Business Finance Update - Nov 22
Hopefully you are enjoying the Christmas party season, which is just about to kick off. In the meantime, here’s some interesting economics, business and tax news.
Household spending jumps 28%
Economy remains in growth mode
ATO chasing tax debts
Census reveals big rise in WFH
Read more below.
Australians continue to be in a spending mood, and businesses throughout the economy are benefitting. September was the 19th consecutive month in which household spending increased, according to the latest data from the Australian Bureau of Statistics. And the level of spending in September was 28.0% higher than the year before – with increases occurring in all nine categories monitored by the ABS:
Clothing & footwear 73.1%
Hotels, cafes & restaurants 60.6%
Recreation & culture 36.6%
Miscellaneous goods & services 24.1%
Furnishings & household equipment 11.9%
Alcoholic beverages & tobacco 4.0%
Spending also increased year-on-year in each state and territory:
New South Wales 37.7%
South Australia 15.2%
Western Australia 15.0%
Northern Territory 10.7%
There were three key pieces of data in the latest national accounts figures released by the Australian Bureau of Statistics. First, the data, which covers the 2021-22 period, shows that the economy grew 3.6%. That was the strongest growth figure in 10 years. Second, GDP per capita (i.e. after allowing for population growth) increased 3.1%. The last time Australia recorded a higher figure was in 1998-99. Third, labour productivity rose 1.1%. While that was lower than the figures recorded in FY21 (1.9%) and FY20 (1.5%), it shows that businesses are finding ways to get more value out of their workforce. Together, these data points suggest the economy is stronger than some negative media commentary might suggest. Meanwhile, Reserve Bank forecasts from earlier this month suggest the economy will grow about 3% during the 2022 calendar year, and then 1.5% in both 2023 and 2024. The unemployment rate is expected to remain around 3.5% until mid-2023, before increasing to around 4.25% by the end of 2024, as economic growth slows. I can help you finance new equipment
ATO has “resumed stronger actions” for businesses with tax debts The Australian Taxation Office has put small businesses on notice that it intends to collect unpaid tax debts and crack down on tax evasion. ATO second commissioner Jeremy Hirschhorn said small businesses were responsible for 65% of the $37 billion in collectable (i.e. not disputed) debt. Mr Hirschhorn said that while the ATO took a relatively relaxed attitude to debt collection during the pandemic, it had "resumed stronger actions for taxpayers resistant to managing their debts and engaging with the ATO". Small businesses that are struggling to pay their taxes should approach the ATO as early as possible, according to Mr Hirschhorn. Also, businesses should never ignore communications from the ATO as "that will raise a red flag". Mr Hirschhorn also said that while most small businesses try to do the right thing, there are some that deliberately evade taxes by participating in the shadow economy. As a result, one of the ATO's focus areas for the coming year will be to "improve small business tax performance".
A new batch of data from the 2021 Census, released earlier this month, has revealed a fascinating glimpse into Australia's workforce. The Australian Bureau of Statistics found that 23.8% of the people who worked on Census day worked from home, compared to only 5.2% on Census day in 2016. Historically, working from home meant farming, with the top five home-based occupations in 1976 being dairy farmers, tobacco growers, poultry farmers, rice growers and graziers. But in 2021, the top five were: business analysts, systems analysts and programmers; ICT managers; ICT network and support professionals; media professionals; and sales, marketing and public relations professionals. Given the rise in working from home, the share of people who drove to work in 2021 fell to 60.2% (from 68.4% in 2016), while the share of people who caught the train fell to 2.8% (from 8.0%). The Australian Bureau of Statistics believes the Census data reflects "a greater societal change toward more flexible working arrangements and a hesitancy towards coming into contact with others".