Update 1 July
The end of Financial Year is here and our team have been working hard to ensure our clients get the right support when they need it.
Now is the time to prepare for the year ahead. If there are ways in which we can make this Financial year easier such as streamlining your accounting, our team are here to help!
This month our Financial Planning Expert, Tony Marshall talks about the latest interest rates rise and how it affects the current market.
The Ignite Ideas Fund supports Queensland-based small to medium businesses that have high-growth potential to undertake commercialisation projects. EOI applications will close 10 am on 7 July 2022.
From today, important changes to how much super you need to pay are now in effect. The cents-per-kilometre deduction rate for car expenses has also now been lifted to 78¢.
The WD Nicholls Team
Happy End of the Financial Year everyone!!
As we all know (and previously written about) the view on how high can interest rates go has been plaguing investment markets all over the globe and we are now starting to see all this speculation flow through to Sydney and Melbourne metropolitan property markets. However, when considering the current fluctuations we are seeing in markets at the moment nothing stands out to be unusual. Over the years it is very common for the market to fall (e.g greater than 10%).
So, what happened?
US inflation rose again in May, increasing 8.6% from a year earlier and 1% from a month earlier. Shelter (rent), food, and gas were the largest contributors, but there was a fairly broad-based advance from most sub-components. Core inflation, stripping out more volatile food and energy components, increased 6% from a year ago and 0.6% from the prior month. Both came in above forecasts, and in contrast to recent talk that inflation may have peaked. This saw investors fret about faster and larger Fed rate rises than previously expected.
Why did it happen?
Record petrol prices, along with rising food and shelter costs, have been fueled by excess demand. The government's COVID responses have been one of the major contributors to this and can be argued they probably let it go on for too long. The other major factor, along with supply shortages originally fueled by covid policies, Ukraine/Russia related supply issues including the effects of sanctions, and more recently Covid-zero policies in China.
What does it mean?
The higher inflation number implies that the US economy is running too hot and may have to be slowed with faster and larger rate rises than previously expected, which then raises the risk of a recession if the economy cools too fast.
The US Fed has made it clear with a rise of 0.75% in June (the market expects 0.50%) and we could see another 0.75% in July which will take the US rate to 2.50%. Rising costs are killing consumer confidence and sentiment as rate rises impact current and future demand whilst rate rises do little to help surging global commodity prices and structural changes in the way people spend and live post-covid.
With this recent downturn, it would seem the Financial Year 2022 will finish lower than it started in July 2021. Here is the performance of all relevant markets for the last month, 6 months, and year:
What should you do?
In the very short term, all the above factors mean added risk and volatility as we are all waiting to see if inflation is brought under control. Don’t panic if you continue to have a medium to longer-term view, as company fundamentals look sound.
Thanks and all the best for 2022/2023.
The Ignite Ideas Fund supports Queensland-based small to medium businesses that have high-growth potential to undertake commercialisation projects that will:
strengthen key industries in Queensland
diversify the Queensland economy
compete in domestic and global markets
engage and/or benefit regional Queensland
create new jobs, now and into the future.
Funding and support
Two tiers of funding are available.
Tier 1 Up to $100,000 (excluding GST) for projects of up to 12 months duration.
Tier 2 Greater than $100,000 and up to $200,000 (excluding GST) for projects of up to 24 months duration. For Round 9, successful applicants will be eligible for additional business development support through our new Ignite+ program. This pilot program will provide support across sales and marketing, customer acquisition, competitor analysis, intellectual property (IP)/legal support, financial structure, connections to mentors and sponsors, and access and introductions to business and investment networks.
Eligibility To be eligible for funding, applicant organisations must at the time of application:
be a business headquartered in Queensland
have no more than 50 full-time-equivalent employees
not be a subsidiary of a group of companies that has more than 50 full-time-equivalent employees
not have received funding for the proposed project activity from either the State, Federal or Local Government
be registered for GST (at time of full application submission).
If applying for tier 1, the applicant organisation and/or related parties must:
not have received an Ignite Ideas Fund grant previously
make a cash contribution to the project that is at least equal to 20% of the value of funding sought.
If applying for tier 2, the applicant organisation and/or related parties must:
not have received an Ignite Ideas Fund tier 2 grant previously
not be applying for a product or service that has previously received Ignite Ideas funding
have successfully completed any project funded under tier 1 of the Ignite Ideas Fund (if relevant)
make a cash contribution to the project that is at least equal to the amount of funding sought
Organisations and their related parties are limited to one application per funding round.
Application process and timeframes
The program has a two-staged applications process – an expression of interest application being the first stage followed by a full application stage for the shortlisted expression of interest applicants.
Expression of interest applications are now open.
Expression of interest applications will close at 10.00 am (AEST) on Thursday 7 July 2022.
Late applications will not be accepted.
All applicants will receive written notification of the outcome of their application to the email address provided in the application form.
Source and credit: Advance.qld.gov.au
Important changes to how much super you need to pay are now in effect.
You now need to pay super for all employees who are paid salary and wage payments, regardless of how much they earn. There is no longer a $450-per-month income threshold. However, employees under 18 will still need to work more than 30 hours in a week to be eligible for super.
This applies for all salary and wage payments from 1 July, including payments where some or all of the pay period relates to work done before 1 July.
The super guarantee rate has also changed. You’ll need to calculate super at 10.5% on salary payments you make to employees on or after 1 July.
Make sure you’ve updated your payroll and accounting systems so that you continue to pay the right amount of super for your employees and avoid penalties.
Super for employers
Work out if you have to pay super
Super guarantee percentage
Source and credit: ATO.gov.au
Earlier this month, ATO Deputy Commissioner of Taxation Ben Kelly confirmed the cents-per-kilometre deduction rate for car expenses would be lifted to 78¢, rather than 75¢ as initially promised in mid-March.
The new rate applies to eligible taxpayers who elect to use the cents-per-kilometre method when calculating income tax deductions for their work-related car expenses.
This rate applies to the income year commencing 1 July 2022 and remains applicable to subsequent income years until such time as the Commissioner of Taxation determines that it should be varied.
Source and credit: AccountantsDaily.com.au
If you wish to arrange a telephone appointment or zoom meeting with one of our team please contact our office either by telephone or email.