THE Banking Code Compliance Committee’s (BCCC) Small Business and Agribusiness Workshop report, published this week, has highlighted the importance of early engagement with small businesses and agribusiness customers experiencing financial difficulty.

The report outlines the issues, discussions, and findings of a workshop that the BCCC facilitated in March 2023 with banks, consumer and government organisations, and its Small Business and Agribusiness Advisory Panel. 

The workshop looked at barriers to assistance for small businesses and agribusiness customers when they begin to experience financial difficulty, identified possible solutions, and shared examples of good practices across the industry. 

BCCC chair Ian Govey AM – whose career has included a stint as Australian Government Solicitor (AGS) and AGS chief executive between 2010 and 2016, and Deputy Secretary of the Attorney-General’s Department from 2000 to 2010 – noted the challenging conditions small businesses currently face and emphasised the importance of collaborating with a range of stakeholders. His previous work in the Attorney-General’s Department and The Treasury focussed significantly on commercial law reform, including the Corporations Act 2001.

“Small businesses and agribusiness customers are under significant pressure in the climate of rising interest rates and inflation. We wanted to bring together a wide range of stakeholders to explore the issues and look at ways we can improve outcomes for these customers,” Mr Govey said.  

“We know customers often reach out too late for assistance. This may be because they do not know what support is available, they do not know how to access support, or even because of a perceived stigma attached to reaching out for help.  

“But ultimately, these customers are not reaching out when they really need to, and it is something we want to help address.” 

Mr Govey reflected on the success of the workshop and emphasised the value in collaboration to find solutions.  

“Seeing industry come together to explore this issue was really encouraging,” he said.  

“But it is just a first step, and we need to continue to build on the ideas and programs that support these customers.” 

The BCCC’s report shared examples of good approaches to customer support, including processes and systems for data analysis, proactive outreach, and education.  

The report highlighted the success story of the Thriving Communities Partnership’s One Stop One Story Hub, which allows banks and other services to proactively connect when a customer is experiencing financial difficulties or other vulnerabilities.  

“This initiative, and the positive impact it has made, demonstrates what is possible when the industry comes together to support the most vulnerable,” Mr Govey said. 

“Financial difficulty is a serious problem for which effective solutions can only come from effective collaboration among the many stakeholders in the industry.”

BCCC is an independent body established to monitor and enforce compliance with the Banking Code of Practice. The committee’s role is to help maintain high industry standards and protect the interests of consumers in the Australian banking sector. 

The BCCC is headed by three representatives: chair Ian Govey, Anne O’Donnell for the banking sector, and consumer advocate Cat Newman. BCCC’s day-to-day work is supported by a secretariat at the Australian Financial Complaints Authority (AFCA).

www.bankingcode.org.au

The full report is on the BCCC’s website.

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NEW HOME construction loans are at similar low levels to those experienced during the onset of the Global Financial Crisis (GFC) in 2008, according to the Housing Industry Association of Australia. (HIA).

“Lending for the purchase or construction of a new home remains at its lowest level in 15 years,” HIA chief economist, Tim Reardon said this week.

The Australian Burean of Statistics (ABS) released the Lending to Households and Businesses data for March 2023 on Friday.

“The number of loans issued to purchase or construct a new home remained stable in March compared to the previous month, to be 30.7 percent lower than at the same time last year,” Mr Reardon said.

“The last time so few loans were issued for the purchase or construction of a new home was in November 2008, when the GFC caused a contraction in building.

“This data confirms that ongoing and significant declines in new home sales will see new home commencements slow significantly in the second half of 2023, under the weight of the higher cash rate. There are very long lags in this cycle and the full impact of the RBA’s rate increases are still to fully hit the housing market, let alone the broader economy.

“The weak lending figures observed by the ABS in March will not be apparent in other economic indicators until 2024, when the volume of homes under construction declines more markedly. Given these long lags, the RBA shouldn’t be waiting to see unemployment rising before pausing the increase in the cash rate. 

“This month’s data does show that the value of lending for renovations and to owner occupiers and investors increased marginally compared to the previous month, contrary to the trend of the past year," Mr Reardon said.

"“Total new lending increased in March 2023 compared to the previous month by 4.9 percent, to be 26.3 percent lower than at the same time last year. This pick up in lending is likely to be short lived as the weight of interest rate increases continues to constrain confidence,” Mr Reardon said.

In original terms, the total number of loans for the purchase of construction of new homes in March 2023 declined in almost all jurisdictions compared with the same month a year earlier, led the Australian Capital Territory (-37.3 percent), Ne w South Wales (-36.3 percent) and Tasmania (-33.0 percent), followed by Western Australia (-30.6 percent), South Australia (-29.7 percent), Victoria (-28.0 percent), and Queensland (-21.8 percent). The Northern Territory saw the only increase, up by 26.1 percent over the year.

www.hia.com.au

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THE Australian Taxation Office (ATO) is reminding small businesses about three key things to be aware of ahead of end-of-financial-year duties.

First, the new small business boost is now available; second temporary full expensing ends on June 30, 2023; and there are some deduction rate changes for running a business from home and car expense rates have changed.

“With only a few days left in the financial year, now is the time to talk to your tax professional if you think these things may be relevant for your business,” ATO Assistant Commissioner Emma Tobias said. 

Small business boosts now available

Boosts are available for small businesses investing in digital operations, or skills and training – for example, new equipment like technology, cloud-computing, e-invoicing or cyber security.

“Small businesses will receive a bonus 20 percent tax deduction for eligible expenses in their tax return, so for every $100 spent, you’ll get a $120 tax deduction – but there are caps on the total amount that can be claimed,” Ms Tobias said.

“If you’re a small business who invested in technology or digital operations between 29 March 2022 and 30 June 2023, then this boost is for you.

“It’s important to remember, any item you purchase must be first used or installed ready for use by 30 June 2023 in order to be eligible,” Ms Tobias said.

Likewise, the small business skills and training boost allows businesses to claim an additional 20 percent tax deduction to train new and existing employees between March 29, 2022 and June 30, 2024.

The training must be through a registered external training provider in Australia.

TFE ends June 30

Temporary full expensing (TFE) ends on June 30, 2023. Small businesses can still claim an immediate deduction for the cost of eligible assets first used or installed ready for use by  June 30, 2023, in this year’s tax returns.

However, the end of TFE on June 30 means the cost of assets that are not already being used or installed ready to use by June 30, 2023, are not eligible for an immediate deduction under TFE in small business tax returns this year.

TFE supports small businesses making capital purchases by allowing an immediate deduction for assets, rather than claiming the depreciation over a number of years.

“Even if you’ve paid a deposit or received an invoice, the asset must be installed ready to use by 30 June 2023,” Ms Tobias said. “If the asset is not installed ready for use by the deadline, you may still be able to claim deductions under the general or simplified depreciation rules.”

Deduction rate changes

Both the ‘running a business from home’ deductions and car expense deductions have changed for this tax time.

The key changes a small business claiming car expenses needs to know is:

The new cents-per-kilometre rate is 78 cents for 2022-23, but remember to keep written evidence to show how you worked out the work-related kilometres. This is method is available to sole traders and partnerships.

The car limit has increased to $64,741 for the 2022-23 income year.

The working from home deduction methods have also changed for this year. Small businesses can choose one of two methods to claim working from home deductions: either the actual cost or fixed rate method. Only the fixed rate method is changing. However, your business structure can affect the method you can use and the expenses you can claim, especially if your business is a company or trust.

“If you are claiming car or working from home deductions, make sure to keep good records,” Ms Tobias said. “This will give you more flexibility to choose the approach that gives you the best deduction at tax time.”

Ms Tobias said the ATO recommends small businesses seek advice from a registered tax professional or read about the changes on the ATO website before making investment decisions.

www.ato.gov.au

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THE Australian Institute of Superannuation Trustees (AIST) has lifted its estimate of the cost of menopause, and how it impacts women’s retirement incomes, to more than $112.2 billion workforce-wide.

AIST is urging the Federal Government to accurately measure and urgenly report on the costs to women of menopause on their careers and superannuation totals by retirement age.

AIST CEO Eva Scheerlinck said the peak superannuation trustee body’s previous estimate – of between $17 billion and $35 billion – had been found to be too conservative. Now AIST had adjusted its assumptions on the basis of new data and broader analysis of the impact on women.

Ms Scheerlinck said with the average age of menopause being 51 and many women experiencing symptoms for five to 10 years, the impact of this life change affecting all women needed to be quantified so that appropriate policy and public health interventions could be developed.  

In a pre-Budget submission, AIST recommended the Federal Government provide funding to the Office for Women to measure and report on the extent to which menopausal symptoms impact women’s employment and retirement decisions, super and retirement incomes.

“AIST bases its estimates on publicly available data sources but recommends that the government undertake its own comprehensive analysis of the heath and economic impacts of menopause on women’s workplace participation and retirement decisions,” Ms Scheerlinck said.

“This is a great time for this work to be done because women retire with 40 percent less superannuation than men and they live longer. If you can’t measure it, you can’t manage it.”

According to Australian Bureau of Statistics (ABS) data, the average retirement age is 52.1 for women and 59.5 for men.

A woman retiring at the average age for a man would accrue an additional 7.4 years of income and superannuation which, based on the average income for women aged 45-54 amounted to lost salary and wages and foregone superannuation of more than $577,512.

According to ABS data, 694,143 women were in the workforce in November 2022 and, by the government’s own estimates, 28 percent of menopausal women will have symptoms severe enough to impact their participation in the workforce.

This translates to a collective economic loss of $15.2 billion per year and more than $112.2 billion in foregone earnings and super over 7.4 years.

www.aist.asn.au

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