Post-JobKeeper World – Why we should not be alarmed

At WSC Group, we are processing our final JobKeeper payments for clients who are still claiming JobKeeper. There is some apprehension, of course, across our community as to what will happen with the finishing of these JobKeeper payments, which are now mainly confined to affected arears such as tourism and events management.

There has been some criticism that Jobkeeper payments have ceased, however, the Federal Government likely had not choice due to the ballooning budget deficit and the need to, in the medium term, ensure that economic resources are diverted to sectors in the economy which are growing.

What I am saying does not sound compassionate from a personal point of view, and we are very much trying to assist our clients in the effected sectors as much as possible. Unfortunately, we may have a scenario where international boarders are closed for another two (2) years so business need to readapt to cater for the new world we live in.

You are probably wondering why there has been such a boom in property prices given our economic activity is still fairly low and with many businesses still struggling with the current economic situation. Although I do not have all the answers for this, I can point towards a few factors which are driving this current market boom in the residential housing market (as opposed to units).

1. If you are going to be locked down, you may as well have a backyard to walk around in as opposed to being locked up in a unit.

2. We are seeing may ex-pat clients coming back from overseas who have not being paying tax for 15 years and are cashed up for property purchases (houses).

3. Given the lockdown in Victoria last year, there seems to be a move of people to south-east QLD with both houses and rentals in short-supply.

4. Given the number of ex-pats abroad and the current world situation, there should be a large influx of people back to capital cities in the coming year resulting in pressure on housing prices

5. Sub-2% interest rates are also making property affordability the best it has been in 25 years.

6. There is a new felt love for regional areas and considering that many people don’t need to attend their office for work, there has been a once in a 15-year boom in regional areas (speaking from personal experience, it only happens once every 15-years).

Therefore, in the next 12-months, we should expect the following:

1. Continual strength in property prices until the reserve bank finally puts up interest rates

2. Capital inflows as ex-pats look to move back to Australia, particularly Sydney and Melbourne.

3. Flat employment growth as some industries restructure which may take another 3-5 years to recover.

Opportunities

The same opportunities still as compared to the pre-covid economy in that so may 60+ year old business owners are wanting to retire, providing great opportunities for vendor-financed business purchase opportunities. Many of our astute clients are looking at businesses to buy and some are able to negotiate good terms of purchases.

In addition to this, there is a rationalisation of businesses meaning that if you are previously run a medium-sized business, this business is likely to continue to grow. With the growth, however, comes the ever present challenge of appropriate staff to assist business owners in running their businesses as well as the normal angst that business owners experience with customers, suppliers and staff. It seems that the larger a business gets, the greater the problems are compounded.

Anyway, lots of exciting challenges to overcome. If you think that the challenges are going to get less, I am sorry to inform you that this is not the case.

By brainstorming and working through our problems, should enable us to stay ahead of the looming challenges and I would encourage you all to put time aside for big picture thinking either in the business that you run or encouraging your boss to do this in the business you work in.

Tax Variations

We will be sending out the appropriate checklists in relation to tax variations on the second week of April. Remembering, if you have not completed a tax variation before, we normally work with you to have this completed by the 31 May.

Tax Planning

Please note that the team will be contacting you in relation to your tax planning meeting, if applicable, by 30 April. There is a lot to think about this year in terms of asset purchases (full deductibility for cars limited to $59k), wrap up of the PAYG Cash Flow Boost and JobKeeper and the writing-off of pooled assets.

All the measures announced significantly reduce taxable income so there may be a opportunity to adjust quarterly instalments and personal tax liabilities.

2020 Tax Returns

If you have not sent in your information for your 2020 tax return, please note that we will need this information by 16 April in order to ensure that we meet ATO lodgement deadlines. Remember, the ATO, the year after an economic crisis, tighten up outstanding payments and we are predicting less leeway be given to our clients in the coming year, so it is vital that you stay on top of your lodgement obligations.

Cyber Crime

Unfortunately, phishing emails, which have been used by cybercriminals to steal financial details from Australians for a number of years, are continuing to become increasing sophisticated. In order to protect your information, please be assured that WSC Group is continually working with our IT support team to increase security measures of our systems. However, we also recommend that you make yourself familiar with what you can do to protect yourself from phishing attempts as outlined by the Australian Cyber Security Centre.