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Update 1 March 2022

Due to the extreme weather conditions currently happening in Mullumbimby, our office will be closed until further notice. We will still be checking emails and attending to any matters that can be dealt with from home. We appreciate your patience during this time. Our thoughts and prayers go out to all those that have been affected by the floods. We have no doubt that the community spirit will rise to the occasion once again and help people get back on their feet.

May the next month offer some respite from global challenges.

As always, we wish you health, happiness and continued success.

The WD Nicholls Team

Queenslanders in communities impacted by the unfolding flooding disaster across the state’s South East can apply for Commonwealth financial support from Monday 28 February.

The Morrison Government has activated the Disaster Recovery Payment (AGDRP) of $1000 per eligible adult and $400 per eligible child to support people impacted by the South East Queensland flooding event that began on 22 February.

The Disaster Recovery Payment is a one-off, non-means tested payment and is available to eligible people in those affected local government areas who have suffered a significant loss, including a severely damaged or destroyed home or serious injury.

Eligible Queenslanders in the local government areas of Gympie and North Burnett can claim support via myGov or by calling Services Australia on (180 22 66) from 1pm Queensland time tomorrow (28 February).

The Government are closely monitoring the flood emergency and they expect further Commonwealth assistance to be extended to other impacted regions and local government areas as the flood impact is known.

Australian Defence Force personnel continue to support the emergency response efforts and will do more once the water recedes and the recovery effort starts.

The Disaster Recovery Allowance (DRA) will also be provided to the affected local government areas in Gympie and North Burnett, with further flood-affected local government areas expected to be added in coming days, as the damage becomes clear.

The DRA assists employees, small business persons and farmers who experience a loss of income as a direct result of a major disaster. You might be eligible for a maximum of 13 weeks payment from the date you have or will have a loss of income as a direct result of a disaster. The DRA is taxable.

Services Australia’s Disaster Assistance phone line (180 22 66) is available for those who are unable to claim online from 1pm Queensland time, Monday 28 February. For more information on support available, click the link below.

Source: Licensed from the Commonwealth of Australia under a Creative Commons Attribution 4.0 International Licence. The Commonwealth of Australia does not necessarily endorse the content of this publication.

Investment Market Update

Well January 2022 has stamped its mark on investment markets! On the back of the Bond market sell off (due to the potential of interest rates rising earlier) in September and October, many asset classes have focused their attention to Central Banks over the world and their monetary policy (interest rate movements. In January we have seen the markets fall as follows:

If we look a little deeper into this volatility we have seen the tech sector suffer some large losses. Though the tech sector has still had a stellar 12 months, we have seen companies like, Facebook (-30%), Telsa (-22%), Afterpay/Square (-19%), Xero (-21%) fall over the last month. We sat down with one of our Investment Consultants, Chris Lioutas, and we believe there are many moving parts at the moment. Here are some of the topics which we are closely watching:

When will inflation start to normalise?

  • Current thinking is that both headline and underlying inflation will start to fall in the 2nd half of the 2022.

  • The reasons behind the fall include annualization effects (ie. larger monthly and quarterly numbers dropping off), supply increases, and lower demand.

  • The critical question then is what level does inflation settle at it in this cycle? Most believe it will settle above pre-covid inflation levels. We would agree with that for 2022 and for at least half of 2023.

Will central banks go early and hard or will they be more patient?

  • There are effectively 2 options for central bank rates lift-off – go early and hard (ie. try and get to rates up to 0.75-1.00% quickly to nip inflation in the bud) or slow and measured (ie. increase rates over the course of 2-3 years – e.g., 2-3 small rate rises per year until they reach their neutral settings).

  • We’re in the latter camp as we believe:

    • Inflation will settle quicker than most expect

    • Raising rates too quickly raises the risk of causing too much damage and potentially having to reverse course

    • Central banks and governments are comfortable with inflation running a little hotter than target given inflation has largely undershot since the GFC and given government debt loads

    • The drivers of lower inflation pre-covid (ie. demographics, debt, and technology) are now even stronger following the last 2 years (ie. worse demographics, more debt, and more technology)

What will economic growth look like for 2022 and 2023?

  • Most forecasts are for a continuation of strong economic growth in 2022 given the amount of stimulus in the system and given expectations of greater reopening.

  • However, forecasts for 2023 are quite mixed at present.

  • There’s a view that 2023 growth will ratchet down fairly aggressively to effectively land at pre-covid economic growth levels. If that’s the case, then it further supports the view that central banks won’t have to do a whole lot to bring inflation under control.

  • One key area where there’s quite a degree of disagreement is Chinese economic growth for 2022 and 2023, with some expecting developed economy-like growth numbers of 2-3% and others expecting a move back up to 5-6%.

How will companies fare during reporting season?

  • We’re partway through US 4th quarter reporting season and more than 80% of companies have met or beat expectations, so fundamentals remain strong.

  • Australian reporting season is happening as we write this article so will be interesting to see how it continues to unfold.

  • Assuming earnings look reasonable to strong, this will provide support to any concerns regarding heightened valuations, and may provide a floor for any bouts of volatility this year.

Will the geopolitical risks spill over into markets?

  • Geopolitical risks generally don’t spill over into markets, and the impact is generally fleeting when they do.

  • As you would now be aware Russia had made the decision to invade Ukraine. This has obviously brought some short-term volatility. Upon the invasion on Thursday afternoon (our time) the ASX 200 was down around 3.5% and the US was down around 5.5% (over the last week). However, on Friday night the US Sharemarket rallied 2.24%. This does not necessarily mean the market has bottomed out, however it does indicate the market is always assessing the current situation and what damage it will have to the world economy.

  • You could argue that the current Russia/Ukraine issue is putting upward pressure on oil and gas prices given the importance of Russian gas supply.

  • Obviously, we’re still watching China/Taiwan closely given the importance of Taiwan’s semiconductor industry.

Is the current bout of volatility in markets something to be concerned about?

  • We don’t think so.

  • We actually think bouts of volatility and weaker market environments are generally healthy and provide opportunity.

  • There are definitely risks impacting investor sentiment right now, but we don’t think any of these risks are catastrophic or are likely to cause a large correction at this point.

  • We remain vigilant and continue to look for opposing views to our current thinking.

Superannuation News

Transfer Balance Cap

In 2017, the government introduced the Transfer Balance Cap (was $1.6 million) which is a ceiling that can stop you from contributing additional funds as well as how much of your superannuation funds you can draw a pension from. This cap increases in $100,000 increments. The December quarter Consumer Price Index (CPI) figures are used to calculate any indexation of the general transfer balance cap (TBC) each 1 July.

The Australian Bureau of Statistics released the CPI figures for the December 2021 quarter. Over the twelve months to the December 2021 quarter, the CPI rose 3.5%. The December quarter figure of 121.3 was not large enough to trigger an increase. The general TBC will remain at $1.7 million for 2022-23. A rise of approximately 5.5% or more over the twelve months to December 2021 was required to trigger an increase in the general TBC for 2022-23.

Removal of Work Test Bill

The welcome news was received a couple of weeks ago with the long-awaited passing of the 2021 Federal Budget superannuation proposals. Treasury Law Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 passed through both houses of Government on 10 February 2022. The Bill is now due to receive Royal Assent and the announcements will apply from 1 July 2022.

A recap of the 2021 Federal Budget Announcements now passed include:

  • Removing the work test for voluntary contributions.

The work test, which required an individual to work for 40 hours in 30 consecutive days to be able to contribute to super, will be removed. This means that anyone under the age of 75 will be able to make salary sacrifices and non-concessional contributions irrespective of their employment situation.

Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.

  • Removing the work test requirement when making non-concessional or salary sacrifice contributions will simplify the superannuation contribution rules and make it easier for older Australians to save for their retirement through superannuation.

  • Increasing the bring forward rule for non-concessional contributions for anyone up to age 75.

Previously this was only available to members aged less than 67 years. It allows members to access future caps and bring forward 3 years’ worth of non-concessional contributions into a financial year, without breaching the NCC cap. Eligibility to utilise this, however is still dependent on a member’s total superannuation balance (at the previous 30 June) being less than $1,700,000. It is understood that a member can utilise the full 3 year bring forward NCC cap (provided they were not current in a bring forward period) just prior to their 75th Birthday (even though contributions cannot be made post age 75). The bring-forward NCC cap will allow older Australians to contribute monies into a tax-effective investment vehicle and will be a great tax planning and strategy tool in the evening up balances between spouses (this will be covered in the next blog and is part 2 of our spouse contribution strategies series).

  • Reducing the eligibility age for downsizer contributions.

Downsizer contribution age eligibility will be reduced from those over 65 to those over 60. The downsizer contribution allows eligible individuals to make a one-off, post-tax contribution of up to $300,000 per person following the disposal of a principal place of residence, to their superannuation fund. These contributions are not counted towards the non-concessional cap.

  • Removing the $450 per month Super Guarantee (SG) Threshold.

The current $450 per month minimum income threshold will be removed, under which employees do not have to be paid SG contributions.

SG payments to employees earning less than $450 per month are expected to commence from 1 July 2022.

  • First Home Super Saver Scheme.

The maximum release amount under this scheme will be increased from $30,000 to $50,000. Assisting members to buy their first home and save faster with the concessional tax treatment of superannuation.

Exempt Current Pension Income

  • SMSF Trustees will now have the choice on their preferred method of calculating exempt current pension income where they have members who have both accumulation and retirement phase benefits (for either part or the full financial year).

The Small Business Debt Helpline is a dedicated small business financial counselling service offering free, independent, and confidential phone-based support to small business owners nationally. Support is provided across a range of complex issues including:

  • avoiding bankruptcy

  • negotiating payment plans

  • debt waivers

  • grant applications

  • insolvency

Small business owners needing extra support will be referred to the right service for them, including mental health support.

All small business owners across Australia can access the Small Business Debt Helpline by calling 1800 413 828 between 9.00 am and 5.30 pm Monday to Friday AEDT.

For more information click the link below.

Source and credit:

In 2019-20, 69% of businesses recorded using one or more information communications technologies. With the impact of the global pandemic, this number is expected to continue growing in 2022.

Investing in digital solutions for your business can:

  • improve your business productivity

  • increase the efficiency of your processes

  • allow for flexible work options in your business.

Having an online or social media presence for your business can also help your business reach new markets and improve customer relationships.

Some digital marketing trends expected in 2022 include:

  • more personalised and interactive online services - such as use of social media platforms to interact directly with customers, or providing a tailored experience for customers on your business website

  • increased marketing through social media - in particular the use of short video marketing on social media platforms

  • use of voice and ‘near me’ searches – making sure your website SEO is also optimised for these search methods will make your business easier to find.

Click the link below to learn more about going digital in your business, including the benefits, setting up a website and social media presence, as well as cyber security.

Once we are back online, 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.


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