FEDERAL BUDGET V2.0
On Tuesday the 25th of October, Dr Jim Chalmers handed down his first federal budget as Treasurer.
In the context of a global economic slowdown, high inflation, rising interest rates, widespread natural disasters and a devilish skills shortage, Mr Chalmers has had his work cut-out.
Dubbed the “mini-budget”, Mr Chalmers’ budget seeks to address cost of living pressures, strengthen the economy and tackle budget repair.
The budget includes some sobering economic expectations, including:
- Inflation expected to peak at 7.75% in the December quarter and to persist at higher rates for longer than expected before easing to 3.5% by June 2024;
- Real GDP forecast to grow to 3.25% in 2022/23 then shrink to 1.5% in 2023/24;
- Electricity prices expected to increase nationally by an average of 20% in late 2022, with retail prices expected to rise a further 30% in 2023/24; and
- The deficit sitting at $36.9bn. Whilst better than originally anticipated, the deficit expands to $49.5bn by 2025/26.
Additionally, tight labour market conditions are expected to see annual wage growth at 3.75% by June 2023. However, high inflation is expected to erode real wages through 2022/23 before rising modestly through 2023/24.
We have published a comprehensive budget guide to give you all the detail in a digestible format.
Additionally, you can access the budget papers from the Government’s budget website.
And of course, feel free to contact us to discuss how the budget may affect you.
SEPTEMBER QUARTER CONSUMER PRICE INDEX (CPI)
The Australian Bureau of Statistics released the September quarter CPI on the 26th of October which confirms a rise of 7.3% for the twelve months to September 2022.
The most significant price rises were in new dwelling purchases, gas & other household fuels and furniture.
The CPI has been rising sharply, as can be seen in the below graph, and has hit its highest point since 1990.
The CPI serves to highlight the extent of our inflation problem.
Whilst we are all very clear on the impact of high (& rising) inflation on cost of living, it is important to be aware of the impacts on savings, investments and superannuation.
For example, fixed interest investments like term deposits are effectively delivering negative returns where interest earned is being dramatically outstripped by inflation.
If you are feeling unsure about your position and could use some financial advice, please get in touch.
DIRECTOR ID REGIME
Since the introduction of the Director ID regime in November 2021 we have written in this forum about the need for company directors to obtain a unique 15 digit identifier by the 30th of November 2022.
As we near the end of October, the clock is ticking ever more loudly as that deadline approaches.
We urge any directors who have not already done so, to apply for their ID as a matter of priority as failure to obtain a Director ID can result in ASIC imposing significant penalties.
Additionally, we note that anyone who was a director on or before 31 October 2021 and has since ceased to be a director, will still be required to obtain a director ID.
In order to apply, directors need to have setup a MyGovID (not to be confused with a MyGov account).
Setting up a MyGovID involves downloading the official App onto a smart-phone and completing the identification procedures. This can usually be done quite easily with your driver licence and Medicare card.
Once you have a MyGovID, you can then proceed to apply for a Director ID here.
When applying for a Director ID, you will need to have your Tax File Number handy as well as some additional information to verify your identity.
This additional information can be any two of the following items:
- Bank account details;
- ATO Notice of Assessment;
- Superannuation account details;
- A recent dividend statement;
- Centrelink payment summary; and
- PAYG payment summary.
Once the application is submitted, you will be issued your unique 15 digit Director ID.
If we assist you to manage the ASIC compliance for your company, please advise us of your Director ID so that your ASIC corporate records can be updated.
And if you need assistance to apply for a Director ID, please get in touch at your earliest opportunity.
CHRISTMAS PARTIES & FRINGE BENEFITS TAX (FBT)
With the festive season fast approaching, many organisations will be planning a get-together with their team.
In many instances, a Christmas party will be regarded as a Fringe Benefit that can give rise to a substantial unexpected cost to the organisation.
However, there are a number of situations where a FBT exposure can be avoided. For example, ensuring that the “minor benefits” exemption is available. Similarly, a party held at the business premises may also qualify for an exemption.
The ATO have some published guidance to help organisations to understand the FBT implications associated with hosting a Christmas party. This is well worth a read.
If you are in the midst of planning your Christmas party, please be mindful that a little bit of knowledge and planning can go a long way.
If you would like some help to understand the ins and outs, please get in touch.
SINGLE TOUCH PAYROLL (STP) PHASE 2
Back in March we wrote about the rollout of STP Phase 2.
Phase 2 of STP was announced in the 2019/20 Federal Budget and involves and expansion of the data that the ATO collects through the STP system.
This expanded data includes:
- Disaggregation of gross earnings into component parts (eg ordinary hours, overtime, etc);
- Employment and taxation conditions (eg TFN declaration information, employment basis, etc); and
- Child support garnishees and deductions.
STP Phase 2 officially started on the 1st of January 2022. However, there are extensions in place to adopt Phase 2 based on the payroll software provider used.
Below is a summary of the adoption dates applicable for some of the most common payroll software providers:
- Xero: 31 December 2022
- MYOB: 31 December 2022
- KeyPay: Live for STP Phase 2
- Quickbooks: Live for STP Phase 2
- Reckon: 31 December 2022
- Wage Easy: 31 December 2022
Payroll software products that are live for STP Phase 2 will have already communicated with users to assist them to start reporting compliantly for Phase 2.
For those who use a payroll product that has an extension, keep an eye out for updates from that supplier leading up to the extension due date.
In particular, the popular Xero and MYOB products are currently rolling out updates that need to be actioned as part of the move to Phase 2.
If you use one of these products for your business, we recommend that you start to look into these items to ensure that you are ready for the 31 December deadline.
If you require more information about STP Phase 2 or need help to transition, please contact us.
ABCC & THE FAIR WORK ACT
From the 10th of November, the Australian Building & Construction Commission’s (ABCC) role in enforcing the Fair Work Act in the commercial building & construction industry will transfer to the Fair Work Ombudsman.
Employers and employees in the commercial building & construction space should keep an eye on the Fair Work Ombudsman’s website for updates on what this change will mean for them.
QUOTE OF THE MONTH
With the Spring Racing Carnival upon us, it is only right that our quote of the month has a horse racing theme.
And we have a great one from the American entrepreneur Jimmy Iovine.
Mr Iovine is quoted as saying, “you try to do the best with what you’ve got and ignore everything else. That’s why horses get blinders in horse racing: You look at the horse next to you, and you lose a step”.
In other words, pay attention to what you are doing, not what those around you are doing.
There is real value in this approach, which is why it is such an enduring philosophy that parents have been telling kids for time immemorial.
There is real power in the ability to remain focused on your own goals and endeavours. Spending too much time looking at others will serve only as a distraction that will hold you back.
Sky Accountants Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Gisborne & Macedon Ranges
Phone: 03 97444522
Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437