NSW State Budget 2020-21

NSW State Budget 2020-21

The New South Wales (NSW) Government delivered the 2020-21 State Budget on 17 November 2020. The Budget forecasts a deficit of $16.0 billion in 2020-21 and a return to surplus by 2024-25, with net debt to return to around 7 percent of Gross State Product over the medium term.

Tax-related announcements include:

  • Reduction in payroll tax from 5.45% to 4.85% from 1 July 2020 to 30 June 2022, which is less than or equal to the lowest headline rate across all Australian jurisdictions (except for Queensland which has a rate of 4.75% for employers or groups who pay $6.5 million or less in wages).
  • A permanent increase in the payroll tax-free threshold to $1.2 million (up from the already introduced increased threshold of $1 million) from 1 July 2020.
  • A $500m “Out and About” program to stimulate spending in the local economy – including restaurants, visitor sites, and cultural attractions. Every adult resident will be eligible to claim up to $100 in digital vouchers for spending on entertainment and eating out.
  • For those small and medium businesses who do not pay payroll tax, each business will have access to a $1,500 digital voucher to be used towards the cost of any government fees from April 2021 to 30 June 2022. This will be available through the MyService NSW Portal and will operate as a rebate, where a claim can be made after fees have been paid.
  • Reform of stamp duty and land tax – the Government has announced a consultation process to tackle inefficient property taxes and will seek feedback from the public on a possible transition away from the current transfer duty and land tax regimes to a single property tax model, such as an annual property tax, that will reduce the up-front cost of acquiring homes and other properties.

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Tax – What The 2019 Federal Election Means For You!

Tax – What The 2019 Federal Election Means For You!

There is only a short time before the Federal Election on 18 May 2019, and there’s a lot of wild speculation and “fake news” in the media.

We’re not trying to recommend who you should vote for, but instead we believe that it is vital that our clients understand how they will be affected by the result of the Election.

Here are some of the key ways you may be impacted:

  • The amount of personal income tax and Medicare levy you will pay
  • The amount of capital gain that will be subject to personal tax
  • Opportunity to continue to convert excess franking credits into cash tax refunds
  • Altering the tax treatment of trust distributions
  • Ability to offset prospectively investment losses against other income (i.e. negative gearing)
  • Ability to claim a full deduction for the cost of managing your tax affairs; and
  • Remove deductibility on personal superannuation contributions and lower the annual concessional contribution cap

A note of caution here, as there is little detail associated with some of the proposed changes. While we have listed below the main policy announcements, the detailed legislation might differ substantially, so we encourage you to be mindful of this!

This is what we know so far (at time of writing):


  1. A tax on those receiving distributions through Family or Discretionary Trusts at 30%. These are small business structures, and this will affect many business owners.
  2. Doing away with the cash refunds for excess franking credits through a SMSF.
  3. Increasing the personal tax rate in the top tax bracket by an additional 2%.
  4. Maintaining a company tax rate at the full 30 per cent (%) for companies with turnover exceeding $50 million.
  5. Higher personal tax rates at the top end and lower personal tax rates at the lower end (i.e. less than $125,000).
  6. Limit negative gearing on investment properties to newly built residential dwellings from a yet to be determined date after the election. Property investments made before this date will not be affected as they will be grandfathered. The ability to negatively gear other asset classes will also be restricted. If the total of the interest and deductions related to investments exceed the investment income, the excess will not be able to be used for offset against other non-investment income such as salary and wages. This excess will need to be carried forward for offset against future investment income or capital gains. It will apply on a prospective global basis to every taxpayer. In other words, it will apply to property and shares alike (and any other relevant asset classes) and it will apply by looking at a taxpayer and assessing their overall investment income as measured against their overall investment interest expenses;
  7. Providing landlords who build new residential dwellings an annual subsidy for 15 years of $8,500 a year if the home is let out at 20 per cent below market rates;
  8. Much higher capital gains tax when you sell an investment property or other taxable asset due to the halving of the Capital Gains Tax (CGT) discount to 25 per cent for individuals. All investments made prior to 1 January 2020 will be fully grandfathered, so the new rules won’t apply to them.
  9. A new deduction (the Australian Investment Guarantee) that will enable a 20 per cent deduction in respect of the purchase of any eligible asset worth more than $20,000.
  10. Capping of deductions for managing tax affairs to a maximum of $3,000. This cap will impact individuals, trusts and partnerships. A carve-out is to apply for individual small businesses with positive business income and annual turnover up to $2 million.
  11. Whistle-blower rewards for tax evasion; and higher penalties for tax exploitation promoters.
  12.  Superannuation:
    • Oppose catch up contributions on concessional contributions and tax deductibility on personal superannuation contributions;
    • Lower annual non-concessional contribution cap to $75,000 and reduce high-income super contribution threshold to $200,000 so that more Div293 Tax will be paid by higher income earners;
    • Increasing the superannuation guarantee to 12 per cent when fiscal circumstances allow;
    • Phase out the $450 minimum monthly threshold to receive super guarantee contributions, as part of a broader women’s super-security package; and
    • Higher penalties for employers not paying SG.



  1. Companies with a grouped turnover of less than $50 million have a reduced company tax rate of less than 30 per cent. Tax cuts already enacted as follows:
    • 5 per cent 2019-20 income year
    • 26 per cent for the 2020-21 income year
    • 25 per cent for the 2021-22 income year and for subsequent income years

The government will no longer proceed with implementing its plan to have a 25 per cent tax rate apply to all companies;

  1. The government has legislated changes to personal income tax thresholds, as announced in the 2018-19 federal budget. Personal tax changes legislated are to be rolled out in three tranches over the next seven years as detailed in the table above;
  2. No change to current arrangements regarding negative gearing of investment property;
  3. No change to the CGT discount, which currently sits at 50 per cent for individuals;
  4. No change to the current arrangements regarding trust distributions from discretionary trusts. Currently distributions are subject to tax in the hands of beneficiaries at marginal income tax rates, which could result in a lower effective tax rate for those distributions;
  5. No change to the current arrangements regarding imputation, in particular the full refund of excess imputation credits. This means that excess imputation credits can be converted into cash refunds;
  6. Superannuation – While not directly a tax policy, the government is proposing a three-year audit cycle for SMSFs that have a history of good record-keeping and compliance;
  7. The $30,000 immediate asset write-off is available to 30 June 2019. There is no certainty beyond this date; and
  8. Establish a Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman’s office to provide support and advice about the Administrative Appeals Tribunal process. It will also create a dedicated Small Business Taxation Division within the AAT which will include a supporting case manager, a standard application fee of $500 and fast-tracked decisions to be made within 28 days of a hearing.


It’s hard to imagine not being impacted in any way.

There are many other election issues that will influence a voter’s preferences and, at the end of the day, it is about making informed choices.

Please contact us anytime if you would like our advice (before and after the Election) about these proposed tax policies and how they may affect you. We’re here to help you!

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Economic Snapshot – FY17 & Outlook for FY18

Economic Snapshot – FY17 & Outlook for FY18

In Summary

If ever investors wanted proof that uncertainty and political events in markets is a fuse to volatility but that economic fundamentals win, 2016/17 would be a good case study. Despite fears of an uncertain geo-political world results were strong in all equity markets – the area volatility excels.
Financial markets commenced 2016/17 in the wake of the Brexit result just a few days before and offered a frightening outlook. At the same time we had looming elections in Europe, where extremist candidates seemed to be making headway, as well as an unheralded US Presidential election with Clinton vs Trump. As things turned out, the European elections proved more benign than feared, the US election delivered one of the most startling results in decades and markets responded favourably through economic policy stimulus. Who would have imagined that?
After all the turmoil, global equity markets commenced a sustained rally that delivered strong double digit gains for the year as a whole. Other risk (equity) assets, such as high yield bonds, also performed very well. However, government bond markets had a poor year and bond-sensitive equities, such as AREIT’s [Australian Listed Property], underperformed with negative returns. In general these developments were driven by investors chasing the “reflation trade” – that is, a view that the world economy was finally entering a period of better growth with moderate inflation.

As 2017/18 starts, risk assets are looking less attractive than a year ago and markets are facing up to the end of the global interest rate easing cycle. From here on, interest rates go up rather than down, with implications for all asset classes, but most especially bonds and currencies. At the same time, the pace of global growth looks set to slow down, thereby providing less support for profits and cash flows. Given all this, equity markets sitting on high valuations look vulnerable to many analysts.

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Economic Snapshot – Annual 2016 & Beyond

Economic Snapshot – Annual 2016 & Beyond

This economic snapshot  covers 2016 with some perspective on how markets performed and why, with an outlook for the year ahead.

In summary

2016 was a dramatic year for the world’s financial markets. The year started with collapsing oil prices, fears of recession and deflation, equity markets falling sharply and investors favouring bonds and what might be termed “expensive defensives”.

By the end of the year, we had rising oil prices, renewed optimism about US growth and inflation, cyclical equities rallying, bonds selling off and defensives falling out of favour. In between we had on then off again OPEC deals, we had Brexit and we had the USA Trump victory which threw most fund managers. In summary despite all the noise and surprise political outcomes, we had a good year for diversified portfolios with positive returns recorded by a number of asset classes in 2016. This end result rewarded patient investors and masked the considerable within-year volatility.

2017 looks like being another year of volatility (the new normal) although somewhat surprisingly, forward looking expectations for asset classes have more upside room than at the beginning of 2016. This is an encouraging scenario built on economic rationale not geo political activities and market sentiment which, of course has a history of overturning expected outcomes in the short term. Snapshot comments cautiously on the outlook in the second half of this update given the interest of many readers for asset class outlooks.

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Economic Snapshot – September-October 2016

Economic Snapshot – September-October 2016

In summary

September was a frustrating month for investors in global financial markets. The first half of the month saw both bonds and equities retreat on concerns the Federal Reserve would lift interest rates at its meeting on the 20th – 21st. As things turned out, the Reserve left the cash rate unchanged and revised down its forward profile of interest rates. The markets were reassured by this, leading bonds and equities to recover ground lost earlier in the month. This see -saw effect is now a recurring theme as markets dance to the tune of the interest rate outlook.

Here in Australia the Reserve Bank has maintained the cash rate at 1.5%, noting the economy is growing at a moderate pace but inflation is low and likely to remain so for some time. Once again, the Reserve Bank noted that an appreciating A$ could complicate the adjustments the economy needs to make.
The Bank of Japan announced a new dimension to its QE program aimed at generating a positive yield curve. Despite the commentary it appears markets remain sceptical about this move.
Meanwhile in Europe the European Central Bank [ECB] left its monetary policy stance unchanged at its meeting in early September. Financial markets interpreted the accompanying statement as a signal the ECB would start to wind back its QE programme. This contributed to nervousness and volatility, as did speculation about the solvency of Deutsche Bank later in the month.

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