Market Insights – 29th April 2019

Market Insights – 29th April 2019

Market Insights

29th April 2019

Top Stocks

Market and Exchange Rates

Commodities

Major Market Announcements

– Federal Labor is promising to slash the cost of child care for hundreds of thousands of families, even making it free for some low-income households. Childcare advocates welcomed the announcement but the Liberal Party warned Labor “promised the world” when it was last in government although the cost of child care actually went up.

– Reserve Bank should call in the helicopters to drop money on Australian households: Citi. The RBA showering Australian households with money from above may sound like a desperate move, but it is one worthy of consideration according to the economics team at the big investment bank Citi.

– Nearly three million pensioners will get $1000 of free dental work every two years under a Labor government. Labor leader Bill Shorten said the $2.4 billion policy would help improve quality of life, self confidence and basic dignity to those on the aged pension

– The big banks, having made it through 2018 scathed, humiliated and to a degree punished, face their first post-royal commission financial reckoning this week — it is unlikely to be a particularly happy event for anyone involved. Three of the so-called four pillars, NAB, ANZ and Westpac, will release first-half results in coming days — CBA marches to a different beat releasing its numbers in February.

– Flight Centre accused of underpaying workers, failing to pay penalties. Federal Court action has been launched against Australian travel giant Flight Centre today, alleging the systemic underpayment of employees — a claim the company rejects.

Market Update

The Australian sharemarket is tipped to open flat after outperforming the United States over the last week and economists are now watching the Reserve Bank of Australia for an interest rate cut “sooner than later”.

Energy was the worst performing sector on Friday with a 1.47 per cent decline after oil prices eased following Brent crude’s first touch of $US75 for nearly six months – a move that hints at a pullback following the commodity’s recent good run.

Woodside Petroleum, Origin, Oil Search, Caltex, and Santos were each down by more than a percentage point.

But the heavyweight financial sector clawed back its early losses to sit flat after the four big banks moved higher.

Commonwealth Bank was 0.39 per cent higher at $75.45, Westpac gained 0.58 per cent to $27.74, ANZ was up 0.18 per cent at $27.40, and NAB was 0.04 per cent higher at $25.67.

All four started the day in the red.

Elsewhere, BHP lost 1.57 per cent to $37.60, Rio Tinto was 0.78 per cent lower at $97.62, and Fortescue Metals dropped 5.39 per cent to $7.19 to drag the mining sector lower.

Consumer discretionary stocks were also down – the sector slipping by 0.66 per cent – after Flight Centre lost more than 11 per cent in value following a 15 per cent profit downgrade on weak domestic leisure spending.

However, biotech giant CSL was a strong performer, gaining 1.02 per cent to $196.98.

The Australian dollar rose a little on Friday to 70.25c US but it’s still down over the course of the week.

Dr Shane Oliver said the RBA is expected to cut interest rates as soon as next week.

“Quite a few economists are moving to forecast that cut after inflation figures came in on the low side for Australia last Wednesday,” he said.

“If they don’t cut then they’ll cut in June. Some say they may wait until after the election but there’s a strong case to cut sooner rather than later.”

Investing in Shares Workshop

This Wednesday, the 1st of May 2019, The Plus 1 Financial Planning team are hosting an Investing in Shares Workshop. 

Shares can be a great way to create wealth, however, unfortunately there is a lot of bad information in the public arena, which has led to a people fearing the share market. As a result of this, people are potentially missing out on a great long-term investment option.

The workshop aims to help you learn the basics of share market investing and key wealth building strategies. 

Event Details:
When: Wednesday 1st May 2019 – 5.30PM – 7:00PM
Where: Plus 1 Group offices – 27 Welsford Street, Shepparton
Cost: Just your time, light refreshments provided

To secure your place, visit www.plus1group.com.au/workshops and register now, or call us on 03 5833 3000.

Seats are strictly limited.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

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If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

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Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
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Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide

Market Insights – 29th April 2019

Market Insights – 23rd April 2019

Market Insights

23rd April 2019

Top Stocks

Market and Exchange Rates

Commodities

Major Market Announcements

– U.S. stocks ended a low-volume trading session little changed on Monday, with the biggest gains in the energy sector as investors otherwise stayed on the sidelines ahead of quarterly earnings.

– Australia’s unemployment rate has edged back up to 5 per cent, despite another strong month of job creation. The slight rise in seasonally adjusted terms can be attributed to more people looking for work. In trend terms, the unemployment rate has now held steady at 5 per cent for five months. The good news in the figures was the bulk of the jobs were full-time positions. Full-time work increased by 48,300, while 22,600 part-time jobs were lost.

– National Australia Bank says it will cop an extra $525 million after-tax hit through new customer remediation costs, mostly related to its wealth arm. The bank on Thursday said the new charges are expected to reduce cash earnings for the first half of the 2019 financial year by an estimated $325 million, and earnings from discontinued operations by an estimated $200 million. In combination with provisions raised in second half of the 2018 financial year, which have not yet been utilised, this brings NAB’s total provisions for customer-related remediation after the financial services royal commission to $1.1 billion at March 31.

– South32 Ltd has reported a 37 per cent fall in its third-quarter coking coal production compared to the second quarter, as it continues to focus on keeping down costs at its Illawarra operation. Production of coking coal or metallurgical coal, a key steel-making ingredient, fell to 990,000 tonnes during the March quarter from 1.6 million tonnes in the second quarter, but still beat a Goldman Sachs estimate of 784,000 tonnes.

– Fortescue Metals Group (FMG) is the latest mining company to have its iron ore output hit by Tropical Cyclone Veronica, although the impact on profits is likely to be offset by higher iron ore prices.

– Australia is home to some of the best dairy operations in the world, but an analyst has warned that without a drastic increase in production the country could soon become an “import nation”.

Since its peak production of 11.27 billion litres of milk a year in 2002, Australia’s total milk production has shrunk to 8.7 billion litres. At the same time, an increasing population has driven demand for dairy products.

However, amid tight margins and competition from cheaper, imported dairy products, farmers and some processors are struggling to increase production and stay profitable.

– Late on Thursday Worleyparsons Limited (ASX:WOR) provided an update on its acquisition of Jacobs Engineering Group. According to the release, the company anticipates that the completion of the transaction will occur after the market closes over the last weekend of April 2019. After which, WorleyParsons intends to adopt Worley as its new brand with the domain name Worley.com.

Market Update

The Australian share market has closed marginally higher after a choppy day in which better than expected jobs numbers caused the local bourse to lose some of its midday gains.

The benchmark S&P/ASX200 index finished up 3.4 points, or 0.05 per cent, to 6,259.8 points at 1615 AEST on Thursday, while the broader All Ordinaries fell 0.4 points to 6,349.9.

“It’s pretty good, we had these better than expected jobs numbers, which caused the market to pull back,” CommSec market analyst James Tao said.

The statistics, showing 48,300 more Australians in full-time employment during March, take pressure off the Reserve Bank of Australia to cut interest rates, which is why the market dipped, Mr Tao explained.

The ASX200 fell 20 points in four minutes after the report was released, but shot up in the final minutes of trade to close the day ahead.

For the week the ASX200 gained 0.14 per cent, its third straight week of gains.

Energy stocks were collectively up 1.09 per cent, with Whitehaven Coal gaining 6.44 per cent to $4.46 after word that its proposed $1 billion Winchester South coal mine southeast of Moranbah would be fast-tracked for consideration by the Queensland government.

Woodside Petroleum, Caltex Australia and Santos all gained as well, led by Calex, up 2.36 per cent to $27.36.

The big banks were all up slightly, with ANZ gaining the most, 0.22 per cent to $26.78.

A decrease in the price of iron ore as Vale was set to re-open its Brucutu mine in Brazil continued to drag on miners, with BHP dipping 0.18 per cent to $38.23, although Rio Tinto rose 1.39 per cent to $97.74.

Galaxy Resources dropped 11.62 per cent to $1.635 – a 23-month low – after the lithium miner reported the US-China trade war had hurt demand for the element in China and that it was holding off selling its Sal de Vida lithium deposit in Argentina.

Kogan.com shares rocketed up 18.63 per cent to $5.35 – a six-month high – after the internet retailer reported 23.4 per cent year-on-year customer growth and announced two lines of business: Kogan Energy Compare and Kogan Cars.

Bubs Australia shares gained 10.13 per cent to 87 cents – a 10-month high – after announcing a deal to sell its infant formula in the 450 Chemist Warehouse locations across the country.

The Aussie is buying 71.85 US cents, down from 71.97 US cents on Wednesday.

What are ETF’s?

Like a traditional managed fund, an Exchanged Traded Fund (ETF) offers the opportunity to invest in a portfolio of securities, such as shares, or bonds.

As with a Managed Fund, each ETF unit represents an undivided interest in the underlying assets. In Australia, this interest is usually in the form of a unit in a unit trust. ETF’s and Managed Funds also both offer professional management, so you don’t have to keep track of every security your fund owns. However, ETF’s are different in that they can be traded throughout the day on an exchange at a market-determined price.

Most ETF’s use an indexing approach. Index ETF’s are built so that their value can be expected to move in line with the indices they seek to track. For example, a 4% rise or fall in an index should result in approximately a 4% rise or fall for an ETF that tracks that index.

Why we like ETF’s. . . 

Investment markets can move significantly in unpredictable ways and experience tells us that selecting managers that consistently outperform the market is a challenge.

By adopting what is known as a “Core-Satellite” approach. This type of portfolio construction uses index funds (ETF’s) as the “Core” of the portfolio, with carefully selected lowly correlated active investments as the “Satellites”

To effectively design and implement a series of core-satellite portfolios the following factors will need to be taken into consideration:

  • Determine the risk profiles and strategic asset allocation.

  • Determine the investments for the core.

  • Determine the size of the core versus satellite in each asset class.

  • Determine how many active satellites are to be used and which ones to complement the core.

Contact our office for further information.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

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Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide

Market Insights – 29th April 2019

Market Insights – 15th April 2019

Market Insights

15th April 2019

Top Stocks

Market and Exchange Rates

Commodities

Major Market Announcements

– U.S. stocks closed near record highs on Friday after the largest U.S. bank, JPMorgan Chase & Co, soothed worries that the first-quarter earnings season would dampen Wall Street’s big rally back from last year’s slump.

– On Friday, Woodside opened a facility to load trucks with LNG from its Pluto plant near Karratha. When operational the facility will be able to load seven trucks a day, with each delivering more energy than 80,000 litres of diesel, and could double its capacity with 24-hour operations.

– Wesfarmers chairman Michael Chaney has warned that Labor’s living wage policy could “throw people” out of work, as new analysis shows small businesses will be hit hardest by the policy. Analysis of data from the Household, Income and Labour Dynamics in Australia survey shows that low-paid employees are most likely to work for small businesses.

According to the survey, 38 per cent of low-paid people work in firms with fewer than 20 employees, compared with 35.2 per cent who work for firms with more than 500 workers. Low-paid employees are classified as those in the lowest 20 per cent of hourly earnings.

– The Reserve Bank has warned that if property values continue to fall heavily, particularly in Sydney and Melbourne, it could push some borrowers into “negative equity”. This is an undesirable situation where the amount owing on a homeowner’s mortgage is higher than the value of their property. However, the RBA noted housing prices would need to fall “significantly further” for negative equity to become widespread, and said a low unemployment rate of 4.9 per cent was an important factor in limiting mortgage defaults.  

– Disney has finally announced that it is planning to launch its online video service to challenge the likes of Netflix, Youtube and all the other incumbent media businesses. This is a big deal because it could seriously affect the operations of ASX businesses like Nine Entertainment Co Holdings Ltd(ASX: NEC), Seven West Media Ltd (ASX: SWM), Telstra Corporation Ltd (ASX: TLS) and News Corp (ASX: NWS). The new service will be called Disney+. 

Market Update

The Australian share market is set for an uninspiring start on Monday despite US shares closing on a positive note last week.

Positive economic data from China and a good start to the US earnings report season meant Wall Street and Europe traded strong at the end of the week.

European shares were up 5 per cent, the Dow was up 1 per cent and the S&P 500 Index was up 0.7 per cent.

“But the funny thing is our futures contract is flat,” AMP Capital’s chief economist Shane Oliver told AAP.

“Normally a rally on Wall Street should be positive for us.”

Dr Oliver said the federal election campaign is likely to cause some volatility, and all eyes will be on national employment figures for the month of March when they are released on Thursday.

It is unlikely there has been enough new jobs created to stop the unemployment rate rising to 5 per cent, after dipping to 4.9 per cent in February.

While growth across the country has been steady, it hasn’t been able to absorb new entrants to the workforce, like migrants and graduating students, and the participation rate has also been rising, Dr Oliver said.

Prime Minister Scott Morrison and federal Labor leader Bill Shorten will continue to talk about making more jobs in the lead up to polling day, but the economist warned of taking promises too seriously.

“We are generating good jobs growth in Australia, but I’d be a bit skeptical of precise numbers,” he said.

“I have no doubt the Australian economy will continue to generate jobs going forward, it’s just that you can get into all sorts of debates about the numbers, particularly when you’re talking about numbers spread out over many years.”

Figures detailing GDP growth in China will also be released this week.

Share Watch

Blackwall Limited (ASX: BWF)

BlackWall Ltd is a vertically integrated property funds manager. They manage, develop and finance income producing real estate on behalf of high net worth and institutional property investors.

What we like about this stock. . . 

Current Return on Equity is excellent
Earnings Per Share Growth has been exceptional
Cash balance exceeds debt
Dividend Yield 4.80%
Current trading price is undervalued from an intrinsic value prospective 

Investors to proceed with caution and protect your capital with an exit strategy, recommended at $0.78c currently trading at $0.835 

The 200-day moving average is downward sloping and implies that there has been limited demand for this stock. However, the stock has been rallying recently. It is too early to tell whether this rally is the beginning of a new trend or simply a bounce. 

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

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Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide

Market Insights – 29th April 2019

Market Insights – 8th April 2019

Market Insights

8th April 2019

Top Stocks

Market and Exchange Rates

Commodities

Major Market Announcements

  • U.S. stocks rose on Friday, boosted by better-than-expected job growth in March, which eased concerns of an economic slowdown that have periodically roiled financial markets over the past year.
  • The Morrison government has lost ground with voters after pledging a sweeping round of personal income tax cuts, with the Coalition trailing Labor by 47 to 53 per cent in two-party terms in the wake of the federal budget. Prime Minister Scott Morrison has maintained his lead on key personal approval ratings but the government has fallen from the two-party result of 49 to 51 per cent in February.
  • As many as 200 jobs are expected to be lost from BHP’s Perth office as part of a round of more than 700 redundancies across the mining giant’s operations nationally. BHP would not reveal how many jobs were expected to go but it is believed the job cuts apply to white collar functions such as human resources, finance and technology.
  • National Australia Bank is in discussions with two Israeli artificial intelligence and biometrics groups about ways to further the bank’s big data capabilities and to protect customers from emerging types of financial crime. NAB is mulling a relationship with the biometrics specialist group to further develop the ways it identifies suspect behaviour by cyber criminals, and it has already run a pilot program with the group that is yet to be revealed.

Market Update

The Australian sharemarket has slumped lower for a second straight day, leaving it flat for the week.

The benchmark S&P/ASX200 index closed down 51.5 points, or 0.83 per cent, to 6,181.3 points at 1615 AEDT on Friday, while the broader All Ordinaries was down 49.8 points, or 0.79 per cent, to 6,270.6.

Every sector was in the red, with tech stocks the hardest-hit, down 1.56 per cent.

The sell-off left the market up less than a point higher than where it began on Monday.

“I think we’ve had a couple of breather days” following seven straight days of gains, Blue Ocean Equities analyst Mathan Somasundaram said.

“The market is pretty much on hold for the [US-China] trade deal,” Mr Somasundaram said. “Most people are sitting out.”

US President Donald Trump said on Friday (Australia time) that the US had found agreement on some of the toughest issues in its trade talks with China, but sticking points remained.

Mr Somasundaram said that if a deal did not come within four weeks, as Mr Trump promised, the market could panic.

Mr Somasundaram added that the markets were adjusting to the fact that the global economy would be stuck with low interest rates for a while, making it tough for banks to make money.

All of Australia’s big four banks were in the red, with NAB down 1.43 per cent to $24.81, ANZ down 1.18 per cent to $25.95, Westpac down 0.69 per cent to $26.05 and Commonwealth down 0.48 per cent to $70.89.

But buy-now, pay-later companies Afterpay Touch and Zip Co both hit all-time highs following reports earlier in the week that Australian retail sales had bounced back in February.

Zip was up 5.67 per cent to $2.05 while Afterpay gained 3.83 per cent to $24.40.

There was also good news for Automotive Holdings Group shareholders, with the stock jumping 20.79 per cent to $2.15 after vehicle retailer AP Eagers announced an all-stock offer for the company.

AP Eagers gained 5.63 per cent to $7.69.

Telecom stocks and the miners were down the least, both collectively less than 0.2 per cent.

Mining giant BHP lost 0.51 per cent to $29.22 while Rio Tinto gained 0.28 per cent to $99.91.

Fortescue Metals was up 1.04 per cent to $7.78 after Moody’s Investors Service said the approval of its Iron Bridge magnetite iron ore project south of Port Hedland, WA, would create near-term risks but long-term benefits and left its bond rating unchanged.

Gold miners posted gains after a rise in the price of the yellow metal overnight.

Newcrest Mining was up 0.12 per cent to $24.63, Northern Star added 0.93 per cent at $8.68 and Evolution Mining gained 1.4 per cent to $3.62.

Telco Telstra was down 0.3 per cent to $3.27, while pharma giant CSL was down 1.19 per cent to $196.88.

The Aussie dollar is buying 71.25 US cents, from 71.16 US cents on Thursday.

Looking head, investors will be watching the release of US non-farm payroll numbers late on Friday night (AEDT) to see how the world’s largest economy is doing, Mr Somasundaram said.

Federal Budget for 2019 – 2020

Our commentary here will mainly be restricted to matters of Financial Planning issues with few changes flagged in this budget. Off to side though we still have some 76 recommendations from the Royal Commission which will instigate some changes over the next few years.

BIG PICTURE

The Government forecast budget for 2019/2020 is: 

  • Expected Revenues – $513Billion
  • Expected Expenses – $501Billion 

Thus, leaving an expected surplus of $12Billion next financial year.

Comment – Good to have a projected surplus for a change. Whilst at times it can be healthy for the country to have a yearly deficit to support a struggling economy Australia’s ONGOING TOTAL GOVERNMENT DEBT remains a concern. The government has said they expect this to be down to $NIL by 2030 (total government debt was over $500Billion in recent years). This is very ambitious having regard to each years forward estimates.

PERSONAL INCOME TAX RATES

It is expected that most average Australians (couples and singles) will receive some tax relief in their 30 June 2019 tax return by of a tax offset. Please see the tables attached to determine where you fit on the scale. Most singles will receive $1,080 offset and couples possibly $2,160 depending on breakup of their taxable incomes.

Comment – For those that are “doing it tough” in managing their living expenses then the tax relief may well be spent on making things easier at home. Sometimes when we receive a tax break or salary increase if we can convince ourselves we did not really need it then perhaps making extra home loan payments of just $20 per week (say the $1,080 per annum) or the equivalent pre-tax contribution (depending on your age and individual circumstances) into superannuation might be a good idea for long term wealth creation rather than just consuming the extra $20 per week.

Home loan – Result over 25 years of just $20 per week (using a conservative average long-term home loan rate of 5%) would be saving of $23,000 in interest payments and 2 years of the term of the home loan). Remember small fish are sweet.

Extra Superannuation Contributions – Result over 25 years of just $20 per week into pre-tax superannuation contributions (using an average long-term diversified fund earning rate of say 7% per annum) then you would be accumulating an extra $83,000 in superannuation assets. Again, small fish are sweet and compounding works.

SUPERANNUATION

NO WORK TEST FOR VOLUNTARY CONTRIBUTIONS BY PEOPLE AGED UP TO 66 – Superannuation contribution rules will change to allow people aged 65 and 66 to make voluntary contributions to superannuation without meeting the work test.

Comment – Plenty of more opportunity for individuals planning to sell an investment property later in life and place into the superannuation system. Similarly, inheritances and/or ordinary investments can be placed into superannuation for perhaps better retirement income outcomes.

BRING-FORWARD RULE EXTENDED TO PEOPLE UP TO 66

Again, superannuation contribution rules to change to allow people aged under 67 to make three years’ worth of after-tax (non-concessional) contributions in a single year. Under current contribution caps, that would enable under-67-year-olds to contribute up to $300,000 in one year.

Comment – Again, creates opportunity to dump large amounts (subject to some maximum allowable rules) into superannuation up to age 67 – working or not.

SPOUSE CONTRIBUTIONS EXTENDED TO PEOPLE AGED UP TO 74

Under the proposed changes, individuals will be able to contribute to their spouse’s superannuation where the receiving spouse is under age 75. In addition, if the receiving spouse is aged 65 or 66, they will no longer need to meet a work test. The work test will continue to apply if the receiving spouse is aged 67 or over.

Comment – Not significant due to levels but can make some difference to overall retirement income results. 

SMALL and MEDIUM BUSINESS TAX CONCESSIONS

The instant asset write-off threshold from $25,000 to $30,000 this financial year and next financial year. This is done on a per asset basis and therefore businesses can write off multiple assets.

Comment – If the asset is definitely needed for the business then effectively a $30,000 purchase after budget night to 30 June 2020 will prove very tax effective rather than the normally depreciated (over many years) items. 

WHAT DOES THIS ALL MEAN FOR SHARE MARKETS

Budgets and elections can have short term ramifications to share markets. However, it has been proven over and over again that long term investment in solid companies paying good dividends always shone through given time for our investments to work in the markets.

At Plus 1 Group, we are happy to talk to persons contemplating a review of their financial planning needs, looking at strategies and alternatives and their investments generally.

All Ordinaries (XAO) 5 Day Chart

Disclaimer: The advice provided is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

Plus 1 Group logo

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
Email Us

CPA Logo
Professional Standards Legislation logo
Platinum Xero Partner
MYOB logo
Quickbooks logo

Sentinel Wealth Unit Trust T/As Plus 1 Wealth Advisors (ABN:11 408 695 672) is an Authorised Representative of Sentinel Wealth Managers Pty Ltd
(ABN: 73 108 328 294) AFS Licence 322211 | Financial Services Guide

Federal Budget Update 2019/20

Federal Budget Update 2019/20

Federal Budget Update – 2019 – 2020

On Tuesday night, the 2019/20 Federal Budget was announced, the highlights are set out below;

Further Decreases to Personal Income Taxes

  • The Low and Middle-Income Tax Offset (LMITO) will be changed to reduce the amount of tax payable; those earning under $37,000 will receive an offset of $255 up from $200, income earners between $37,001 and $48,000 will receive $255 plus 7.5% above $37,000, the offset will increase from $530 to $1,080 for people earning between $48,001 and $90,000 and will gradually phase out up to a maximum threshold of $126,000.
  • From 1st July 2022, the top threshold of the 19 per cent tax bracket will increase to $45,000 (up from $41,000).
  • The Low Income Tax Offset (LITO) will increase to $700 (up from $645) from 1st July 2022.
  • From 1st July 2024, the 32.5 per cent marginal tax rate will be reduced to 30 per cent.
  • From 1st July 2024, the 37 per cent tax bracket will be abolished.

Changes to the Instant Asset Write Off

  • The threshold for the instant write-off will be increased to $30,000 (up from $25,000).
  • The Instant Asset Write Off will be extended for another twelve months up until 30th June 2020.
  • Medium sized businesses (with aggregated turnover between $10 million and $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 purchased after budget night (2nd April 2019) (they wont have access to small business pooling).
Asset first used or installed ready for use Small Business (turnover less than $10 million) Medium Business (turnover between $10 million and $50 million) Large Business (turnover greater than $50 million)
1st July 2018 to 28th January 2019 $20,000 N/A N/A
29th January to 2nd April 2019 (budget night) $25,000 N/A N/A
2nd April (budget night) to 30th June 2020 $30,000 $30,000 N/A

Medicare levy low-income thresholds will be increased for the 2018/19 year

  • Individuals $22,398 (increased from $21,980).
  • Families $37,794 (increased from $37,089) plus additional $3,471 for each dependent child (increased from $3,406).
  • Single seniors and pensioners $35,418 (increased from $34,756).
  • Family seniors and pensioners $49,304 (increased from $48,385) plus additional $3,471 for each dependent child (increased from $3,406).

Storm affected Primary Producers in Queensland

Payments to primary producers in the Fassifern Valley, Queensland affected by storm damage in October 2018 will be treated as exempt income.

Income Tax exemption for North Queensland flood grants

An income tax exemption will be provided for qualifying grants made to primary producers, small businesses and non-profit organisations affected by the North Queensland floods.

Requirements for Australian Business Number holders

Australian Business Number (ABN) holders will be required to lodge their Income Tax Return from 1st July 2021 and confirm the accuracy of their details on the Australian Business Register annually from 1st July 2022 to retain their ABN status.

Div 7A amendments

The start date of amendments to Div 7A will be delayed by 12 months to 1st July 2020.

Superannuation Contributions allowed for 65 and 66 year olds

From 1st July 2020, Australians aged 65 and 66 years of age will be able to make voluntary contributions (both concessional and non-concessional) without having to meet a work test.

Spouse Contributions Tax Offset Eligibility Extended

Restrictions on claiming the spouse contribution tax offset will be eased from 1st July 2020 allowing spouses aged 70 to 74 years of ago eligibility if they meet the work test.

Exempt Current Pension Income Calculations

The calculation of exempt current pension income (ECPI) will be simplified for Superannuation Funds from 1st July 2020, allowing trustees to calculate ECPI on a preferred basis.

Expansion of Super Stream

From 31st March 2021, Super Steam is to be expanded to enable the ATO to send electronic requests to superannuation funds for the release of money from a member’s account and to be used with rolling over money from one Fund to another.

Increased Luxury Car Tax refunds for primary production and tourism operators

For vehicles acquired on or after 1st July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.

Energy Assistance Payment

A once off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2nd April 2019 who are residents of Australia will be made. Qualifying payments are the Aged Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, the Veterans Service Pension and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 and the Safety, Rehabilitation and Compensation Act 1988.

Social Security payment reporting to be verified by Single Touch Payroll

Individuals who receive income support payments from DHS will have their reported income matched with Single Touch Payroll reports from 1st July 2020.

Family Benefit extended to ABSTUDY students away from home

Family Tax Benefit eligibility will be extended to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend secondary school.

Income from forced sale of livestock invested into Farm Management Deposits

From 1st July 2019, net income generated from the forced sale of livestock will be exempted from the Farm Household Allowance (FHA) payment assessment, when that income is invested into a Farm Management Deposit

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