a maximum of $4,000) possible within the funding round.
 
The performance will need to have been planned as follows:
 

  1. To be delivered or performed between May 28 and September 2, 2021;
  2. Live, in-person audience (i.e. not ‘just’ a streamed performance)
  3. Held indoors or outdoors
  4. With an expected audience of at least 75 people or a series of performances over multiple days at the same location with an expected minimum audience of 200 or more. (I am seeking clarification on how this is impacted by density limitations that were in place prior to, and during, the lockdown periods)

This funding also applies for interstate gigs – i.e. Victorians who were meant to ‘cross the border’ and perform or work interstate in the same way, would be eligible for this support grant.
 
Where costs incurred / claims are between $200 – $500 per gig, then a grant of $200 is applied. For costs of over $500, then a $500 grant is paid.

 

2. Live Performance Support Program (Presenters) Round Two

In a similar way, there is a support fund for the ‘venues’ that have been impacted by the lockdowns and suffered losses as a result.
The terms and conditions of this grant are similar to the ‘suppliers’ grant, regarding dates, type of performance and estimated attendances. For the Presenters, a funding claim is possible for up to $7,000 for one event, with a further claim for a second event for up to $5,000 also possible.
This grant is also available to performers who were intending to promote their own show as well – i.e. it is not limited ‘just’ to established venues (pubs, clubs, etc)
 
For this grant, it may be necessary to identify ‘key suppliers’, from whom the presenter intended to receive goods or services, with up to 10 suppliers identified. This of course, could be food and beverage suppliers, performers, venue hire and crew.

Closing date for applications – and estimated payment timelines

The final date (currently) for lodgement of the application is September 8, with payment ‘anticipated’ to occur within 15 days of the closing of applications – so it would be expected to be paid by September 23.
 
A number of items must be included within the application, and a few background checks on items like ANZSIC codes, ABN, and related registrations must be confirmed before an application is lodged. This reduces the possibility of delay or rejection of the claims.
 
We can assist you with the process, prepare and lodge the claims on your behalf, and monitor the claim process with Business Victoria after it has been lodged.
 
If you – or anyone you know – may be eligible for these support funds, please call me on 0409 788 399, or email me at
stuart.smith@fiscalartisans.com.au to discuss your situation and work on your application.
 
I look forward to hearing from you!
 
Rock on!
 
Stuart

For more information on Fiscal Artisans, please go to our website

 

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If your Business Climb is like scaling Everest, It's Time to Go Beyond The Numbers.

 

If your Business Feels like you are scaling Everest,

It’s Time to Go Beyond The Numbers.

You have done more in the last financial year than just survive, but it has been hard!

This is the time that we turn our attention to our year-end obligations – namely, preparing financial statements and preparing tax returns, and looking at how well (or otherwise) we have done for the year.

For many, the financial statements and tax returns that we prepare are a ‘historical document’. It is a look at the numbers ‘in the past’. But what it can be, is a roadmap to the future – the starting point to your next trek.

What do you have your sights set on for 2021/2022? How can we Go Beyond The Numbers to help you achieve it?

With another financial year over, and one which for so many will have been one of the hardest ever faced, it is beneficial to look at your current situation and reflecting on your successes, not just what has or has not happened.

For many, being in business is a bit like trying to climb Mount Everest.

It is tough!

The air is thin up there, and it seems like something many dream about, but few succeed at actually doing. And no matter how hard you try, you feel like it is all uphill, all the time. And if you fall, the crash will be hard, and deadly.

Let’s look at The Numbers

Many people know that Mt Everest is over 29,000 feet, or over 8,800 meters tall. To scale the mountain, people usually start at one of the two base camps, which are over 5,000 meters above sea level.

To many, it seems an insurmountable task.

But let’s look at this differently, and Go Beyond The Numbers

One of the things that I have been doing for a while is checking in regularly with my business coach. Michael has been a client, friend, confidant, and business coach for some time now. He has helped me look at many aspects of the business, my processes, and, more importantly, the values and ethics inherent within my organisation.

In one of our recent meetings, we looked at the last year or so and set the targets for the year ahead (his and mine). As part of this discussion, we acknowledged that we had done more than just ‘survive’ with what we have been doing over the last few years.

He described it as ‘being at Mt Everest base camp’, having got there under our own power.

Let’s unpack that and how this relates to what you do.

To get to base camp, there are a few options.

 

 You can fly in; 


You can drive in most of the way;



Or you can walk up to the base camp from sea level.

For many people, ‘just getting to base camp’ is a success. It means that they have gone from ‘zero’ – sea level, starting with nothing but their personal skills and knowledge – to scale a height few people achieve. They can stay there and ‘live’ quite successfully.

In business terms, it means you are running your own business, paying your way, covering your living expenses, and providing for yourself and your family, without having to ‘go back downhill’ and ‘work for wages’ (or get financial support from family or friends to survive). You have ‘got the combination right’, and you are not staying awake at night, wondering how the gas bill will be paid next week.

Having ‘walked up to base camp’, you have developed the strength, the skills, and the resilience to maintain your position at a high altitude. This is something that you need to both acknowledge and celebrate.

In some cases, people have ‘flown’ into base camp without acclimatising to the rarefied air. For most of these people, being at base camp is simply a ‘holiday’, and they cannot stay for very long.

It is much like their business ventures. The ‘fly-ins’ may have had a business purchased for them, or ‘inherited’ the ownership or a partnership arrangement. They get in, make some cash, and get out again. They have not developed their business skills through ability and have probably achieved their success as a result of other peoples ability to ‘get them there’.


That is not what you have done – you have ‘walked to base camp’ yourself. You may have had a group of people with you on the trek, but you got there using your efforts and ability. You walked your talk.

And you are not just surviving. You are thriving.

Think of it this way. The Everest base camp is over 5,000 meters above sea level. Everest is under 9,000 meters. So, if you have ‘achieved base camp’, you are more than halfway there already. Going further is not ‘starting from the bottom’ at all.


But what about scaling Everest? Isn’t that the goal? And how do I get there?

For some, yes, that is the goal, but it is not the ‘only’ goal.

When you get to base camp, it is not hard to look around and see that there are a wide range of mountains that can be climbed. You don’t have to choose ‘Everest’ and be done with it.

Your choice can be completely different to anyone else, or you can simply stay at base camp.

In a business context, that choice could be:

  •   Staying as is, managing and maintaining the business as it stands now, and managing it profitably without aiming for growth and expansion; “Keeping it ticking over and under control”; Perhaps achieving ‘the same result’ from less time, and less effort, and using the spare time for other chosen pursuits;
  •    Doing ‘more of the same’ duplicating the business or expanding the volume of work done (without expanding services, products etc.) “Same but bigger”;
  • Doing something new within the business; “Do we climb Everest, or K2?”
  • Using the profits from the business to build an investment portfolio, pay down debts, etc.; “Let’s go climb Mont Blanc in Europe instead”;
  • Learn new skills (personal or professional) that are unrelated to the business activity; “I’m done climbing. Let’s learn to fly instead.”
  • Or you can work with others and help them build their careers. “Having done it myself, I will show you how to climb”.

The choice is yours. But it is not a choice that means you need to ‘start again’, nor is it something that you need to do ‘alone’.

At base camp, to climb the heights, the first thing you need to do is:

Hire the Sherpas!


The Sherpas are the experienced, local climbers who ‘know the mountain’. They carry the loads needed to support you on your mission, and the local knowledge and guide and support you to achieve your goal of summiting the peak.

In a business context, the Sherpas come in several forms. It is the team of advisers – accountants, lawyers, bank and finance support, coaches and mentors who work with you.

It is also the ‘tools of the trade’ (in the business and finance context) that we use to help you keep on track – and helping to ensure you don’t fall down a crevasse. Tools such as Xero, and add ons like Dext (for data collection) and cashflow tools to keep you on top of your financial information are part of this. Your systems and processes, the way you do the things you do. Your marketing, social media, etc.

And the setup and structure that you ‘wrap’ around your business – with all the statutory and regulatory requirements in place to keep your trek in line.

 

This is what we mean by ‘Go Beyond The Numbers’. We look at the results, ask questions, and work with you to achieve your next peak. We ‘assemble the sherpas’ and come on the trek with you. We help you mount the summit, and take pride as you stake your claim on the peak.

 As an example, amongst the projects we are assisting clients with are the following:

   a)  Redevelopment of a regional property into a multi-unit dwelling, to retain one and use the others to build an investment portfolio;

   b)  Analysis of a business for sale (and undertake stocktakes and financial lending arrangements) to enable a client to expand their existing business beyond its current regional spread;

   c)  Convert a client business from ‘sole trader’ to a corporate structure, to both reduce total tax payable and expand their opportunities to grow their business;

   d)  Rent or buy? A client wants to look at whether to buy a small property to run their business out of, compared to renting a facility; And assist with the bank’s information needs for this.

   e)  Using property investment to reduce the tax a client pays this year and build an investment portfolio for retirement for their future. (or to ensure that their kids have somewhere they can move into in the future!)

   f)   Manage my portfolio! Would you please help me keep track of my share purchases, sales, dividends etc.? Even Crypto if you can (and, yes, we can)

 

In all of the above cases, we are working with our clients, helping them to ‘lead the trek’. We “assemble the Sherpas”, be it professional advisers (finance brokers, share traders, lawyers, etc.) and tools of the trade – software, data, reports etc., to help to make things happen. The only limitations (besides legal issues!) are your imagination and desire to make things happen.

So, having got to base camp and realising you are breathing the clean, thin air of achievement, where do you want to go next? 

What is your Everest?

Name your peak, and let’s go! We can make 2021/22 the time of your next achievement, plan, take action, and make it happen.

What is it going to be? Call or email me, and let’s talk about it.

 

Onwards and upwards – and let’s Go Beyond The Numbers.

Stuart Smith

Director (and Head Guide)

Fiscal Artisans










A New Year and a New Look!

 

A New Year and a New Look!

 

Hello all,

With the start of a New Financial Year, there has been a time of review and a reset for many of us.

And as well as looking at the results and setting the plans for the year ahead, we have decided it was time for a fresh look, and a fresh outlook.

And here it is:

 

 

So, what does it mean? What does it represent?

The philosophy behind what we do and how we strive to work with you is that we “Go Beyond The Numbers”. i.e. The financial and tax work we do for you is not the ‘end point’ – it is the beginning of what we can do.

In the logo, the bar graphs represent ‘the numbers’ –symbolising the results achieved in the past and the present, with the arrow moving out from the base of the numbers, flowing up and out to a future that we create.

The image is also reminiscent of a Tall Ship, ‘sailing beyond the horizon’ – going beyond the known maps (i.e. last years results, as shown on your tax return or Balance Sheet) and evoking the image of overcoming challenges sailing to a world unknown, and achieving rewards and riches previously unimagined.

We see our work with you in a similar way, in that we can work with you to go beyond what your “current numbers” represents, and help you to achieve your successes and gain the rewards. We can help, guide, encourage, advise, and bring together a team to help you succeed.

Let us know what you think of the design, and what your “beyond” looks like.

We look forward to catching up with you in the coming weeks and months, and helping you to achive your goals.

Lets ‘go beyond the numbers’ and make things happen!

 

Regards

Stuart

Victorian Business Costs Assistance – Lockdown 4.0 support payments

 Victorian Business Costs Assistance  
Lockdown 4.0 support payments



Through Business Victoria, the Victorian State Government has released the guidelines for its latest round of support for businesses and sole traders that the current Victorian lockdown has impacted.

There are two specific schemes – the Business Costs Assistance Program (round two) and the Licensed Hospitality Venue Fund. I am focusing here on the Business Costs Assistance Program in this piece.

It needs to be noted that not all businesses will qualify automatically, as the support has been targeted primarily at businesses and industries that have been shut down as a result of the lockdown and are unable to continue income-earning activities in a work from home basis. The list of industries are listed in the blog, as well as the guidelines for the scheme.

In addition, there are effectively two levels of support, based on the different periods of lockdown between Metropolitan Melbourne and Regional Victoria. Essentially, this equates to a $2,500 per week payment for businesses affected by the lockdown.

The guidelines are shown below (extracted from the Business Victoria guidelines), as are the industry sectors that qualify for the support.

This is not limited to incorporated businesses, so sole trader businesess (with a registered ABN AND GST registration) can also apply.

We can assist you with the submission (as we did for many clients with the various support grants in 2020), and can discuss the eligibility guidelines with you as needed.

Please feel free to contact us on 0409788399 or info@fiscalartisans.com.aufor more information.




GUIDELINES

Business Costs Assistance Program Round Two

COVID-19 assistance to businesses

Program Summary

On 30 May 2021, the Victorian Government announced a $250.7 million Circuit Breaker Business Support Package to support Victorian businesses most affected by the May-June 2021 circuit breaker action. An additional $209.3 million was announced by the Acting Premier on 2 June 2021.

The $371 million second round of the Business Costs Assistance Program (the Program) will provide grants of either $2,500 or $5,000 for eligible businesses directly affected by the circuit-breaker industry restrictions.

 

1. Standard Eligibility Criteria

1.1 To be eligible for the Program, a business must:

a) Be located within Victoria (primary operating address, and Victoria address registered with Worksafe Victoria) ; and

b) Be registered as operating in an eligible industry sector identified in the List of Eligible ANZSIC classes (as defined by the ANZSIC class linked to the business’ ABN ; and

c) Have incurred direct costs as a result of the circuit breaker action and the business cannot predominantly operate remotely; (For example, but not limited to: booking cancellations, utilities, wages, paid leave for staff unable to attend work, rent or the loss of perishable good or any other direct costs affecting the operation of the business related to the May-June 2021 circuit breaker action. These costs may have been incurred prior to, on or after 27 May 2021. The costs must be incurred by the applying business, as defined by its ABN.) and

d) Have an annual Victorian payroll of up to $10 million in 2019-20 on an ungrouped basis ; and

e) Be registered for Goods and Services Tax (GST) on 27 May 2021; and

f) Hold an Australian Business Number (ABN) and have held that ABN at 27 May 2021.

g) Be registered with the responsible Federal or State regulator

For employing businesses only :

h) Be registered with WorkSafe Victoria ; and

i) Attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the circuit breaker action, and supporting their casual workers, where possible

2 Other eligibility conditions

2.1 Businesses that have received assistance through the Business Support Fund, payroll tax rebate/waiver, or other COVID-19 programs may apply for assistance under the Program.

2.2 Businesses that receive a grant under the 2021 round of the Licensed Hospitality Venue Fund (LHVF21) are not eligible for a grant under the Program.

2.3 Organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program.

3 Demonstration of eligibility

3.1 Applicants must attest that they meet the eligibility criteria at the time of application and intend to remain trading at the end of the circuit breaker action. Applicants will also need to meet the eligibility criteria at the time the application is assessed by the Department of Jobs, Precincts and Regions (DJPR).

3.2 Industry sector: To be eligible, an Applicant’s primary business activity must be in an eligible industry sector and this must be reflected in the Applicant’s ABN registration information. Applicants should check that their details on the Australian Business Register website are correct prior to submitting an application. This includes ensuring that the industry classification (ANZSIC class code) linked to their ABN registration correctly captures their primary business activity.

3.3 Identity Documents: Applicants must provide details of a current proof of identity document. This must be one of the following:

  • a driver licence or learner permit issued in any Australian jurisdiction; or
  • an Australian Passport; or 

  • a Medicare Card; or
  • a foreign passport for those issued with an Australian Visa.

The identity document details must be for a person listed on the Australian Business Register as either the owner, co-owner, associate or authorised contact of the business

3.4 If the current proof of identity is unable to be confirmed, Applicants will receive a follow-up email with instructions to amend their proof of identity details. If the applicant does not then rectify proof of identity details before the Program close date, the application will not be considered by the Department for this Program.

 

4 Available funding

4.1 From 4 June 2021, changes to the existing industry circuit breaker restrictions (from 28 May 2021) affect businesses differently depending on the businesses location and industry type.

4.2 The total value of a grant under the Program is up to $5,000. For businesses that meet the standard eligibility criteria: 

• businesses that were directly affected by the circuit breaker industry restrictions between 28 May up to and including 3 June 2021 will be eligible for funding of $2,500; 

• businesses that remain directly affected by the circuit breaker industry restrictions on and from 4 June 2021 will be eligible for funding of $5,000.

4.3 The Department will determine the value of the grant based on an assessment of the Applicant’s business location and ANZSIC class.

4.4 A business as defined by its ABN can only receive one grant under the Program.

 

5 Funding use

5.1 Grant funds must be used to assist the business, for example on:

• Meeting business costs, including utilities, wages or rent;

• Seeking financial, legal or other advice to support business continuity planning;

• Developing the business through marketing and communications activities; or

• Any other supporting activities related to the operation of the business.

6 Assessment Process

6.1 Funding will be allocated through a grant application process, through which businesses are invited to apply for a grant.

6.2 As part of the assessment process, any information provided by Applicants will be shared and subject to verification with other government agencies (state and federal) including the Victorian State Revenue Office, WorkSafe Victoria, the Australian Business Register and the Commonwealth Department of Home Affairs.

6.3 Any of the following circumstances may be taken into consideration in any decision whether to award a grant:

• Any adverse findings by a Government agency or local council regarding a business or its operation;

• A business is, or notice has been given that it will be, placed under external administration;

• There is a petition for bankruptcy or to wind up or deregister a company or business; and

• The business is or becomes deregistered or unregistered (including cancellation or lapse in registration or any relevant permit).

6.4 Businesses must ensure that their ABN registration information is current and accurate as at the time of application.

6.5 Each application will be carefully considered and assessed against the eligibility criteria. If an unsuccessful Applicant considers that their application has been incorrectly assessed, they will have the opportunity to lodge a complaint. More information on the complaints process and a complaint form can be found at https://business.vic.gov.au/contact-us/complaints.

6.6 Only final applications that are lodged with the Department will be considered and assessed, and applications in draft stage will not be considered.

7 Compliance and Audit

7.1 Applications may be subject to audit by the Victorian Government, its representatives or the relevant Auditor-General and will be required to produce evidence (such as payroll reports to demonstrate impact) at the request of the Victorian Government for a period of four years after the grant has been approved.

7.2 If any information in the application is found to be incomplete, inaccurate, false or misleading, or grants are not applied for the purposes of the business in accordance with the terms of funding as set out in these Guidelines and any attached application, the grant will be repayable on demand.

 

8 Other information about this Program

8.1 DJPR reserves the right to amend these guidelines and application terms at any time as it deems appropriate.

8.2 DJPR will endeavour to notify all Applicants of the outcome of their submitted application within 10 business days.

There may be delays if your application:

• does not meet all the eligibility criteria

• does not have correct evidence or documentation

• requires you to make changes • is a duplicate application for the same business

• has incorrect information, such as ABN or bank details (for successful Applicants)

• does not include current or accurate information registered with relevant regulators or partner agencies, such as the State Revenue Office, Australian Business Register or WorkSafe Victoria.

 

9 Closing date and how to apply

9.1 The Program will be open for applications until program funds are exhausted or 11.59pm Thursday 24 June 2021, whichever is earlier.

9.2 Applicants are required to submit an application online via the Business Victoria website (business.vic.gov.au). All questions in the application need to be completed and requested information is to be provided to ensure timely assessment and grant payment.

9.3 If you have any queries about your application or require further information on the program visit business.vic.gov.au or contact the Business Victoria Hotline at 13 22 15.


ANZSIC Industry codes for Business Support Grants


Please note:

If your ANZSIC industry code is not on this list, you are not eligible for funding through the Business Costs Assistance Program Round Two. This list applies to both employing and non-employing businesses in Metropolitan Melbourne and Regional Victoria.

* Regional businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in regional Victoria.

# Businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in metropolitan Melbourne and regional Victoria.

Categories

 

Non-essential retail

3911 Car Retailing*

3912 Motor Cycle Retailing*

3913 Trailer and Other Motor Vehicle Retailing*

3921 Motor Vehicle Parts Retailing*

3922 Tyre Retailing*

4129 Other Specialised Food Retailing*

4211 Furniture Retailing*

4212 Floor Coverings Retailing*

4213 Houseware Retailing*

4214 Manchester and Other Textile Goods Retailing*

4221 Electrical, Electronic and Gas Appliance Retailing*

4222 Computer and Computer Peripheral Retailing*

4229 Other Electrical and Electronic Goods Retailing*

4231 Hardware and Building Supplies Retailing*

4232 Garden Supplies Retailing*

4241 Sport and Camping Equipment Retailing*

4242 Entertainment Media Retailing*

4243 Toy and Game Retailing*

4244 Newspaper and Book Retailing*

4245 Marine Equipment Retailing*

4251 Clothing Retailing*

4252 Footwear Retailing*

4253 Watch and Jewellery Retailing*

4259 Other Personal Accessory Retailing*

4260 Department Stores*

4272 Stationery Goods Retailing*

4273 Antique and Used Goods Retailing*

4274 Flower Retailing*

4279 Other Store-Based Retailing n.e.c.*

4320 Retail Commission-Based Buying and/or Selling*

Hospitality

4511 Cafes and Restaurant*

4513 Catering Services*

4520 Pubs, Taverns and Bars*

4530 Clubs (Hospitality)*

Tourism

4400 Accommodation*

4621 Interurban and Rural Bus Transport*

4623 Taxi and Other Road Transport*

4820 Water Passenger Transport*

4900 Air and Space Transport*

5010 Scenic and Sightseeing Transport

5029 Other Transport n.e.c (e.g. ski lift, ski tow operators)*

5299 Other Transport Support Services n.e.c.*

6611 Passenger Car Rental and Hiring*

7220 Travel Agency and Tour Arrangement Services*

8910 Museum Operation

8921 Zoological and Botanical Gardens Operations*

8922 Nature Reserves and Conservation Park Operation*

9131 Amusement Parks and Centres Operation

9139 Amusement and Other Recreational Activities n.e.c.*

Events and related services

5511 Motion Picture and Video Production*

5513 Motion Picture Exhibition*

5522 Music and Other Sound Recording Activities*

6619 Other Motor Vehicle and Transport Equipment Rental and Hiring*

6631 Heavy Machinery and Scaffolding Rental and Hiring*

6632 Video and Other Electronic Media Rental and Hiring*

6639 Other Goods and Equipment Rental and Hiring n.e.c*

6991 Professional Photographic Services (e.g. wedding and events photographers/videographers)*

7299 Other Administrative Services n.e.c (e.g. events management / organisers)*

9001 Performing Arts Operation*

9002 Creative Artists, Musicians, Writers and Performers*

9003 Performing Arts Venue Operation*

9511 Hairdressing and Beauty Services*

9539 Other personal services n.e.c. (e.g. wedding celebrants)*

Services and education

7311 Building and Other Industrial Cleaning Services

7313 Gardening Services*#

7712 Investigation and Security Services*

8211 Sports and Physical Recreation Instruction

8212 Arts Education

8219 Adult, Community and Other Education n.e.c.

9111 Health and Fitness Centres and Gymnasia Operation

9112 Sports and Physical Recreation Clubs and Sports Professionals

9113 Sports and Physical Recreation Venues, Grounds and Facilities Operation

9114 Sports and Physical Recreation Administrative Service

9429 Other Machinery and Equipment Repair and Maintenance*

9491 Clothing and Footwear Repair*

9499 Other Repair and Maintenance n.e.c.*

9512 Diet and Weight Reduction Centre Operation*

9531 Laundry and Dry-Cleaning Services*

9532 Photographic Film Processing*

9534 Brothel Keeping and Prostitution Services

Health care and social assistance

8531 Dental Services*

8532 Optometry and Optical Dispensing*

8533 Physiotherapy Services*

8534 Chiropractic and Osteopathic Services*

8539 Other Allied Health Services*

8599 Other Health Care Services n.e.c.*

 

Which sectors are eligible for a grant?

To see if your business is in an eligible industry sector you should:

  • check the four-digit ANZSIC class linked to your Australian Business Number (ABN) on the Australian Business Register and confirm it matches your primary business activity
  • check if the four-digit ANZSIC class linked to your ABN is in the list of eligible ANZSIC classes for this program.

If your four-digit ANZSIC class linked to your ABN is not on the list of eligible ANZSIC classes for this program, then your business is not eligible for a grant under this program.
If you need to update your ANZSIC class, more information is available on the Australian Business Register.


You should only change your ANZSIC class if your current one does not accurately reflect your business activity.

Which sectors are NOT eligible for a grant?


Businesses that are continuing to operate or can work from home during restrictions are not eligible to apply for a grant. For example:

  • essential retail (i.e. supermarkets, food retailers, pharmacies)
  • manufacturing
  • construction
  • mining
  • agriculture, forestry and fishing
  • professional services (with some exceptions, such as wedding and events photographers).

My business is able to partially operate during restrictions. Can I apply for this grant?
Businesses in eligible sectors continuing to operate but unable to carry out their usual business activity can apply and may be eligible for a grant.
For example:

  • a retail business unable to open for normal trading but changed its operation to ‘click and collect’
  • a restaurant unable to have dine-in service but can operate a limited takeaway service.

Why are some businesses getting $2500 when others get $5000?


The grant amount payable is determined by the business’ industry sector (see Eligible ANZSIC classes) and its location.
Businesses that were subject to restrictions between 28 May 2021 and 3 June 2021 (inclusive) will be eligible for funding of $2500.
Businesses that continue to be subject to restrictions on and from 11:59pm on Thursday 3 June 2021 will be eligible for funding of $5000.

My business is a gardening business, why am I only eligible for a $2500 grant?


Gardening service providers in regional Victoria and metropolitan Melbourne are able to resume operating from 11:59pm on Thursday 3 June 2021, so they are only eligible for a $2500 grant rather than the $5000 grant, which is only for businesses that remain subject to restrictions after Thursday 3 June 2021.

How do I update my Australian and New Zealand Standard Industrial Classification (ANZSIC) on the Australian Business Register?


Only update your ANZSIC class if your current class does not reflect the activities of your business.

Business Victoria is not able to advise you on which ANZSIC class your business falls into. If you are unsure about your business’ ANZSIC class, please seek independent advice, from your accountant for example, or by contacting the Australian Business Register.
If you need to update your ABR details, there is a step-by-step guide on the Australian Business Register and the Business Victoria website.


Why do I have to be registered for Goods and Services Tax (GST) to receive this grant?


For the purposes of this program, being registered for GST indicates that your business was actively trading prior to 27 May 2021 up to now.

A business must register for GST when it has a GST turnover (gross income minus GST) of $75,000 or more.

Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.

Businesses with annual 2019-20 turnover of more than $75,000 that are not required under relevant taxation legislation to be registered for GST are also eligible to apply.

I previously applied for the Business Support Fund (or another COVID-19 related grant) and was not eligible. Can I still apply for this program?


Yes, but you must meet all this program’s eligibility criteria to be eligible for a grant.

I have applied for a Licensed Hospitality Venue Fund 2021 grant, can I also apply for this program?



Businesses can only receive a grant from either the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021, not both.
If you submit applications to both programs and are found to be eligible under both programs, you will only receive one grant – the program that delivers the highest level of financial support.

However, applying for both programs may result in delays to application processing and receiving your grant payment.

My business is a hospitality venue with a liquor licence and I incurred direct costs as a result of restrictions but I wasn’t eligible for the Licensed Hospitality Venue Fund. Can I apply to this program?


Licensed hospitality venues that do not receive a grant under the Licensed Hospitality Venue Fund 2021 may apply for assistance under the Business Costs Assistance Program Round Two if they meet the eligibility requirements.

What types of businesses are eligible?


Employing and non-employing businesses, companies, partnerships, and trusts are eligible to apply for a grant from the Business Costs Assistance Program Round Two. Superannuation trusts are not eligible. For more information, please read the program guidelines.
Business Costs Assistance Program Round Two guidelines (PDF 272.46 KB)PDF icon
Business Costs Assistance Program Round Two guidelines (DOCX 1553.88 KB)DOCX icon

I received a grant/support through another COVID-19 business support program. Can I apply for the Business Costs Assistance Program Round Two?


Yes. If you meet the eligibility criteria you can apply for a grant from the Business Costs Assistance Program Round Two unless you receive a grant through the Licensed Hospitality Venue Fund 2021.

My business lost more than $5000 during restrictions. Can I apply for more?


No, the grant is capped at $5000 per eligible business.


If I incurred less than my grant amount in costs, will I need to pay some of the money back?


No. But businesses must attest they have incurred costs as a direct result of the restrictions to be eligible for a grant.


I am a performer/artist who has lost work during restrictions, but I am not registered for GST. Can I still access support?


No, under the program guidelines all applicants must be registered for GST. A business or enterprise must register for GST if it has a turnover of $75,000 or more.
Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.


Which identification documents should I submit with my application?


I’ve received notification that my identification check has returned an invalid result or could not be validated. How do I update my proof of identity?
Update your contact details by following the steps outlined in our Proof of Identity Verification User Guide.
Download a copy of these instructions: Updating Proof of Identity Details in Grant Hub forms (PDF 633.93 KB)PDF icon

How do I know what the status of my application is?


The status of your application will appear in the Business Victoria Grants Portal:

  • Draft – you have started an application
  • Submitted – you have accepted the terms and conditions and submitted
  • Under assessment – your application has been received and is being assessed by the Business Victoria team
  • Successful – your application was successful
  • Unsuccessful – your application was unsuccessful.

From the time you submit your application, you will receive progress notifications.
We cannot contact you while your application remains in ‘draft’ as you haven’t yet given permission for the department to use your contact details.


I wasn’t eligible for a grant from the first round of the Business Costs Assistance Program. Can I apply for this round?


Yes, you can apply for the second round of the Business Costs Assistance Program. This round has an expanded list of eligible sectors compared to the previous round, to cover businesses most impacted by the May and June 2021 restrictions, and reflect that businesses no longer have JobKeeper or other safety nets to fall back on.
You will be eligible for a grant from the Business Costs Assistance Program Round Two if you meet all the program’s eligibility criteria.

How do I provide evidence that my business is registered for WorkCover Insurance with WorkSafe Victoria?


If you are an employing business, you will need to include your unique WorkCover Employer Number (WEN) on your application.

Your WEN can be found on the top right-hand corner of your 2020-21 invoice from WorkSafe Victoria. Your WEN is also printed on your WorkSafe Certificate of Currency. Note you do not need to provide your certificate of currency when applying for this grant.
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
Non-employing businesses do not need to provide a WEN on their application.
I’ve recently applied for a WorkCover Employer Number (WEN) but haven’t received it. What can I provide in my application as evidence that I’m registered with WorkSafe Victoria?
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
A WRN is issued in the format of NR-XXXXXX-XXXXXX when you submit an online application for WorkCover insurance. It appears in printable form once the application is submitted. You will also receive an email with the number.
When your WEN is issued, your information will be updated in our systems automatically and we will progress your application. You do not need to take any action.
Please note that applications with a WRN may take longer to process because the WorkCover registration process must be complete before we can start assessing your application.
You must provide details of a current proof of identity document. This must be one of the following: a driver licence or learner permit issued in any Australian jurisdiction; or an Australian Passport; or a Medicare Card; or a foreign passport for those issued with an Australian Visa.

Is Property Still a Good Investment?

Is Property Still a Good Investment?


As we approach Tax time again – it’s only four weeks away now! – the questions around tax deductions for this year and beyond start coming in thick and fast.
And one of the most common questions is – can I get a tax deduction from buying a property?

Of course, the answer is yes – provided that it is an investment (not something you are living in yourself) and the costs of the property – interest and running costs – are higher than the rental received.
I have been keeping track of the median value of property in Melbourne over the years, and the following graph shows how it has moved over the years. This is based on the June median value across all dwellings (houses and apartments/units) from 1970 to 2020. It takes out the month by month variation and keeps to a consistent position – outside of the ‘spring and autumn rush’ for each year.


While there was a drop in the 2019 year, Covid in itself does not appear to have had as big an impact on prices as many thought. The December median price for houses was $750,000, and for units, it was $605,000. So, even in a Covid affected year, prices have continued to rise.

But, as I am often asked – is property still a good investment? I mean, how can prices keep increasing?

There are many elements to this issue, so let me try to go through some of them for you.

Over the last 40 years, we have seen substantial rises in property prices, and many will say that ‘it cannot go on like this’. As I see it, the key factors for the ongoing increases in prices are as follows:

1. Household incomes have increased.

Beyond the simple fact of steady increases in annual salary for most people (even if the increases have been very modest over the last few years), the increase in the female workforce participation over the last five decades has meant that most households have seen an overall increase in total income levels available.

Increased childcare and early childhood education, and better health arrangements, have also meant that it has been easier for most couples to have both members in the workforce simultaneously, leading to more disposable income, savings and debt reduction capacity.

This has also meant that there is ‘more money on hand’ to cover loan repayments, making higher loan balances more affordable.

Data from the Australian Institute of Family Studies in 2020 suggests that: “Changes to employment patterns, including a larger female workforce, have resulted in significant increases to household income, with the 2017/18 financial year average weekly household income at $2,242 before tax, up from $1,361 in 1995/96.”

That’s an increase of 65% in just over 20 years. As a result, it is likely that household incomes have increased by 85% or more since 1980.


2. Loan terms have changed

Over the last 20 years, the standard loan term has increased from 20 years to 25 and now 30. This may not seem like much of a benefit when you consider the extra interest payments, but it has a big impact on affordability and how much people can borrow.

Let’s say you are looking at purchasing a property and seeking a $500,000 loan. The bank offers you a loan over 20 years at 3% p.a.

The cost for a Principal and interest loan on this basis would be $2,772.99 per month.

Now, if we stretch that loan out to 30 years – what is the monthly payment?

It is $2,108.02 per month – a saving of over $600 per month.

But what if we go the other way and say – well, I can afford $2,773 per month. How much could I borrow with a 30-year loan?

The answer is $657,724 – $157,000 or 31% more!

So, for the ‘same’ monthly savings/investment, the scope to purchase a higher value property (or to bid to a higher amount at an auction) is suddenly realised.

Having worked with many finance brokers, spoken to many bank managers, and seen the assessment processes that the bank uses in calculating loan approvals, this element is very much in the picture. i.e. the banks don’t look only at the total amount that you are looking to borrow. They look instead at how much of your income it will take to repay the loan every month. If the monthly payment is below a certain % of your total income, and other factors agree, they will approve the loan – no matter how big it is.

The banks also know that, in many cases, a loan is renegotiated, or paid out with 5 – 7 years, so their risk factor is reduced significantly. Higher prices and ‘affordability’ reduce their risks even further as a result.

3. Interest rates have dropped

And with the second point, this is the big change in the market over the last 20 or so years.

The website infochoice says: “Interest rates on home loans hit 10.38 per cent p.a. in July 1974 and stayed at around that level until September 1980.”

Let’s do the maths on the same 20-year loan as per above, but with a 10.4% interest rate instead of 3%.

A 20-year loan costing $2,772.99 per month would only get you a total of $279,628. Compared to the $657,724 shown above for 30 years, or $500,000 for 25 years.

Falling interest rates have more than doubled the borrowing capacity over this time.

But you say, surely interest rates cannot stay this low?

In time, you may be correct. Assuming that the economy ever gets back to what it was like ‘in the good old days’ before Covid, interest rates will – almost certainly – increase. But if they have been pushed up, then it is because inflation has increased as well, meaning that what is borrowed in “today’s dollars” will cost less to repay in ‘tomorrows dollars’ – and inflation is likely to have pushed the price of property up further as well.

A good indicator in most cases is the fixed rates on offer for 3 to 5 year terms (Very few banks offer anything longer here in Australia). Currently, many of these fixed-rate terms are lower than the standard variable rate on offer. While this is partly due to ‘special covid arrangements’ the Reserve Bank put in place to assist the banks, it is a key measure to watch to see the direction of interest rates in the short to medium term. It is only my opinion, but I don’t believe we will see any significant change in interest rates for at least three years. Inflation would need to reach over 5% for two or more years before the Reserve Bank decided to pull the reigns in tighter.

4. Population growth and demographic changes.

There is where I see a generational shift in the demographic make-up of the Australian population.

This change arises from many factors, with immigration only being one aspect (and that is limited in the current ‘closed border’ situation).

While point 1 highlighted the impact of the ‘two income’ family arising out of the increasing female workforce participation, it also has had the impact of far more ‘solo’ income households, and the ‘professional couple’ groups – friends who are not in an intimate relationship, but who live – and invest – together, to step into the property market (or simply to save on living costs and increase scope for saving and investing). Sharing a flat in uni, becomes sharing a home, becomes sharing an investment property.

At the other end of the marital relationship, where marriages have broken apart, each member of the couple often needs to acquire their own residence. One household becomes two, each with “extra space for the kids” and a shared work or study space as well. I know I have assisted a few clients with such a transition, to understand the growing impact this has on property demand. And the need to ‘re-establish roots’ is hugely important in this area.

This has led to an increase in the number of one and two-bedroom dwellings being required in the inner suburban and city areas and an increase in the ‘townhouse’ type dwelling in the inner and middle rings of Melbourne. i.e. affordable, compact but with facilities, near to work and social requirements. The quarter-acre block is being replaced by a fully functional townhouse that has group amenities and social connection.

There is also a large amount of ‘generational transfer of wealth’ happening, and at a later age than for previous generations, where our parents and grandparents are passing on in their 80s and 90s – instead of their 50s and 60s, as was often the case in pre-war generations. This has meant that the inherited wealth is often  larger – as it has had the benefit of time to grow – and it is going to children who are more ‘set’ in their financials plans, and are able to use more of the inheritance for investment, rather than for covering living costs.


So, where to from here?

So, based on the above, you can see that the increasing ability of people to afford home loans means that there is an increased ability to ‘invest’ in property – be it for their own living requirements or investment purposes.

The ongoing ability to claim rental property losses as deductions against other taxable income – and then have the profits made from the sale of the investments taxed at a discounted rate – makes the residential property an attractive form of investment.

What Covid has somewhat ‘driven home’ is that people do not have to ‘commute’ as much to work. More and more of their employment can be done ‘from home’, leading to a significant shift in demand for property from the ‘inner circle’ to both the middle suburbs or increasing the ‘tree change/sea change’ element for many people. After all, if you are stuck in front of a laptop most of the day, wouldn’t it be nicer to look out over an ocean view than the Jolimont railyards? Or to know that the surf is only ten minutes away when you finish work?

As a result, much of the demand – for both purchase and rental – are occurring in ‘planned developments’ where lifestyle and living facilities are being included from the start or are centred around areas that have well-established facilities, such as schools, hospitals, transport links, and local employment opportunities.

Various locations are ‘targeted’ for growth, resulting from the Victorian Government’s Melbourne 2030 plan, with its emphasis on Principal and Major Activity Centres, identifying the likely growth areas within the metropolitan region due to increased infrastructure, employment, and transport connections. Some areas will grow faster than others, and the opportunity to invest in this growth can be taken with proper research and due diligence.

There are some good opportunities in the market and scope to invest for medium-term growth and short-term tax benefits. With marginal tax rates of 34 to 49%, the total cashflow investment required to fund a property investment can be ‘tax effective’ and, over time, provide a solid base for your investment portfolio.

We have a team of associates that can help with many aspects of this investment, from investment property selection to bank finance and legal support. We can analyse the choices and show you how the tax savings can assist in funding the investment and how to optimise your choices.

For more information or to discuss your tax position or investment opportunities, please contact us on 0409788399 or info@fiscalartisans.com.au


The 2021 Federal Budget. Once in a lifetime.

 

The Australian Federal
 Budget 2021


Once in a lifetime…

 Last night – Tuesday, May 11, 2021, the Treasurer handed down the budget for the 21/22 year.

While the government won’t describe it this way, it is clearly an election budget – given the next election is due by Mid May 2022, so unless they go with a February 2022 budget announcement, there is no time for a follow up before we next go to the polls.

And in the current environment, and with a Government hooked on announcements and re-announcements, rather than significant new action, there is very little in the budget that was not already announced, or simply a continuation of what was already in place but dressed up as a ‘new initiative’.

Many of the forecasts and expectations in the budget are predicated on the assumption that ‘everything will go so very well’ in terms of the vaccine roll-out – despite actual vaccination numbers being less than one-third of the way to what was originally planned. The Federal Government expects interstate borders to remain open, while international borders will stay closed until at least July 2022. (and probably much later).  

And they hope and expect that we will all feel good about everything and get back into the shops (and interstate holiday resorts) and spend like there is nothing to worry about!

They don’t expect wages to rise (they have given up on that fallacy) but that spending will increase, and unemployment will reduce (which it will if you define employment as one hour per week of any gainful activity). The economy is expected to rebound with a 4.5% growth in the coming year (off the low 2020 base, mind you), with growth of around 2.5% p.a. after that.

And, at the end of the budget forecast period, the total Federal Debt is expected to exceed one TRILLION dollars, an amount Dr Evil would not be able to get his head around. And this from the party that wants us to believe ‘are the better economic managers’. That debt will be 40%+ of GDP by 2025 (compared to 10% of GDP under Wayne Swan in 2013). This is a government of high tax, high spending and higher deficits – at least until they get re-elected again in 2022 (and 2025 if they have played their cards right with this budget). In summary the Australian Economy is facing a decade or more of budget deficits, no matter who is in power. or what their historical (or hysterical) philosophical viewpoint is. Goodbye Mr. Freidman, Welcome back Mr. Keynes, come and sit at the big table again!

 Andrew Probyn on the ABC described it as  “the Hot Chocolate Budget – Everyones a winner”. 

I see it much more as a Talking Heads one. Once in a lifetime… 

And you may ask yourself.

Let’s go through the main details related to individuals, professionals, creatives, small business operators, investors, and Super funds.

 

Personal Income Tax changes

Low and Middle Income Tax Offset for the 2022 year.


This is the first of the Talking Heads announcements. i.e. it is not a new change to the tax rate; it is a continuation of a previously announced rebate that was due to expire on June 30, 2021.

What this will mean is that a tax offset of UP TO $1,080, that applies to low and middle-income levels, will continue on, and avoids what would have been a tax increase applying to these income levels on the 21/22 year


                                                        Proposed LMITO for 2022


$37,000 or less

Up to $255

$37,001 to $48,000

$255 + 7.5% of excess over $37,000

$48,001 to $90,000

$1,080

$90,001 to $126,000

$1,080 3% of excess over $90,000

$126,001 +

Nil


This tax offset is not made in regular wages – it is paid out when the tax returns are lodged and based on your net taxable income once all income and deductions are taken into account.

And, again, it only applies for ‘one more year’. So after July 1, 2022, this offset is currently due to expire. But the tax cuts legislated for incomes above $120,000 will continue beyond that date.

Same as it ever was.

Medicare Levy Low-income thresholds.

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:

  • The threshold for singles will be increased from $22,801 to $23,226.
  • The family threshold will be increased from $38,474 to $39,167.
  • The threshold for single seniors and pensioners will be increased from $36,056 to $36,705.
  • The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.
  • For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

 Tax residency rules being changed.

This is being touted as a ‘simplification’. What it really is doing is capturing a lot more people under the definition of Australian Residence for Tax Purposes.

The primary test will be a simple ‘bright line’ test – a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.

So, what this means is that people from overseas who are in Australia for 183 days or more, say on a working visa – are treated as Australian Residents for tax purposes – meaning that any income earned overseas (i.e. in their ‘homeland’) will also be subject to Australian tax.

This is significantly different from past arrangements, where people who had a ‘permanent abode’ and family overseas would be seen as non-resident for tax purposes. As Australian Residents, they may also be liable to the Medicare levy – even if they are not entitled to Medicare entitlements! We await the detail of this announcement once legislation is put into place.

Self Education deductions – removing the $250 exclusion

Currently, the first $250 of a prescribed course of education expense is not tax-deductible.
Removing this $250 exclusion is expected to reduce compliance costs for individuals claiming self-education expense deductions. In reality, this ‘exclusion’ is commonly covered by deduction claims in other areas (like vehicle use or home office expenses anyway)
This measure will have effect from the first income year after the date of Royal Assent of the
enabling legislation. This will inevitably mean that this will not apply until the year BEGINNING July 1 2022, so it will not be able to be claimed on your tax return until after June 30, 2023.


Employee Share Scheme changes – ‘cessation of employment’ no longer a taxing point

The Government will remove the ‘cessation of employment’ taxing point for tax-deferred Employee Share Schemes (‘ESS’) that are available for all companies.
This change will apply to ESS interests issued from the first income year after the Royal Assent of the enabling legislation. (So not likely to occur before July 1 2022)
Currently, under a tax-deferred ESS, where certain criteria are met, employees may defer tax until a later tax year (‘the deferred taxing point’). The deferred taxing point is the earliest of:
(a) cessation of employment;
(b) in the case of shares, when there is no risk of forfeiture and no restrictions on disposal;
(c) in the case of options, when the employee exercises the option and there is no risk of forfeiting the resulting share and no restriction on disposal; and
(d) the maximum period of deferral of 15 years.
This change will remove the ‘cessation of employment’ taxing point (i.e., point (a) above) and result in tax being deferred until the earliest of the remaining taxing points (i.e., points (b) to (d) above).
So, should you receive shares under an ESS from an employer and then leave the employer before the shares become ‘available’ to you, then leaving the employer will not automatically mean that the share issue is now subject to Income Tax. Of course, this does not necessarily change the scheme’s rules (nor will it have any impact on shares already issued under the current rules) – which may have an ‘automatic issue or default’ clause in the scheme that will take effect on your departure anyway.

Business Taxpayers – Changes And Continuations

Temporary Full expensing Extended

In the prior year (2020/21) Federal Budget, the Government announced amendments to allow businesses with an aggregated turnover of less than $5 billion to access a new temporary full expensing of eligible depreciating assets until June 30 2022. Temporary full expensing became law on October 14 2020.
In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months to allow eligible businesses with aggregated annual turnover or the total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30 pm AEDT on October 6, 2020, and first used or installed ready for use by June 30 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.
Same. As. It. Ever. Was. If they repeat this again in the following tax year, they won’t be able to call it ‘temporary’ any more – it might even qualify for a permanent emplyment contract!
So, if you did not buy the equipment you needed for your business (any ABN registered business with a turnover up to $5 Billion p.a. – so we know who this is really aimed at), you can safely look to order that equipment now and up to June 30, 2022, and have it installed and ready to use on or before June 30, 2023, to be able to claim 100% of the purchase price against your business income in the same tax year. June 26 to 30 will be frantic days at the likes of Officeworks, Harvey Norman, Commercial vehicle yards and various plant and equipment places!

So can you buy a Porsche and get a 100% deduction? – only if it is under the luxury car limit and can show enough business use! Maybe that EV order might finally be possible though – so long as it does not ruin your weekends.

Temporary Loss Carryback extension

In the 2020/21 Federal Budget, the Government announced amendments to introduce a temporary loss carryback measure. Broadly, this initial measure allowed ‘corporate tax entities’ with an aggregated turnover of less than $5 billion to carryback tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years. The rules relating to the temporary loss carryback regime have been enacted and are contained in Division 160 of the ITAA 1997.
In the 2021/22 Federal Budget, the Government has announced that the loss carryback measure will be extended to allow eligible companies (i.e., with an aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year as well to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.
So, again, this is not a new provision. It is a continuation of what has already been in place. This was announced in the 20/21 budget – In October 2020, and is yet to take effect as the first year in which the loss carryback can be claimed is the (current) 20/21 tax year. So this is effectively a re-announcement of an announcement with an extension. Olympic diving trials, anyone?
This policy has been in place in the past – Wayne Swan as the Labour treasurer, implemented this in 2012 to take effect from the 2014 year – and this was repealed in Joe Hockey’s ‘leaners and lifters’ budget!
Still, it may benefit businesses (not sole traders though – they are not eligible) who have been impacted by the Covid lockdowns in the 2021 and 2022 years, where they can reclaim some or all of the the tax paid in past years. Review your business position when preparing your 2020/21 tax returns later this year.
Coupled with the instant asset write off and ‘temporary full expensing’ provisions, there is scope for businesses to purchase large equipment items (perhaps on finance arrangements) before June 30 and use the losses to claim back tax previously paid. Again, seek advice on this and get an accurate poicutre of your business’ operating results before taking action.

Digital economy strategy (including self-assessing the effective life of intangible depreciating assets)

The Government will provide $1.2 billion over six years from 2022 for the Digital Economy Strategy, ‘to support Australia to be a leading digital economy and society by 2030’. From an income tax, investment incentive perspective, the Digital Economy Strategy includes the following:
(a) The Government will allow taxpayers to self-assess the tax-effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and in-house software. This measure will apply to assets acquired from July 1 2023, after the temporary full expensing regime has concluded. (So its impact is still years away in terms of investment potential)
The tax-effective lives of such assets are currently set by statute. Allowing taxpayers to self-assess the tax effective life of an asset will allow for a better alignment of tax outcomes with
the underlying economic benefits provided by the asset. It will also align the tax treatment of
these assets with that of most tangible assets.
Taxpayers will continue to have the option of applying the existing statutory effective life to
depreciate these assets.
(b) The Government will provide $18.8 million over four years from 2022 for a Digital Games Tax Offset to provide a 30% refundable tax offset for qualifying Australian digital games expenditure ongoing from July 1 2022, with the criteria and definition of qualifying expenditure to be determined through industry consultation.
(c) The Government will provide $200.1 million over two years from the 2022 income year to develop and transition government services to a new, enhanced myGov platform, providing a central place for Australians to find information and services online.
Well, it’s a start.

Where innovations or ‘new work’ creates assets like patents and copyright, the traditional approach was that the cost of developing these assets was written off over a legislated ‘life’.

For most copyright (like music copyright), this was over a 25 year period. With these changes – which will not apply until after July 1, 2023 (after the next election again) the creator can’ self assess’ the life of the patent or copyright etc. This will have benefits in claiming the cost of developing or creating the patent or copyright over a shorter period of time, which is ’a start’.

The Digital Games offset – well, all I can say is that it is about time!

The video game industry globally is bigger than Film and TV ($250 BILLION p.a. annually). The cost of developing high-quality material is akin to a Movie or TV production. The benefits for digital artists, music composers, film crew, computer programmers and the like is self-evident. Australia has some incredible people ion these fields, and compared to extractive and other industries, they have ben chreonically undersupported, leading to much of this talent going over seas to continue careers – and build busineses. This is among the many ‘new industries’ that virtually did not exist just a few decades ago, that need to be developed, enhanced and enabled to grow in Australia. The future is creating new things, not digging up fossilised dinosaurs and burning them. 

But the amount allocated so far is pitiful. Breaking this down, they are estimating $4.7 million p.a. in offsets will be paid – again starting from July 1, 2023. Based on a 30% offset, this equates to $15.6 million p.a. in Digital Games production costs. And, like the Film Production offsets, the minimum spend to make a claim appears to be $500,000. (Note that the Film offset threshold is also being lifted to $1 million as of July 1, 2021.) Lets see the detial and how this wil be maanged – as it is we have to wait over 15 months before it starts to take effect, and potnetially 3 yesrs before it has an impact on the tax revenues of the government.

So, while it is good that the Federal Government is starting to recognise the value of the Digital Games industry and following the lead (again) of states like South Australia and Victoria in this area, the announcement itself is well short of what it needs to be.

And when you compare it to the $100 million p.a. being allocated to actually making MyGov useful, it gives greater context on this as well. Hopefully, this is just a starting point, and we see this industry being developed and supported in the same way as film and TV production has been supported over the years, even though much more needs to be done there.

Superannuation changes

Removing the work test for voluntary contributions

The Government has announced that it will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps. (i.e. the annual caps and the total balance caps) Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.
The measure will have effect from the start of the first income year after Royal Assent of the  enabling legislation, which the Government expects to have occurred before July 1 2022. 
Currently, individuals aged 67 to 74 years (inclusive) can only make voluntary contributions (both concessional and non-concessional) to their superannuation fund or receive contributions from their spouse if they satisfy the work test (subject to a limited work test exemption). Generally, to satisfy the work test, an individual must be working for at least 40 hours over a period of not more than 30 consecutive days in the income year the relevant contribution is made.

Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and will increase flexibility for older Australians to save for their retirement through superannuation.

Reducing the age limit for downsizer contributions – sell your house and add to your super!

The Government will reduce the age limit from which downsizer contributions can be made by eligible individuals, from 65 to 60 years of age.
The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred before July 1 2022. (So this would take effect from July 1, 2022, if Royal Assent is received.)
The downsizer contribution allows eligible individuals to make a one-off, after-tax contribution to their superannuation fund, of up to $300,000 per person, following the disposal of an eligible dwelling, where certain conditions are satisfied.

Under the current requirements, an individual must be at least 65 years of age at the time of making the relevant contribution for the contribution to qualify as a downsizer contribution.

Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility

The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid SG contributions by their employer.

The measure will have effect from the start of the first income year after Royal Assent of the
enabling legislation, which the Government expects to have occurred before July 1 2022. (so again, it is likely to commence from 22/23, not in the coming tax year.

This means for small business and the self-employed (through companies and trusts) that superannuation payments will be compulsory for ALL employees – full or part-time – no matter what the monthly or annual income levels are. This will have implications regarding payments made to business owners as directors fees or ‘end of year bonuses’ from profits, where super had not been paid during the year. An SGC’ trap’ can occur for business owners, so tax planning and cash flow budgeting will be important to ensure that business owners do not fall foul of these implications.

While it is a good move to ensure that all employees are eligible for superannuation contributions, regardless of the number of hours worked or monthly salaries paid, proper planning will be required in the lead up to this being implemented.

“The Women’s Budget”

With the uproar around Canberra, following the Brittany Higgins disclosures (and a certain former minister who has been on medical leave that no one can refer to, for fear of litigation), much was touted before the budget about the increased level of support for ‘women’s services and issues’. And the numbers on a broad level look substantial – but break it down and compared to other measures, and you are left wondering.

There’s $8 billion on residential aged care and $7.5 billion on aged care home packages (both over a 5 year period – 2 elections!) with another $6 billion on infrastructure (women still like roads) and $2 billion-sized chunks disbursed to mental health, vaccines and child care.

There’s a billion dollars for “women’s safety”, which breaks down into $261 million towards domestic and sexual violence prevention programs with the states (over 2 years), resulting in, amongst other things, an additional $10 per day per resident for residential daycare (How many chicken nuggets is that going to provide?) a $164 million trial of cash-and-kind grants for women fleeing violence, $90 million on consent education, and $320m for women’s legal services and children’s contact centres for the safer management of children in families undergoing separation or dispute.

But that is not per annum.

That is “over the forward estimates”, meaning that is the funding generally for the next 3 – 4 years. Compared to spending on other areas (like defence equipment and support for fossil fuel industries or the Diesel Fuel Rebate), it is paltry and will not go very far towards improving the health and safety of many women and families impacted by Domestic Violence. It is likely that more will be spent on political advertising over this time than will be spent helping to stop family violence.

It has also been stated that the elimination of the $450 per month Superannuation threshold will ‘substantially assist women with their ability to build up their retirement incomes.” Let that sink in. The way to help women is to provide super to them when they are earning less than $103 per week. Interesting outlook!

JobSeeker Increase (already in place).

It was mentioned again that the base JobSeeker payment has been increased by $50 per fortnight – but that increase was announced and started on April 1, at the end of JobKeeper, so it’s a bit disingenuous to have it mentioned as a ‘new increase’. (and what it really was, was a reduciton form the ‘temporary Covid inspiroed boost” that applied for 6 months and was phased out in line with the JobKeeper arrangmeents.

What IS increasing is the need to apply for 20 jobs per month – up from 15 – as of July 1, 2021!

A good way to increase activity in the economy is to bring people up from below the poverty line and give them the ability to survive and get out to find work. The increase does not do enough to achieve this.

Childcare changes

Subsidies for second and subsequent children in Childcare will be increased to 95 per cent. The annual cap of $10,560 per child (or $203 per week) will be removed, benefitting higher-income earners impacted by the Income threshold. Again, this will not apply until July 1, 2022. This applies to Child care (or early learning), not after school care – so those with Primary school children won’t get additional support from this announcement.

Infrastructure

Break out the HiViz vests! $110 Billion in the announcements. But this is over 10 years, with very little actually being undertaken in the next 12 months. Victoria has been allocated $3.3 Billion over the 10 years – but only $397.7 million over the next 4 years. Even the much-vaunted ‘inter-modal hub’ is more than 4 years away. So what has been allocated will be announced to us many times over the coming years. Over and over again.

The Unannounced Budget items.

An area that has had little or no discussion in the main press is the ‘allocated but unannounced’ component of the budget. Over 9 Billion dollars of funding has been allocated in the budget process, but what that is for and how it will be allocated, is yet to be announced. Apparently, $3.75 BILLION of this is to be ‘announced’ over the next 12 months
This is the spending that will likely be targeted – one way or the other – for promises to be made leading up to the 2022 and possibly the 2025 election campaigns. Stand by for a raft of ‘community programs’ support schemes and targeted funding aimed at marginal electorates in the coming 6 – 12 months.
So, we face 6 months or more of additional announcements aimed squarely at keeping eyes distracted from what is not happening in regards to renewable energy matters, climate change, education, universities, returning Australians, Quarantine in Hotels and of Refugees, bushfire remediation, flood and reef repairs and the like. Instead, there will be a succession of ‘big cheques’, road and rail announcements in the regions, sports halls and barbeques, HiViz vests, Rugby Tops and Baseball caps. all the way to the next election – which will probably be announced when we finally get to over 15 million people vaccinated ‘at least once.’
While some are praising this budget – bascially because the Government has abandoned austerity and continued some benefits in the hip pocket areas, there are many, missed opportunities. When a Government is incurring a $160 Billion+ deficit, and not looking at significant reductions in that level for many years, the money can be better spent on improving the society (not just the economy) and providing a significant reset for many areas. Accept that this is a long term plan – not just look over the horizen to the next political cycle – and plan for the major changes that are needed.
You know, like a well managed business, corporation or dictatorial regime woud do. Make your own choices about the comparision you prefer.
So as David Byrne or Kermit would say:
‘You might ask yourself – how did I get here?’

Lets leave it to Kermit to explain…Once in a Lifetime

To discuss any matters arising out of the Budget, or relating to your business, investment, taxation or related financial matters, please call us at Fiscal Artisans on

0409 788 399

or email to

stuart.smith@fiscalartisans.com.au

Din Din Din! Your days as a director are about to be ‘numbered.’

 

Din Din Din!

Your days as a director are 

about to be ‘numbered.’



The Federal Government is working on implementing a Director ID number system, which will allow for the tracing of directors across companies.

This system is to be implemented from November 30, 2022, and Directors will be required to apply for a new Directors ID Number (or DIN)  by that date.

This system will be managed separately to the Tax File Number (TFN) and Australian Business Number (ABN) system now in operation and will be managed by the Commonwealth Registrar, operating as a separate statutory function of the ATO as part of the Governments “Modernising Business Registers (MBR) program.  

In the 2020 federal budget, additional funding was announced to integrate the system with the government’s Modernising Business Registers (MBR) program.This integration will create a super registry by bringing together the Australian Business Register and 31 other registers currently administered by the Australian Securities and Investments Commission, forming the Commonwealth Registrar.

It is hoped this system will prevent the use of false identities and help prevent illegal phoenix activity, where directors deliberately liquidate companies to avoid paying debts, which is estimated to cost the Australian economy between $1.8 billion and $3.2 billion each year. i.e. It ‘should’ make it easier to trace directors who move operations from one company to another, or who have a record of ‘companies closing’  year on year.

 How the Director ID system will work

All directors will be required to establish their identity with the Commonwealth Registrar before receiving their unique director ID, which they will retain throughout their lifetime, even if they cease to be a company director.

This process will involve directors providing their names and former names, addresses and former addresses, contact details, and their date and place of birth.

Directors will also need to prove their identity using key identifying documents, such as a driver’s licence, passport, birth certificate or visa, and may be asked to provide their tax file number (TFN). I expect that this last part will become a critical aspect so that it is harder for people to obtain multiple DIN’s. It is currently relatively simple for a person to have two different sets of details listed with ASIC, depending on whether or not middle names are included in the filings, address details, etc., are maintained correctly.

While the Commonwealth Registrar will operate separately from the ATO, it may ask the ATO to provide the TFN of applicants to verify their identities, and details provided to the registry may be cross-checked against the taxation office’s records.

Directors will face significant civil and criminal penalties if they fail to apply for a director ID by the deadline and for conduct that contravenes the new rules, including falsifying identify information or intentionally apply for multiple director IDs

For companies registered under the Corporations Act, directors face potential civil penalties of up to 5,000 penalty units, or $1.1 million.


What  Happens  next?  

According to the proposed arrangements, the director ID regime will go through a testing phase, which will run until October 31 this year. As part of this phase, the Commonwealth Registrar will invite a group of existing directors to test the system to make sure it has a robust, reliable and consistent user experience.

After this testing is completed, existing directors and those who became directors during the testing phase will have a little over 12 months to apply for their director ID number.

Anyone who wishes to become a company director after November 30, 2022, will need to apply for a director ID before being appointed as a director. This may slow down new company setup processes for small businesses, depending on the approval processes involved, which is why I expect the submission of the TFN will be crucial in the identification process.
So by early 2023, anyone in business will need to add a new identification number to their lists! TFN, ABM, ACN and now DIN.

What has not been reported on so far is the impact of this process on directors of Australian companies that reside overseas. What will the process be for these individuals, and what forms of ID will be accepted? Will they be required to apply for an Australian TFN if they don’t already hold one? Time will tell on that one.

I recall the chaos when the ABN system was first implemented, Hopefully, 20 odd years later, some lessons have been learned, and the ‘trial process’ will consist of a bit more than a few ‘mates filling in some forms to check it all out’ to test the process. There will be a flurry of activity with various corporate register and management systems that will need to update systems to record the DINs and changes to every single ASIC form that needs to be lodged for company activities to incorporate the DINs into the system.

As the systems become apparent, we will liaise with our clients to arrange the application process to ensure it is as smooth as possible.

For more information or to discuss what you need to do as part of this process, please email us at info@fiscalartisans.com.au, or call me on 0409 788 399.

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