What happened?

In a shock result, Scott Morrison and the Coalition have retained power and are likely to achieve a majority in the lower house, with five seats yet to be finalised. The Coalition achieved a 41% primary vote in an election that everyone had them losing, with Labor only achieving 33% primary vote. Queensland turned blue which caught many by surprise in light of the highly favoured state Labor government, whilst Victoria didn’t turn red enough to secure Labor victory.

How did it happen?

The analysis is ongoing, but we can point to a few pretty logical conclusions:

Too much too soon – only a government already in power would campaign on bold and new policies, and only someone ill-advised would campaign on more than one or two major messages, but Bill Shorten and the Labor party managed to do both. We can see why these occurred given the expectation they would win big and perception that voters wanted change. However, the messaging ultimately confused voters and the big/bold new policies scared voters away. In stark contrast, Scott Morrison and the Coalition campaigned on one message (ie. “a fair go for those that have a go”) with one new policy (tax cuts for all). Simplicity clearly resonated.

Alienation and division – too many of Labor’s policies alienated and divided larges sections of the voter base. Franking credits (retirees), negative gearing (anyone with an investment property, construction workers), climate change (higher energy prices in the near term, mining job losses), and higher wages / no corporate tax reform (less jobs). When you add all those together, it goes close to explaining the 66% of people who didn’t vote Labor. We’re not saying some of those policies don’t have long term merits or could be better represented with some adjustments, but the quantum scared plenty of voters away.

Preference votes – this largely explains why Queensland turned blue (so close to State of Origin), with United Australia Party and Katter Party preferences going the way of the Coalition. When we look at the voter base, many Queenslanders rely on the mining sector for work and plenty of self-funded retirees south of the border move to Queensland for retirement. Labor’s climate change agenda directly impacted the Adani coal mine in northern Queensland which turned voters against them.

Scott Morrison’s US style campaign – although many Australian’s fail to understand that our political system puts the party first not the individual (unlike US presidential campaigns), Scott Morrison very cleverly campaigned by himself and didn’t allow any of his front benchers to speak for the party during the campaign. This meant voters could get closer to him and that the messaging was very clear. When too many people at the top speak, the messaging almost always gets mixed.

Economic backdrop – the Australian economy continues to weaken with inflation remaining weak and unemployment now starting to increase. Consumption is too low, as is wages growth, and the household budget is stretched under mortgage stress and higher household expenses (energy, private health insurance, school fees). In addition, the housing market continues to weaken affecting sentiment and the labour market. With that backdrop in mind, you have an incumbent government which earlier in the year announced a budget surplus much sooner than expected, and one campaigning on tax cuts for all, versus a challenger campaigning on plenty of change which in the short term may have led to job losses, higher energy prices, less investment in residential property, and lower ownership of franked Australian shares. We’re not saying these would’ve happened, but that’s what the electorate believed.

What does it mean?

There’s three main takeouts from the result of the weekend’s election:

The lower house – the Coalition will lead the lower house with majority, and may even end up with a clear majority, which would allow them to appoint their own speaker whilst retaining the numbers on the floor of the house. This would give them clear passage in the lower house without having to rely on deals with the smaller parties. Some might argue that’s too much power, but it means a government can finally be decisive and not have to cut ridiculous deals that largely only advantage a tiny part of the population at the expense of the rest. The Senate is likely to remain messy, so the balancing of power remains.
The Labor party – with Bill Shorten having stepped down as the leader of the Labor party, the party will need to appoint someone to fill the big hole left considering Labor was very united in Shorten as their leader. Whilst there are plenty of willing and qualified people to fill the role, that person’s job is made all the harder by virtue of the fact that voters made it very clear that the Labor policy agenda was wrong. The change required on the policy front is enormous, in addition to electing a leader who appeases both the right and left factions of the party.
The RBA – their job has possibly been made somewhat easier in that they would prefer to not have to cut rates any further. It remains to be seen how supportive the Coalition’s policies will be on the economic front, but both the housing market and the share market will get a free kick out of the Coalition win, helping lift sentiment, whilst the Coalition’s majority in the lower house should also provide a much needed lift in business confidence and sentiment, which may result in greater private sector investment and less pressure on the labour market. Time will tell, however, the recent uptick in unemployment means that the RBA has seen all the pre-conditions achieved for a rate cut (low inflation, weak labour), which the market now expects in June and another one in the 2^nd half of the year.

Do I need to re-think my portfolio?

The answer is broadly no, given no changes to franking credits or negative gearing. However, we’re not ones to encourage complacency, and we remain as active as ever in assessing and interpreting changes to information, whether they are Australian recession, Brexit, trade wars, etc. The main tenets remain:

Diversification – the only free lunch
Don’t over stretch for income or for growth – over-stretching ensures pain
Rebalance and reassess – be willing to take advantage of opportunities, flexibility is important

Last night the Treasurer, Josh Frydenberg, handed down the Federal Budget 2019-20. Whilst some would suggest that this a typical pre-election budget, there are some significant benefits for the majority of our clients.

Forecast Surplus

The most significant announcement was that the budget is “back in the black” with a forecast surplus in the 2019/20 year of $7.1b. This is significant as it has been a long time coming and amounts to a significant interest bill reduction to be able to fund essential services, infrastructure projects and help expand the overall economy to the benefit of all.

Other significant changes in the Federal Budget

Other significant changes that will impact people, are lower tax rates, an increase in the Medicare low income threshold, and the expansion of the instant asset write off for most businesses. All of which should have a positive impact on a slowing economy and allow Australia to maintain a competitive tax position in a Global economy where countries are increasingly competing for our most talented individuals and businesses.

Professionals Tax Cuts

Australians are able to earn more and keep more of what they earn, and even professionals on higher incomes can make the most of this.

The highest tax band has been expanded to incomes over $200,000, up from those over $180,000. This means that all taxpayers on salaries between $45,0001 and $200,000 would be taxed at the lower rate of 30 per cent.

Good news for Businesses and Business Owners

The good news for businesses is that more will be eligible for an instant asset write-off on purchases valued at up to $30,000, which will also see substantial tax cuts introduced.

Originally introduced as a temporary measure for purchases under $25,000 in value, then increased to $25,000, it has now been increased again to $30,000
These eligibility requirements have been updated to businesses with an annual turnover of up to $50 million which enables 220,000 in addition to access the write-off
The government also noted that it has “legislated to bring forward the increases to the unincorporated small business tax discount rate, rising from 8 per cent currently to 13 per cent in 2020–21 and to 16 per cent from 2021–22 (up to the existing cap of $1,000)
The government said it would direct $525 million to ‘upgrade and modernise’ Vocational Education and Training (VET)
Further resource was allocated to establishing Training Hubs to facilitate better connections between employers and school students, targeting skills shortage

Additional business incentives

In addition to the asset write-off for businesses, other incentives that are of benefit to your business include:

The roll out of e-invoicing with the aim of reducing transaction costs by $28 billion over the next decade
Reducing the number of BAS GST questions by education to streamline GST reporting for small businesses
$60 million in funding for export development grants
Reaffirmed commitment to the establishment of a $2 billion Australian Business Securitisation Fund which will focus on enhancing small businesses’ access to finance

Superannuation

Unlike many previous budgets there were fortunately not many changes to superannuation. I say fortunately as on most previous occasions there has usually been a sting in the tail. However, this time there appears to be only positive news for those 65 or 66 years of age who will no longer have to meet a work test to be able to contribute to super. Also, the spouse contribution rules will be extended to those between ages 70 to 74.

Positive news for South East Queensland

Finally, for those of us who live in the SE corner there was some very positive news on the infrastructure front. Additional funding for the M1 corridor, light rail expansion on the Gold Coast and fast rail business case for Brisbane to Gold and Sunshine Coasts.

Keep up to date

It will be interesting to see how Labour responds in coming days as it is going to be difficult to explain away the negative effects of their proposed franking credit changes, capital gains tax and negative gearing proposed changes. With an election just around the corner we will update you in coming months on how and when these changes will likely impact you should there be a change in government which the poles are currently predicting.

Quill is a team of financial specialists, working with professionals and entrepreneurs to take their financial and business growth to the next level. Get in touch with the Quill team today.

Single Touch Payroll (STP) is currently being rolled out across Australia by the ATO and requires employers to report salaries and wages, PAYG withholding and superannuation directly to the ATO each time they pay their employees.
From 1 July 2018 STP is mandatory for employers with 20 or more employees and will become mandatory for employers with 19 or less employees from 1 July 2019.

Although the deadline date of 1 July 2018 has already passed, the ATO has issued deferrals to most software providers, e.g. Xero has an automatic deferral until 31 December 2018. If you have not yet registered for STP, it would be best to contact your provider to discuss their deferral program.

How do I prepare for the Single Touch Payroll registration?

If you are currently reporting to the ATO through paper and do not currently have a Single Touch Payroll compliant payroll solution, you will need to register as soon as possible to avoid penalties relating to non-lodgement.

If you are already with a payroll software provider, you will need to ensure the following items are correct and up to date before registering for STP:

• Ensure your organisation details such as your ABN, addresses, phone numbers etc. are all up to date.
• Ensure all employee details such as tax file numbers, date of birth, addresses etc. are all correct and up to date.
• Check that you are paying your employee’s correctly and that their super entitlements are calculated correctly. If they are under an award it would be best to review the up to date information under their award and correct where necessary.
• Ensure all payroll staff are aware of this change.
• Prepare a headcount and confirm you have over 20 employees as at 1 April 2018.

How will Single Touch Payroll impact my business and reporting?

Your payroll cycle will remain the same and your super will still be reported and paid through your SuperStream provider. However, you will be reporting your super directly to the ATO each time you run payroll through your payroll provider rather than on a monthly or quarterly basis. This allows the ATO more visibility of an employer’s super obligations and payments.

Once you have reported your weekly wages and PAYG through Single Touch Payroll, the ATO will be able to automatically pre-fill these amounts into your monthly or quarterly Business Activity Statements at W1 and W2. Click here to read about the penalties involved in late BAS reporting.

At the end of the financial year, you will not be required to issue payment summaries to your employees for the payments you report and finalise to the ATO through Single Touch Payroll. This will instead be made available directly to the employees online through myGov.

How can I find out more information?

Get in touch with us or give our office a call on 07 5528 2000 to discuss registration in more detail. At Quill, we are passionate advocates for all of our clients and our team is focussed on providing an experience, not just great service. As the largest multi-disciplined financial services practice on the Gold Coast, we provide a high touch personalised service delivered with competence, confidence and amazing results.

Alternatively, if you would like further information on this topic, you can visit the ATO website.

Changes to the ABN Lookup effective 31 October 2018 will see trading names disappear, be quick and register your business name before it’s too late.

Did you know on the 28 May 2012 Australian Securities & Investments Commission known as ASIC introduced a new business name register ASIC Connect, which superseded the previous state and territory registers? From this date, any new business name registrations could only be registered to a current ABN holder, enabling a visible link for business name registrations to be recorded under an ABN registration on the ABN Lookup website at https://abr.business.gov.au

With the introduction of the new national Business Names Register, the Registrar of the Australian Business Register known as the ABR also stopped collecting and recording business names registered for an entity or individual under the old state or territory laws along with unregistered names used for business purposes. Notice was then given to individuals and entities at that time that a ‘transitional’ period for the historical names, now referred to as an entity’s trading name would continue to be displayed in the trading name field only of the ABN Lookup.

Many years passed with the ‘transitional’ period end date now being confirmed as the 31 October 2018 meaning, after this date the Registrar will no longer publicly display the previously recorded trading names on the ABR’s ABN Lookup website.

What does this mean for your business name?

If you were to continue to use a trading name for business purposes rather than your legal name, or a business name that you had registered to your individual or entity’s ABN with ASIC, other businesses that you deal with will be unable to use the ABN Lookup website to verify your identity or confirm your GST registration status. You would also run the risk that another individual or entity may secure a name that you have traded as and have been known by for your entire business life.

How can you prevent losing your business identity? | Register your Business name

If you don’t already have one, you will need to apply for an individual or entity ABN with the Australian Business Register and complete a business name registration under your ABN registration with ASIC Connect or, alternatively give our office a call on 07 5528 2000 to discuss and we can complete the registrations for you.

There were a lot of small tweaks in the Federal Budget handed down on Tuesday.

One that has received scant attention so far is the confirmation of an intention to change the Centrelink assessment of lifetime annuities that have been given a fancy new name; Comprehensive Income Product for Retirement.

These CIPR’s are a tweak of an old product called ‘lifetime annuities’.

The way a lifetime annuity works is that you give an insurance company a lump of money, and they promise you regular income for as long as you live, but when you die, that income (and the asset) dies with you.

Before 20 September 2003, such annuities were exempt from the age pension assets test. Between September 2003 and September 2007 the Centrelink asset value was assessed at 50% of the amount invested, and then for new annuities purchased from 20 September 2007 onward, the full amount of the investment was counted as an asset, with annual reductions based on your life expectancy.

The 2018 Federal Budget announced a return to a partial exemption for such annuities, or CIPR’s as they will be known (as if the finance industry needed more acronyms!).

So, is the CIPR with a 60% asset test exemption good news?

We believe that it will be useful for some people. But not for all. Why?

Because while the reduction of the assessed value is attractive, the way the income is assessed is less attractive than in previous versions.

Take the example of a 70 year old single female, with $192,200 in super, owning her home, and with $30,000 worth of household contents and motor vehicles.

At present she would be entitled to the full age pension of $907.60 per fortnight, including supplements. That equals $23,597.60 per annum.

The $192,200 in super could buy her a lifetime annuity (current quote from Challenger Life) that pays $15,000 per annum. Using the current rules, the income test is done by dividing the purchase price by her life expectancy to come up with an annual ‘return of capital’ in this case $10,796 per annum. The balance is considered as ‘income’. In this example that would mean $4,204 of the $15,000 annual cashflow being assessed as income by Centrelink.

A single person can have $4,368 per annum of deemed income before the pension is reduced, so by buying an annuity under the existing rules she would still get the maximum age pension.

But come July 1, 2019 when the new rules are introduced, things will change. Under the proposed assets test, the $192,200 that she invests to buy that income stream would be assessed at only $115,320 (60% of the purchase price) which is great if she has a problem with the assets test. But then 60% of the income payments received will also be counted for the income test. This means that her deemed income goes from $4,204 under the old rules, (capital divided by life expectancy) to $9,000 under the new rules.

Because the maximum limit for income before the pension starts to reduce is only $4,368, she will get a reduced Centrelink age pension with this new product.

The reduction is $0.50 of pension for every $1.00 above the $4,368. Doing the math, we find that she would lose $2,316 per annum of Centrelink benefit.

So a single pensioner in that circumstance would be worse off under the new rules than the ones we currently have.

Not every situation is going to be the same. There will be some scenarios where the use of these new lifetime income products may be able to access some age pension where they may have previously been locked out by the current means testing.

Every case is different. We love analysing the personal situations of our clients to find the best combination of outcomes that is right for you.

So if you, or a friend is navigating the complex world of retirement investing, give your Quill Group adviser a call to discuss what is right for you.

Update: Applications for the Queensland Government Energy Efficient Appliance Rebate are now open. To apply, go to u

Although purchasing appliances that are more energy efficient can have a higher upfront cost, they can lead to long term saving because of the amount of money you will save on your electricity bill yearly.

Choosing an energy efficient fridge or washing machine can save Queensland households up to $50 a year, and energy efficient air conditioners could save up to $135 per year. $20 million has been committed under the Affordable Energy Plan for rebates on approved energy efficient appliances, in order to assist Queensland households to improve their energy efficiency.

What are the rebates available?

Rebates will apply to purchases on or after 1 January 2018 of the following household appliances:

$200 for a 4 star energy rated washing machine
$250 for a 4 star energy rated refrigerator
$300 for a 4 star energy rated air conditioner.

If you purchase a PeakSmart air conditioner, you can also apply for additional financial benefits available through:

Energex’s Positive Payback Program (for South East Queensland customers)
Ergon Energy’s PeakSmart Program (for regional Queensland customers).

Check with Energex or Ergon Energy regarding the eligibility criteria for these programs and to apply.

You can only apply for one appliance rebate per household, and proof of purchase will be required as part of your application.

Are you eligible?

Choosing your new, energy efficient appliance can be exciting, however it’s important to check whether you’re eligible for the rebate first.

The appliance must:
– Have at least a 4 star energy rating
– be new, and purchased on or after 1 January 2018
– be for the purposes of domestic or residential use in a Queensland residence.

Furthermore, for air conditioners;
– The 4 star energy rating relates to cooling
– free-standing portable air conditioners and evaporative coolers do not qualify for the rebate

Prior to completing the online application form you should review the Energy Efficient Appliance Rebate Terms and Conditions to determine if you are eligible for a rebate.

Please note this is limited to 1 rebate application per household, and funding is limited.

What do I need to provide?

–  your Electricity National Metering Identifier Account Number, located on your household electricity bill
–  your name, address, email and telephone number
–  the eligible appliance make and model (this may be located on your receipt/tax invoice or on your appliance user manual)
–  your bank account BSB and account number (for us to transfer the rebate into if your application is approved)
–  a copy of your Tax Invoice/Receipt (scanned and saved to your computer for upload during the application process).