Summer 2022

It’s December, summer is here and holidays are just around the corner. We take this opportunity to wish you and your family a happy festive season!

The big story on the global economic front continues to be inflation, and how high interest rates will go to tame it. November began with the US Federal Reserve hiking its federal funds target range by another 75 basis points to 3.75-4.00%. There are signs the tough approach is working, with the annual rate of inflation falling from 9.1% in June to 7.7% in October.

In Australia, the Reserve Bank lifted the cash rate another 25 basis points to a decade high of 2.85%. Inflation fell to 6.9% in the year to October, down from 7.3% in September, but remains high and economic signals are mixed. Reserve Bank governor Philip Lowe is keeping a close eye on consumer spending, where higher interest rates are having an impact. Retail trade fell 0.1% in October for the first time this year. And while the ANZ-Roy Morgan consumer sentiment index was up 5.6% to 83.1 points in the last three weeks of November, it remains 22.9 points below the same week last year. But rate hikes are not yet affecting the labour market, with unemployment falling to a 48-year low of 3.4% in October, while annual wages growth rose 1% to 3.13% in the September quarter, the fastest growth in a decade.

The Aussie dollar lifted 3c to around US67c over the month, crude oil prices fell 10% while iron ore lifted 0.5%. Shares remain skittish but positive overall. The ASX200 index rose more than 5% in November while the US S&P500 index was up more than 2%.

Sustainable investing on the rise

Sustainable investing on the rise

Sustainable investing isn’t new and is becoming more mainstream. From climate change to gender diversity, more people are aligning their money with their values.

In 2021, Australia’s sustainable investment market increased 20 per cent to a record $1.5 trillion. The Responsible Investment Association Australasia (RIAA) 2022 benchmark report found sustainable investments represents 43 per cent of total professionally-managed funds.

In addition to traditional shares and fixed interest sustainable investments offer a wide range of assets, including property, alternatives such as forestry, infrastructure, private equity and cash.

Most big super funds offer a sustainable investment option and some offer this as their default option. You can also buy sustainable managed funds, including a growing list of exchange-traded funds (ETFs).

What are sustainable investments?

Focus on people and planet

Sustainable investing is also known as ethical, responsible and ESG (environmental, social, governance) investing, with the focus on people, society and/or the environment.

Sustainable investments are selected using a variety of screening methods, including:

  • Positive screening selects the best investments in their class
  • Negative screening excludes harmful sectors, companies or activities such as arms, gambling, animal testing, tobacco and fossil fuels
  • Norms-based investing screens for minimum standards of relevant business practices
  • Impact investing has the explicit intention of generating positive social or environment impacts.i

The term ESG investing is used when a fund or company commits to sustainable investing in these three areas:

  • Environmental – air and water pollution, biodiversity and climate change
  • Social – child labour and labour standards, ethical product sourcing, gambling and human rights
  • Governance – board diversity, corruption, business ethics, corporate culture and whistle-blower schemes.

The report found gender diversity and women’s empowerment are also gaining popularity.

Sustainable investing is not all warm and fuzzy. Performance still matters.

Performance gains

Initially, sustainable investing often came at the expense of returns but that is no longer necessarily the case.

The report compared the performance of what it terms responsible investment funds and mainstream investments funds (on average and net of fees) over the past 10 years to December 2021.

Responsible multi-sector growth funds consistently outperformed mainstream funds and their benchmark over 1, 3, 5 and 10 years. Responsible Australian share funds generally outperformed or were on par with mainstream funds. Only responsible international share funds disappointed, underperforming mainstream funds across all timeframes.

Watch out for greenwashing

Increased demand for sustainable investments has led to a rapid increase in the number of products available. The rush to cash in on the trend has sometimes led to what is known as ‘’greenwashing”. The Australian Securities and Investments Commission (ASIC) describes greenwashing as the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.

ASIC warns investors to review the product terms. For example, a fund might describe itself as ‘’no gambling” but may invest in companies that earn less than 30 per cent of revenue from gambling.
Look for a clear explanation of how the product will achieve its aims and don’t rely on vague language like “considers”, “integrates” or “takes into account”.

Australian companies lifting their game

It’s not just super funds and managed funds taking sustainable investing more seriously, Australian listed companies are also adapting to changing investor preferences and regulatory environment. A recent analysis of ESG reporting by Australia’s top 200 listed companies, PwC found a 13 per cent increase in companies declaring a commitment to net zero emissions. However, only 55 per cent of those disclosed a transition plan or activities that will enable them to reach net zero.

There was also a 10 per cent increase in companies disclosing climate risks and opportunities, and a 30 per cent increase in companies disclosing a gender diversity policy.

For investors seeking sustainability along with financial returns from their investments, momentum and choice is growing. So please get in touch if you would like to discuss your investment options.


Tax Alert December 2022

Tax Alert December 2022

Tax compliance, higher fines in spotlight

Business taxes remained largely unchanged in the second Federal Budget of 2022, but employees working from home can expect less generous deduction rules for the 2022-23 financial year. Here’s some of the latest tax developments.

All quiet on the small business tax front

There were no significant tax changes affecting small business in the October 2022 Federal Budget, although there was a big focus on tax compliance.

The ATO will receive $685 million over four years to help it raise $2.1 billion from a crackdown on shadow economy activities. This may be of concern to some small and mid-size enterprises (SMEs), as the ATO believes the bulk of these activities occur among smaller business taxpayers. The Budget also included a $15.1 million boost for the existing small business debt helpline and programs focused on the financial and mental wellbeing of small business owners. Help with rising energy costs included $63 million to improve SME energy efficiency and energy use.

It’s unknown whether measures of the popular instant asset write-off and carry back of losses will be extended past 30 June 2023. We may need to wait for the May 2023 Budget for the answer.

STP Phase 2 deadline soon

With Single Touch Payroll (STP) Phase 2 reporting now well underway, small business employers need to remember their next reporting deadline is 1 January 2023.

Common STP reporting mistakes seen by the ATO this year include incorrect re-mapping of pay codes and not separately itemising bonuses, overtime and commissions; failure to correctly input existing year-to-date amounts; and incorrectly categorising allowances. The ATO has a range of factsheets and resources available to help employers get their STP reporting right.

Draft guidance on work from home deductions

Taxpayers working from home are likely to face significant rule changes when claiming tax deductions this financial year following release of the ATO’s draft guidance on the issue.

Under the new guidelines, employees will only be permitted to claim a deduction of 67 cents for every hour they genuinely work from home, instead of the 80 cents under the short-cut method available prior to 1 July 2022.

Asset depreciation on items used for work purposes will require a separate depreciation calculation. Employees will not require a separate home office or dedicated work area to claim the deduction, but normal substantiation rules apply.

Alternatively, employees working from home can claim a deduction for their expenses using the traditional actual cost method.

Increase in ATO penalty units

Taxpayers running afoul of the taxman will find themselves facing bigger bills this year after the Federal Budget included measures to increase the fines for regulatory penalty units. From 1 January 2023, fines will jump from $222 to $275 per penalty unit, a 19.3 per cent increase.

This is on top of regular indexation by the CPI, which is every three years, and this will remain in place, with the next one due to take effect on 1 July 2023.

Enhancing tax transparency

Large private business entities will face more scrutiny of their tax affairs after new legislation passed through Parliament to require greater transparency of the tax affairs of private companies.

The reform reduces the tax information reporting threshold for private corporate tax entities to companies with a total income of $100 million or more (previously $200 million or more). This lower threshold applies to reporting for 2022-23 and subsequent financial years.

The previous grandfathering of the exemption applying to certain large proprietary companies from the normal obligation to lodge their annual reports with ASIC was also removed.

Super for holiday season employees

Employers planning to hire staff on a short-term basis for the holiday season need to remember changes to the Superannuation Guarantee (SG) rules mean temporary staff may be eligible for super contributions.

From 1 July 2022, employers must make SG contributions at 10.5% for eligible employees regardless of how much they earn after removal of the $450 per month eligibility threshold.

For new employees who are offered choice of super fund but fail to choose, you must request their stapled super fund details from the ATO to meet your super obligations.

Leave your cares at home when you travel

Leave your cares at home when you travel

Holidays should be blissful periods where you can do exactly what you want – usually involving relaxing and enjoying time with loved ones. However, it’s not uncommon to come back even more tense than ever and feeling like you need another vacation after what should have been a lovely break.

Here are some ways to make sure your well-deserved break is all that you want it to be.

Dealing with disruption

It is more common now to face some level of disruption to holiday plans if you are flying – whether that be long queues at airports, flight cancellations or lost luggage. It’s important to recognise that there may be factors outside your control that impact your plans and deal with them as and when they happen. Keeping your cool, knowing your rights and trying to be constructive when faced with a problem can mean you are more likely to get assistance but there are also measures you can take to reduce the likelihood of problems.


There is a lot you can do in the way you plan your trip to avoid problems. When travelling consider leaving more than enough time at the airport before boarding and it’s also worthwhile taking earlier flights are they as less subject to being cancelled. Book direct flights where possible and ensure you allow adequate time for layovers in the event of delays.

There is a lot of demand for accommodation and hospitality services at present, so the days of spontaneity are over for now. Arrange accommodation in advance and research restaurants and attractions you’d like to go to and make bookings, so you don’t miss out.

Even the best laid plans do sometimes go astray so try to make the best of less-than-ideal circumstances. Your kid’s best memories of your holiday just might be when you got stuck overnight and had to stay in a funny little hotel in a strange city you had planned to visit only in transit.

Staying safe and well

You don’t want to get sick on holiday so take the basic precautions we all learnt during the pandemic to avoid catching lurgies and stay well.

It’s also quite common for people to let their guard down and take risks they may not take at home when they are on holiday, so think before hopping on that motorbike or crossing that flooded monsoonal river.

Travel insurance can be an important part of holiday planning so decide what may be appropriate for your circumstances and shop around to get the right coverage.

Switch off

Achieving the right headspace to enjoy your holiday can be as challenging as the planning and organisation. As tempting as it may be to check in and respond to work-related queries while you’re away, doing so may make it harder for you to relax and enjoy the moment.

If you are in a role where it’s not possible to completely switch off from work while you’re away, planning to check in for a limited time at the same time every day means you are not constantly ‘on call’ or thinking about work.

Ensure your holiday suits your style

Everyone’s idea of the ideal vacation is quite different. Some people like nothing better than a vacation filled with adventure and frenetic activity and for others the ideal holiday consists of lying around by the pool with a glass of something cold in their hand.

Know yourself and plan for a holiday that ticks the boxes for you, but also consider your travelling companion or companions, and make sure if you aren’t on the same page about how you want to spend your time, you are OK to spend some time apart doing your own thing.

Whatever your holiday style and preferences, a vacation is very much about what you make of it – so don’t sweat the small stuff (or even the big stuff that’s out of your control!) and make yours a happy, relaxing, and safe one.

Super Focus Pty Ltd (ABN 48 200 213 405) Corporate Authorised Representative of CMT Financial Services Pty Ltd (ABN 61 162 109 373) Australian Financial Services Licence No. 434 377 This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.