Leading up to the 2019 festive season, numerous Bills passed through the parliamentary process and became Acts (legislation); these legislative changes affect a wide range of personal finance areas.Notably, regardless of whether you are a wealth accumulator or retiree, you may find that one or more of these legislative changes are of relevance to your financial situation, goals and objectives, now and into the future.

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What will markets bring in 2020? It has been a tumultuous time for our country and our thoughts go out to those that have lost homes and loved ones due to the bushfires that have engulfed Australia.

Calendar year 2019 saw most asset classes generate very strong returns with many delivering double-digits returns. Australian equities, as measured by the S&P/ASX 300 Index, returned 23.8%, while global equities, as measured by the MSCI World ex Australia Index AUD, returned 27.6% for the year. At the other end of the asset classes spectrum, bonds also posted strong returns with Australian bonds, as measured by the Bloomberg AusBond Composite 0+ Year Index AUD, returning a solid 7.3% for the year. These returns were generated despite concerns over US-China trade tensions, Brexit, arguably high asset prices and mixed economic news.

A key factor contributing to this market strength has been the fact that interest rates appear to be on hold in the US and possibly heading lower in Australia. This is making investing in growth and interest rate sensitive assets, such as property and infrastructure, attractive when compared to holding your money in cash. Additionally, some of the economic indicators that were trending down, such as the PMI (Purchasing Manager’s Index), seem to have stabilised and the consumer seems to be holding up.

In 2020 we are paying particular attention to three key themes …

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In 2018, the ATO issued a controversial draft ruling which took a very strict stance on the four-year time limit for claiming input tax credits and fuel tax credits. The ruling had been used by the ATO to deny input tax credits and fuel tax credits where the Commissioner makes a decision on an objection or amendment request outside the 4-year period. However, a recent observation by a judge ruling on a related matter has put the ATO’s strict stance in doubt and as a result, the ruling has been withdrawn. The ATO has recently withdrawn Draft Miscellaneous Taxation Ruling MT 2018/D1 on the time limit for claiming input tax credits and fuel tax credits. Generally, under s 93-5 of the GST Act, the right to claim an input tax credit expires after 4 years and commences on the day on which the entity was required to lodge a return for the tax period to which the input tax credit would be attributable. Section 47-5 of the Fuel Tax Act has a similar provision which limits claims to 4 years after the date which taxpayers were required to give the Commissioner a return.

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As bushfires continue to rage across the country, support for devastated communities are coming from all sides and the ATO is no exception. It has announced automatic deferrals for lodgement and payments for taxpayers in impacted postcodes in the states of NSW, Victoria, Queensland and South Australia. BAS deferrals up to 21 March 2020 may be available depending on the area and additional postcodes may be added to the list once damage assessments have been finalised. As the bushfires that devastated large swathes of the country continue on their destructive path leaving shatter communities in their wake, there are glimmers of hope with efforts to support and rebuild these communities starting to gather pace. In conjunction with these efforts, the ATO has announced automatic deferrals for lodgements and payments for taxpayers in impacted postcodes in the states of NSW, Victoria, Queensland and South Australia.

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Leading up to the 2019 festive season, numerous Bills passed through the parliamentary process and became Acts (legislation); these legislative changes affect a wide range of personal finance areas. Notably, regardless of whether you are a wealth accumulator or retiree, you may find that one or more of these legislative changes are of relevance to your financial situation, goals and objectives, now and into the future. In this article, part one of a two-part series, we cover legislative changes that fall under the Government’s Health and Treasury portfolios: Health portfolio, The Pharmaceutical Benefits Scheme (PBS) and the PBS Safety Net threshold amounts. Treasury portfolio Super Guarantee contributions and salary sacrificing arrangements, Non-arm’s length income (NALI) and limited recourse borrowing arrangements (LRBAs), and Redundancy and early retirement scheme payments eligible for concessional tax treatment.

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“Downsizer” contributions let you contribute some of the proceeds from the sale of your home into superannuation – but there are several important eligibility requirements. Learn which areas the ATO says are tripping up superannuation members and ensure you get it right. Are you thinking about selling the family home in order to raise funds for retirement? Under the “downsizer” contribution scheme, individuals aged 65 years and over who sell their home may contribute sale proceeds of up to $300,000 per member as a “downsizer” superannuation contribution (which means up to $600,000 for a couple). These contributions don’t count towards your non-concessional contributions cap and can be made even if your total superannuation balance exceeds $1.6 million. You’re also exempt from the “work test” that usually applies to voluntary contributions by members aged 65 and over.

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Death, destruction, loss of trading and big insurance claims from the devastating bushfire crisis won't necessarily hit gross domestic product, according to JPMorgan. Sally Auld, JPMorgan's chief economist, has called into question the wider effects of the bushfires on the economy given the regions that have been affected. The economic impact of the bushfires may not be as big as first thought according to JPMorgan. She noted that the negative, direct effects of such disasters on GDP operate mostly through production lost from disruption to infrastructure and productive capital. However, at this point most of the fires have not been in areas that are significant production contributors to GDP. "Significant bushfires, almost by tautology, occur mostly in non-productive, non-residential and non-cleared land," Ms Auld noted. While forests, animals and orchards have been damaged, it is worth noting that while total agriculture and forestry production fell 6.1 per cent in 2019, it only took 0.1 per cent off GDP over the year.

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As 2020 begins, we hope all our clients have had a safe and happy new year. Sadly, we know that many people and communities are and have been impacted by the devastating bushfires currently affecting much of Australia.

Understandably, the immediate concerns remain on community safety, food and shelter. In the weeks and months ahead, it will be the time to focus on supporting and helping communities to rebuild.

 Salt will provide free consulting services to help any businesses referred to us to assist them in their business recovery.

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With all the pandemonium of the holiday season and the end of the year rush, your super is probably the last thing on your mind. However, this is precisely the right time to think about implementing some strategies to increase your super for the coming year. With some simple, no-cost strategies such as finding your lost super, consolidating your super accounts, and making sure you’re in a fund that’s performing well, you will be well on your way to a comfortable retirement. It’s coming up to the end of another year, among all the chaotic festivities, our thoughts may turn to goals and resolutions achieved during the year. Career successes, reaching fitness goals and life milestones are all causes for celebration. While most of us wouldn’t even think twice about our superannuation, now is the perfect time to put some resolutions in place to increase your super for the new year. Afterall, it is what we’ll be relying on in retirement, and even small improvements now could mean extra luxuries later.

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