Shuffling The Deck: 2022-23 Budget 2.0
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Click here to download the Business & Profit Matters Newsletter – Spring 2022
Click here to download the Budget 2022-23
The NSW Government has released a range of support options for NSW flood affected residents.
Please see details below:
Housing support
Rental support
The Rental Support scheme will provide up to 16 weeks of financial rental support to flood victims in temporary accommodation. Total funding available will depend on the number of people per household including children.
To be notified when more information is available, please register your details or call 13 77 88.
Temporary housing support
If you’re staying with friends and family right now but will need accommodation in the coming weeks (and months), the Temporary Housing Support Package can assist with:
Financial support
Immediate financial help and payments are available to people living in disaster declared areas.
If you live in or lease a rental property that has been affected by a flood or storm, tenants and landlords have certain rights and responsibilities relating to payment of rent, damage to belongings and urgent repairs.
Any tenancy related disputes following a natural disaster can be taken to the Tribunal.
Essentials and clean-up support
Clean-up
All flood-impacted households will receive clean-up assistance, including the removal of debris, mud and green waste. Skip bins and dump trucks will start to appear on streets. Where there are no skip bins or dump trucks available, separate waste on the kerbside until they arrive.
Cleaning up after a natural disaster can be dangerous – here’s some advice on how to clean up safely and deal with hazardous waste.
Please contact your client manager should you require further information.
WHAT DO I NEED TO KNOW?
The ATO has recently announced a major focus on Section 100A of the tax law – the area of the law focusing on trust distributions to associated family members, commonly referred to as splitting income among the family.
Specifically, the ATO will focus its attention on cases where a trust distribution is made to a family member, for the primary purpose of capturing a lower tax bracket.
30 June 2022 is expected to be transitional period, with the proposals to be implemented from 1 July 2022. There are sections of the ruling that can apply retrospectively, so it is important to be reviewing your position sooner rather than later.
FOR EXAMPLE:
At this stage, the ruling is currently open for consultation, and we expect further discussion and announcements over the coming weeks and months. We will keep you updated with changes as they occur.
If you are a client of HYD Advisory, your Client Manager will be covering this topic with you in your next catch up.
We will need to review your specific circumstances and cover alternative tax minimisation strategies that may be available to you (for example, using a “bucket company” with various classes of shares issued to family members) to allow you to split income with family members.
Click here to download the Business & Profit Matters Newsletter – Summer 2022
Despite the ongoing impact of COVID-19, things are looking up for Australia according to the findings of the latest Deloitte Access Economics Business Outlook report.
Chris Richardson, Partner, Deloitte Access Economics reports despite the ongoing battle with COVID and the possibility of mutations and new strains, Australia is well placed for recovery. Richardson says while the recovery will be patchy in 2022, families and businesses are savvier at living with COVID. Globally, he says, the greatest success is likely to go to those nations whose populations are triple vaxxed with high vaccination rates.
Currently, Australia has one of the highest rates of double vaccinated citizens in the world and the nation is well on its way to getting the majority of Aussies are triple vaxxed.
“Australia is now much more match fit for fighting COVID: we’re well vaccinated, we’ve got the hang of juggling lockdowns and other COVID challenges, and we’re cashed up with dollars leftover from when the pandemic meant that money couldn’t be readily spent. That combination spells resilience and recovery,” explains Richardson.
“But Omicron has gone vertical, and it won’t be the last mutation for us to fight. China’s economy has softened in ways that particularly challenge us. And the markets wrested control of the cost of money away from the RBA, notably raising the cost of two- and three-year fixed-rate loans at a time when borrowings have leapt.
“The good outweighs the bad. It has been doing that for a while – for all its challenges, 2021 recorded the fastest growth in the Australian economy since 2007, making it the second-fastest growth seen in the past two decades. Deloitte Access Economics sees 2022 as a similar story, with Australia’s growth remaining above average as pandemic damage to the economy continues to be repaired,” says Richardson.
With COVID infections impacting supply chains across the country, Deloitte suggests businesses more pricing power than they’ve had in decades. Add to this higher energy prices and a weaker $A, and consumer prices have spiked. Currently, price rises are outstripping wages, so unless wage gains increase significantly, inflation will ease.
And while stimulus is being wound back, Richards says we won’t end up with interest rate rises like those of the past.
“Our inflation risks are less: we will pick up a deflationary impulse from China’s slowdown, we haven’t suffered the Great Resignation seen in the US, price increases here have so far only been in a narrow range of products, and most wage agreements are struck over several years. That gives the Reserve Bank the luxury of time. And it really should take advantage of that amid today’s highly uncertain environment.”
Job market explodes
Australia’s closed borders have led to an exploding job market with job vacancies continuing to rise. If this continues, Deloitte predicts the unemployment rate could reach as low as 4 per cent by the end 2022.
“Popular opinion sees the secret sauce of our job joy as closed borders. And it’s true that closed borders help explain huge vacancies across IT, farming, retailers and hospitality. Yet that’s just a one-off effect – ongoing migration generates as many jobs as it fills (in the exact same way that having children eventually generates as many jobs as it fills). Rather, the key driver of Australia’s exuberant job rebounds has been the pedal to the metal support for the Australian economy of governments and the Reserve Bank,” says Richardson.
Expect a budget blowout
The Deloitte report suggests we should also expect budget blowouts for a while to come… but don’t blame COVID.
“Federal and state budgets are in trouble. As we’ve said for some time, that isn’t because of the pandemic. Yes, COVID has been costly, but those costs are ultimately temporary. But while we were glued to our daily dose of the Gladys and Dan show, the cost of running Australia rose.
“That’s because (1) we’ve underspent on social services for years, so the budget in May 2021 added an ongoing $15 billion a year in social spending, and the budget update at end-2021 added a further $10 billion a year (mostly on the NDIS). And at the same time (2) the world has become a more dangerous place for Australia. That makes for more expensive defence costs too. Allowing for these building cost pressures, the federal budget looks likely to settle at ongoing annual deficits of over 3 per cent of national income.
Slow going for arts, tourism and hospitality
While 2022 may well avoid large and lengthy lockdowns, Omicron’s rise is likely to make low touch, low trust and low density a focus compared with pre-pandemic norms.
“So although recovery in tourism, hospitality, admin services, and arts and recreation will continue, it may be patchy and partial,” suggests Richardson.
“And COVID is running riot in ways that are playing merry hell with a bunch of ‘high touch’ industries: including trucking and distribution, as well as supermarkets and retail more widely. That pain is probably temporary, but it is huge.
“Yet the bad news for those sectors will see matching good news for sectors that fight the pandemic and protect the economy – the likes of the public sector, finance and health will stay stronger for longer during 2022 because they’ll need to, while another year of record harvests means farmers are doing even better.”
What next
The ongoing fight against Omicron will determine the speed at which Australia reintegrates, and the best economic evidence of that will be seen in consumer spending – where NSW and Victoria dropped off the pace during lockdowns.
Looking longer-term, the increasingly long running nature of the coronavirus crisis suggests that an echo of some COVID patterns (with the bigger states struggling and the smaller states prospering) will linger on,” concludes Richardson.
The NSW Government has announced a $1bn support package for struggling NSW small businesses.
Acknowledging the difficulty that business operators have faced, the NSW Treasurer Matt Kean has announced a package of measures to support small businesses impacted by COVID-19 over January and February 2022.
Releasing the package, the NSW Treasurer said, “household balance sheets are strong at the moment, when we get out of this wave, we expect a snap back and the economy will bounce back better on the other side of this.”
Small Business Support Package
The NSW Small Business Support package provides eligible employing businesses with a lump sum payment of 20% of weekly payroll, up to a maximum of $5,000 per week for the month of February 2022. The minimum weekly payment for employers is $750 per week.
Eligible non-employing businesses will receive $500 per week (paid as a lump sum of $2,000).
Eligibility
To access the package, businesses must:
The support package only covers the month of February 2022. Applications for support are expected to open mid-February.
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