Ahead of the Curve
Consumer confidence lifts post-election amid hope of interest rate cut
30 May 2019
Scott Morrison’s surprise re-election and growing expectations official interest rates will be sliced has boosted the confidence of Australian shoppers as calls grow for more government spending to drive down unemployment.
The ANZ-Roy Morgan weekly measure of confidence, released on Tuesday, lifted for the second consecutive week to sit at its highest level since late April.These are just a few key points where SME owners can immediately apply to their tax returns.
Since the Coalition’s victory on May 18, consumer confidence has improved by 3.3 per cent with much of that increase occurring immediately after the election.
Despite the increase, it still sits around where it was a year ago.
head of Australian economics David Plank said apart from the election, consumers appeared to be anticipating a rate cut when the board of the Reserve Bank of Australia meets next Tuesday.
“Consumers are upbeat both about their personal outlook and the economy in general,” he said.
“The prospect of lower interest rates and what appears to be a major sentiment shift on the housing market are likely drivers of the positive outlook.”
While confidence about current and future finances is moving up, a key part of the survey points to some concern among consumers.
The measure of whether it is a good time to buy a major household appliance slipped and sits 8 per cent lower than a year ago and well short of its long term average.
Governor Philip Lowe, in a speech last week during which he signalled a rate cut would be discussed at the RBA’s board meeting on June 4, highlighted the importance of driving unemployment lower.
Markets put the chance of a rate cut to 1.25 per cent, the lowest Australian cash rate on record, at 100 per cent. Economists are now debating when the RBA will follow up next week’s cut, which would be the first since August 2016, with another.
The economic teams from all major banks expect a second cut by October.
Small Business Tax (Part 1) – Sole Trader
After covering small business valuations and accounting in the last few weeks, let’s turn our attention to the very first days of starting a small business – the choice of a legal structure to carry on the business. This week we will start by introducing the most basic and simplest of all legal structures – sole trader. We also cover the tax implications of operating a business as a sole trader.
A sole trader is an individual running a business. It is the simplest and cheapest business structure.
If you operate your business as a sole trader, you are the only owner and you control and manage the business.
You are legally responsible for all aspects of the business. Debts and losses can’t be shared with other individuals.
You can employ workers in your business, but you can’t employ yourself.
As a sole trader, you are responsible for paying your worker’s super. You’re also responsible for your own super and may choose to pay it into a fund for yourself to help save for your retirement.
As a sole trader, you:
Use your individual tax file number when lodging your income tax return
report all your income in your individual tax return, using the section for business items to show your business income and expenses (there is no separate business tax return for sole traders)
Apply for an ABN and use your ABN for all your business dealings
register for Goods and Services Tax (GST) if your annual GST turnover is $75,000 or more pay tax at the same income tax rates as individual taxpayers and you may be eligible for the small business tax offset put aside money to pay your income tax at the end of the financial year – usually, you will do this by paying quarterly Pay As You Go (PAYG) instalments claim a deduction for any personal super contributions you make after notifying your fund.
As a sole trader you can’t claim deductions for money ‘drawn’ from the business. Amounts taken from the business are not wages for tax purposes, even if you think of them as wages.
If you’re paid mostly for your personal efforts, skills or expertise, you might be receiving personal services income (PSI) and you may have to treat deductions in relation to this income differently.
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