Business Finance Update - June 22
We have just finished another financial year, I hope your company had a good finish to it and that FY23 has even more growth, opportunity and profit for you. As we head into a new year, with a very real possibility of recession in the near term, I would strongly encourage you to review your business finances and if you do not already have a working capital facility (overdraft, debtor finance, line of credit) to consider setting one up now, just in case. If the economy does dramatically slow down, which I believe is the likely outcome, at least then you have a working capital 'safety net' to help your business keep running. If things stay the course, then you have an extra level of capital that you can use to hire more staff, in marketing, general expenses, or not even use, and the beauty of many working capital products is you only pay for what you use. Planning your working capital requirements (through a budget with your accountant, or with Skyward Financial who can give you a free template, just reply to this email and ask for it) ahead could be the difference between your business stalling, growing, missing opportunities or hitting a wall. Last minute money is the most expensive kind of money, plan ahead now for the up coming financial year. We are here to help, just reach out. The key business, finance and tax stories making news right now are:
Wages growth rises to 2.4%
Job market tightens further
ATO issues tax return warning
Car market hit by supply issues
Read more below.
Businesses gave their employees an average wage rise of 2.4% in the year to March, according to the latest data from the Australian Bureau of Statistics.
Wages growth has now increased for five consecutive quarters, albeit from a very low base:
December 2020 = 1.4%
March 2021 = 1.5%
June 2021 = 1.7%
September 2021 = 2.2%
December 2021 = 2.3%
March 2022 = 2.4%
With the job market continuing to strengthen (see next story), wages are expected to keep rising, according to the minutes of the Reserve Bank’s June monetary policy meeting. "Information from the bank's liaison program continued to indicate that wages growth would increase from the low rates of recent years as firms compete for staff in a tight labour market."
What a difference a year makes. In May 2021, the national unemployment rate was 5.1%. But by May of this year, it had fallen to 3.9%, according to the Australian Bureau of Statistics. The underemployment rate also fell during that 12-month period, from 7.5% to 5.7%. In more good news, the participation rate (the share of adults who either have a job or who are looking for one) rose from 66.2% to 66.7%. So there are more people in the labour market, more people in work and fewer people out of work. That’s encouraging for employers, because it means more consumers with the ability to spend money. The Reserve Bank expects "further declines in unemployment and underemployment" in the months ahead, according to the minutes of its monetary policy meeting from earlier this month. Want to expand? Call me for a loan
The Australian Taxation Office has said it will pay close attention to the work expenses that people claim in their tax returns. Assistant commissioner Tim Loh said if you claim more working-from-home expenses than in a typical work year, the ATO would expect to see a corresponding reduction in working-from-office expenses such as clothing, parking and tolls. Mr Loh also said that if your working arrangements for this financial year were different from those of the previous year, you can’t just copy and paste your FY21 claims for FY22.
"If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense,” he added. “For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.” To claim a deduction for a work-related expense:
You must have spent the money yourself and not have been reimbursed
The expense must directly relate to earning your income
You must have a record to prove it (usually a receipt)
Demand for new vehicles is outstripping supply, according to the latest monthly sales report from the Federal Chamber of Automotive Industries. A total of 94,383 new vehicles were sold in May, which was 6.4% fewer than the year before. FCAI chief executive Tony Weber said the reduction was due not to falling demand but because global supply chains are struggling to recover from pandemic impacts. “The global automotive industry continues to be plagued by a shortage of microprocessor units and shipping delays. This issue is not unique to Australia," he said. “Car makers continue to report high demand across dealer showrooms and online marketplaces. Pandemic interruptions continue to impact manufacturing and conflict in Ukraine has disrupted vehicle component supply. Monthly sales figures are also dependent on shipping arrivals which continue to be uncertain.” The top five models in May were:
Toyota Hi-Lux (5,178 sales)
Toyota RAV4 (3,925)
Ford Ranger (3,751)
Toyotas Corolla (3,310)
Toyota Landcruiser (2,667)