Welcome to an early Federal Budget edition of our April newsletter. As the Morrison Government clears the decks ahead of a May election, Australians will be weighing up the impact on their household budgets.

The war in Ukraine added a major new source of uncertainty to the local and global economic outlook in March. Economic sanctions against Russia have cut its oil exports, sending crude oil prices surging 6% over the month to more than US$111 a barrel. This puts further pressure on inflation, already on the rise as global economies recover from the pandemic. In the US, inflation is at a 40-year high of 7.9%. The US Federal Reserve lifted official interest rates in March for the first time since 2018, by 0.25 basis points to a range of 0.25-0.50.

In Australia, the lead-up to the Federal Budget added to the uncertainty. The Reserve Bank is taking a “patient” approach on interest rates for now, but with inflation at 3.5% and tipped to go higher it is expected to begin lifting rates later this year. Australia’s economy grew by 3.4% in the December quarter, the strongest gain since 1976 as the nation emerged from lockdowns. Unemployment fell from 4.2% to 4.0% in February, but rising prices are putting pressure on household budgets. Petrol prices hit a high of $2.12 a litre in March, costing the average motorist an extra $66.20 to fill their tank since the start of the year. Consumer confidence is at an 18-month low, with the Westpac-Melbourne Institute index down 4.2% in March to 96.6 points. And a 20.6% lift in home prices in the year to February has pushed the average mortgage on established homes to a record $635,000.

Rising commodity prices – iron ore and wheat were both up almost 5% in March – pushed the Aussie dollar to around US75c.

Federal Budget 2022-23: Spotlight on tax

Tax offsets and temporary cuts were at the heart of this year’s Federal Budget as the government attempts to woo voters in the run-up to the election.

Treasurer Josh Frydenberg emphasised the crucial role of his tax measures in helping Australians cope with the growing cost of living pressures and in supporting the small businesses he calls the “engine room of our economy”.

According to the Treasurer, the measures in this year’s Budget represent the “next stage in leading Australia’s strong economy into the future”.

One-off tax offset and payments

A signature announcement in the Federal Budget was providing one-off cost of living tax offsets and payments to lower-income earners.

From 1 July 2022, taxpayers will receive a one-off $420 cost of living offset. The offset will take effect when they submit their tax returns at the end of the 2021-22 financial year.

In addition, the Budget included a one-off income tax-exempt payment of $250 to help eligible pensioners, welfare recipients and concession card holders with their cost of living pressures. They will automatically receive the payment in April 2022.

A key tax omission in this year’s Budget was another extension to the existing Low and Middle Income Tax Offset (LMITO), which means eligible taxpayers will no longer receive the offset (currently worth up to $1,080) beyond the current financial year.

Cut to fuel excise

Another major measure in the Budget was a temporary halving of the current excise rates for petrol, diesel and other fuel and petroleum-based products for six months until 28 September 2022.

This temporary cut in petrol and diesel rates (from 44.2 cents to 22.1 cents) per litre is designed to reduce cost of living pressures for households and small businesses.

According to the Treasurer, households will be around $300 better off over the 6 month period. Businesses will receive fuel tax credits where fuel is used in light vehicles travelling off public roads and by heavy vehicles or plant and machinery. Light vehicles operating on public roads are ineligible for FTCs, but will benefit from cheaper bowser prices.

Small business support

The Budget also included a reduction in the GDP uplift rate to be used for 2022-23, which will provide $1.85 billion in cash flow support for small business.

Both the offsetting of losses against previously taxed profits and the instant write-off of assets for businesses with a turnover of less than $5 billion were extended again until 30 June 2023.

Businesses with annual turnover of less than $50 million will also gain access to a new bonus 20 per cent tax deduction for the costs (up to $100,000) of expenses and depreciating assets relating to improvement of the organisation’s uptake of digital technologies. These technologies include such things as cloud computing, cyber security enhancements and portable payment devices.

Training and apprenticeship subsidies

A new Skills and Training Boost will provide small businesses with an annual turnover of less than $50 million with access to a bonus 20 per cent tax deduction for the cost of external training courses delivered to their employees. The deduction will apply to training expenditure from Budget night until 30 June 2024.

Employers will also be able to access wage subsidies if they take on apprentices in occupations listed on the Australian Apprenticeship Priority List. For an apprentice earning $34,000 a year, an employer will be eligible to receive up to $8,750 in wage subsidies over two years.

The Budget also provided $5.6 million over four years in funding for a new dedicated small business unit in the Fair Work Commission and $2.1 million for Financial Counselling Australia’s Small Business Debt Helpline.

COVID-19 tests tax deductible

To clarify concerns expressed by taxpayers, the Budget included a provision to make the cost of taking a COVID-19 test to attend a place of work tax deductible for individuals from 1 July 2021. The government also announced that Fringe Benefits Tax (FBT) will not be incurred by businesses where they provide COVID-19 tests to their employees for this purpose.

If you would like to discuss any measures in the Federal Budget, please don’t hesitate to give us a call.

Information in this article has been sourced from the Budget Speech 2022-23 and Federal Budget support documents.

Embracing the power of automation

Life seems to be getting busier year after year, especially in the workplace. Just as well there are measures we can take to increase productivity and create efficiencies within not only our workplace, but our personal life as well.

Automation within organisations is a common occurrence these days due to the importance placed on streamlining processes and increasing productivity. And with technology changing at such a rapid rate, it’s empowering businesses to implement changes along the way.

While most jobs can benefit from a degree of automation, ‘automation’ doesn’t need to be and shouldn’t be a scary word. When used effectively in the workplace and your day-to-day life, it can free up time for the critical tasks, allowing you to do what you do best; foster creativity, think strategically and build relationships.

Advantages and challenges to be aware of

We all have those tasks that bog us down, they are often repetitive and prevent us from undertaking the more important aspects of our roles. Automating these mundane tasks can provide many advantages including;

• • Reducing busy work, freeing up resources to focus efforts on more important tasks that require critical thinking.

• • Increasing knowledge sharing within and between teams, with improved reporting and processes.

• Minimising duplication of data and the possibility of data entry errors.

Introducing change comes with its own set of challenges, even if automating processes leads to improved satisfaction and productivity. Some key considerations when implementing new technology and automation include;

• • The initial costs of new products or services, team training and the time for the team to take up the new process.

• • Data security issues with the increased reliance on technology.

• • Being mindful not to introduce unnecessary complexity. Automation for the sake of automation will not always create efficiencies.

• Developing indicators to measure the success of the new process.

Where can you start making changes today

Automation should ultimately make your working environment simpler and it’s one of the best tools we have at our disposal for efficiency. A few areas where you can begin making changes include;

• • Sales and client onboarding: Client relationships are built over time, and often require a personalised touch. However, there are simple ways to reduce the administration of finding, converting and onboarding new clients. This may include an integration between your emails and CRM for better client profiles, appointment setting tools and a sales workflow with automated emails to prospects to maintain regular touch points.

• • Data entry across various areas of the business: No one likes to get bogged down entering, or worse re-entering data. Investigate integrations between your accounting software and CRM (and any other platforms) so data only needs to be entered once. This will both reduce time and the possibility for errors.

• • Invoicing and accounts: Online accounting software enables businesses to manage accounts and payroll effectivity – but are you making the most of the tools available to you? Do team members enter timesheets directly into the accounting software, eliminating data entry? Also consider issuing repeat invoices and invoice reminders to assist with prompt payment.

• Marketing: There has been an explosion of tools to assist you in effectively marketing your business. Consider scheduling your social media with a free scheduling tool. Share content across the business to maximise your efforts. Collect and store new leads in your CRM or email platform so you can market to them in future.

Get on board with change

There are many reasons why automating processes within an organisation is beneficial for productivity, but it can also have a positive effect on team morale and job satisfaction. By removing manual tasks and replacing them with an automated process, you could reduce stress levels and potentially have a beneficial impact on absenteeism within the workplace.

One key thing to remember is now that flexible working is a high priority for most people, whatever strategies you implement, they must have the ability to be accessed remotely.

By incrementally introducing a few new strategies across various areas of the business or your role, you’ll start reaping the rewards sooner than you think.

Protecting your business from ID thieves

The COVID-19 pandemic has led to many challenges for small business operators, including a significant escalation in cybersecurity threats.

One of the fastest growing of these threats is identity (ID) crime, with the Australian Competition and Consumer Commission’s (ACCC’s) Scamwatch finding ID theft in Australia increased 234 per cent in 2021.

The scale of the problem is worrying, with a recent survey by the Australian Institute of Criminology finding 19 per cent of respondents had experienced misuse of their personal information.

What identity criminals want

The explosion in ID crime is not just a problem for individuals, it’s a growing headache for businesses. This is due to the increasing amount of personal information they now hold, about their employees, clients and customers.

The ATO has been reminding small businessowners that ID documents are like gold to tax scammers, who can use information such as a driver’s licence, passport and tax file number to steal tax refunds and super.

Cybercriminals can also commit fraud in your name, take over your business and submit amendments to your Business Activity Statements. This makes it vital to protect key information ID thieves target, such as employees’ personal information, business records containing personal information, BAS documents and myGovIDs.

Check your physical records are protected

Worrying about the physical security of your information may seem old-fashioned, but ensuring your business premises and systems are protected is vital.

ID criminals can obtain invaluable business and client details simply by breaking into your premises and photographing business records or employee details.

To combat this, fit physical barriers such as window and door locks, file copies of documents and ID information in lockable storage units, and ensure you install an appropriate alarm system to protect against intruders.

Securing your business online

Strong online security practices are also essential to protect information about your business, employees and clients from ID thieves.

If you hold financial records, confirm the identity of anyone requesting changes to their information and fully verify new payment details. Ensure your employees are trained to identify suspicious requests for personal information, or emails that may link to fake websites built to capture passwords.

It’s also important to secure your email account through multi-factor authentication or a strong, unique passphrase.

Good online security also means changing all the passwords used in the business on a regular basis and ensuring they are not easy for potential thieves to guess. Updated security and anti-virus software needs to be installed on all devices used by the business and by any employees working from home.

When sourcing business software and support (such as payroll services), ask vendors about their system security, including where the data will be stored and their security certification and support services for data breaches.

Reporting cybercrime to the ATO

While your business’s reputation can take a real battering if you don’t have adequate protections for both your own and your clients’ ID information, there are also regulatory requirements when it comes to data breaches.

Businesses have an obligation to report all tax-related security issues to the ATO.

To help you manage your obligations to protect identity information, the ATO has an online security self-assessment questionnaire small businesses can use to check their performance in this area. This can help you identify which online security measures you are getting right as well as potential areas for improvement.

Businesses also have data breach reporting obligations under the Privacy Act. The Office of the Australian Information Commissioner has helpful tips on how to create a solid data breach response plan.

Protect your myGov ID

The government’s push for more online transactions means more and more personal and business information needs to be protected. If you or a key employee accesses the government’s online services on behalf of your business, you will need a myGovID.

This new digital identity key uses encryption technology to protect your identity when interacting with government agencies online. To strengthen protection of your identity and business information online, you can now set up face verification on myGovID.

If you are aware or suspect your myGovID has been inappropriately accessed, you need to report it immediately.