Finance & Investment

Pfisterer says Zeller and other fintechs challenge big banks to ‘lift their game’

By Leon Gettler, Talking Business >>

THE number of Australian fintechs is growing strongly.

But Ben Pfisterer, the CEO of business payment service Zeller, says more competition is needed in the business-to-business (B2B) banking industry. 

“We have got an unprecedented time with technological change at the moment and that’s just not coming through,” Mr Pfisterer told Talking Business.

“You’ve only got to look at the majority of terminals that sit on business counter tops and they are old, traditional, small screen offerings – basically a number being routed around the eco-system. They don’t do anything other than that primary function.

“We believe a lot can be done with that payment experience.”

Mr Pfisterer has a lot of experience in this space. He set up Square (now Block), the payments company, in Australia, and ran that for six years.

Zeller creates Aussie niche

He said Zeller was creating a niche in the market.

“If you look at business banking, it’s obviously tightly held by four pretty big incumbent banks and if you look at the solutions they provide, they’re pretty generic, they haven’t evolved and they still have problems,” he said.

Zeller aims to be a one-stop shop for businesses’ banking needs, according to Mr Pfisterer.

Zeller was started in 2020, and when it launched in 2021 it offered debit cards, business banking accounts and payment terminals. Now Zeller plans to also offer online payment acceptance, credit cards and expense management services.

Over time, Zeller is looking to expand into lending and become a fully licensed bank under the Australian Prudential Regulation Authority (APRA).

Mr Pfisterer said businesses needed to go through a whole bunch of processes for payment, such as setting up bank accounts and applying for a Visa or Master Card service, to get going.

“That’s a whole set of understanding rules, fees, terms and conditions, and contracts,” he said.

“That shouldn’t be the case. Every business needs these products and we should be able to offer them vastly more simply.

“We’re not talking about lending money here. There shouldn’t be this rigmarole and protracted process happening.

“We thought we could do it better. We could truncate it.

“If you look at the four majors, their solutions are incredibly similar and they haven’t changed much.”

“We believe we can do a whole lot better and hopefully we’re proving that,” Mr Pfisterer said.

Finance competition is lacking

Mr Pfisterer said with the four major banks, there was not enough competition in finance for the B2B industry.

“Whether that’s competition from lack of product or prices, it’s simply not enough,” Mr Pfisterer said.

“We hear it consistently. They don’t get the service they need. They don’t get the innovation.”

He said the major banks were not working in the area of payment services.

“What should be a simple process of accepting payments and holding money … the banks have done a goof job. Don’t get me wrong but ultimately, they’re not changing fast enough to keep up and businesses need more in today’s environment.

“There’s a whole lot of sweeping change, whether it’s Buy Now, Pay Later or accounting software,” Mr Pfisterer  said.

“All these things need to be better integrated and merged into these products. They don’t need that confusion in banking products.”

www.myzeller.com

www.leongettler.com

 

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.

https://play.acast.com/s/talkingbusiness/talking-business-45-interview-with-ben-pfisterer-from-zeller

 

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Banking Code Compliance Committee urges ‘early collaboration’ to assist small businesses in financial difficulty

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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ATO highlights EOFY changes for small business

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

 

ENDS

Building loans remain at 15 year low, HIA warns

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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AIST wants menopause impacts measured as estimated women’s retirement funds ‘below par’

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

 

ends

What you really need to know about the 2023 tax year

By Sonia Gibson

THE 2023 TAX YEAR has just begun and it’s important to know what’s changing in the way of your personal and corporate liabilities – and also with respect to changes in superannuation and trust management. 

The good news is that there’s nothing truly shocking to take into account and most changes for this tax year aren’t going to leave you with a huge increase in your tax burden. However, you do need to be aware of these changes, if you want to be prepared for your return next June.

FOR INDIVIDUALS – a minor change

The only change for individuals is that the ‘home office short cut method’ which allowed somebody working from home to claim 80 cents an hour, has been cancelled.

This should come as no surprise as it was a measure meant to provide some relief during the lockdowns when people were being forced to work from home. 

It seems unlikely that lockdowns are going to return on a similar scale and thus, the tax relief provided for that scenario is no longer needed. 

FOR COMPANIES – some good news

The 2023 financial year sees that company tax rate drop from 26 percent to 25 percent for those companies that are ‘base rate entities’ (that is, they turn over less than $50 million a year). 

However, the super guarantee levy goes up to 10.5 percent and the $450 super guarantee threshold is being dropped for monthly wages.

That means you must pay 10.5 percent super on all payments to employees and eligible contractors no matter what the amount you’re paying them. 

It’s worth noting that this change also means that if you have to make super contributions for young workers (those under 18) you will no longer have to make such contributions unless the young person works more than 30 hours each week for you.

The shadow of Covid means that rapid antigen tests are still a useful tool and these tests have been deemed fully tax deductible if they are required in order for someone to attend a place of work. 

The loss carry back provision for 2022 applies again and finishes on June 30, 2023. This allows for a rebate up to the amount of tax paid between July 1, 2018, and June 30, 2022, if a tax loss has been incurred between July 1, 2019, and June 30, 2023.

Single touch payroll reporting is now mandatory for all business with employees on the payroll. This also incorporates a director taking periodic payments if an adjustment has been done for wages, director’s fees or a bonus at the end of the financial year.

ASSETS – full expensing

Assuming your business turns over less than $50m a year, then all business asset purchases installed and ready for use between October 6, 2020 and June 30, 2023 will be 100 percent tax deductible. 

The only exception to this rule is if you purchase a car for more than $60,733 where FBT (fringe benefits tax) may apply. 

SMALL BUSINESS TECHNOLOGY INVESTMENTS AND SMALL BUSINESS SKILLS TRAINING – not yet law

The previous government had put forward a bill which would provide 120 percent deduction for investments in technology by businesses turning over less than $50m, though there would be an annual cap to this of $100,000 worth of qualifying income. 

The measure would cover expenditure and investment related to digital adoption (such as payments to cloud services, portable payment devices, etc.) 

However, this measure has not yet been made law. If it is made law, then it will apply to expenditures incurred between 7.30pm (AEDT) on March 29, 2022 and until June 30, 2023.

A similar measure for small business skills training has also been proposed but has not yet become law. If it does become law, eligible expenses for the 2022 financial year are to be claimed in the 2023 tax return along with any eligible expense from 2023.

SUPERANNUATION

There aren’t many changes to superannuation this year. The transfer balance cap has gone up from $1.6 million to $1.7 million. 

The work test has been discontinued for those aged between 67 and 74 when the individual makes personal non-concessional super contributions and salary sacrifice contributions. 

And the age threshold for downsizing contributions, when moving home after selling an original home, has decreased from 65 to 60. The maximum contribution that can be made is $300,000. 

FINAL THOUGHTS on the 2023 tax year

This is a brief overview of the major changes for the year ahead, it’s very important to get specific advice regarding your circumstances from an accountant.

This is doubly true if you are using a trust where the gifting back law change may affect you. This is a complex area and it’s impossible to do justice to it in a couple of paragraphs.

www.accountingheart.com.au

About the author                                  

Sonia Gibson, of Accounting Heart Chartered Accountants has always loved solving puzzles and empowering people to help themselves. Accounting Heart brings these two passions of hers – her head and heart – together. While figures might send you batty, to Sonia they tell the unique story of your business. It’s her role to translate that story into one you’ll understand, so you can then write it your own way. 

 

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Lower quality advice for lower fees? No thanks, says Scott Phillips

By Scott Phillips

Really? 'Lowering standards to lower fees' is the proposed approach to reforming financial advice? That’s a strong 'hell to the no' from me.

See, there’s a review underway, covering financial advice. And boy… as you can tell, I have some thoughts. Strap yourselves in.

Apparently, if reports in the Australian Financial Review are to be believed (and there’s no reason not to) the review is going to recommend that financial advisors no longer have to apply the ‘best interest’ test, when giving financial advice.

Whoa! What the actual? 

If these changes go through, financial advisors would no longer have to ensure their advice was in the clients’ best interest? Think about that for a minute.

Imagine being a doctor, and not having your patients’ best interest as your number one obligation. Or a lawyer, and not having to act in the best interest of your client.

And yet this review is (apparently) about to let financial advisors act in some other way?

Apparently ‘good’ advice will now be enough. Bloody hell.

Maybe, after a decade or so, the industry is about to win, putting itself ahead of its clients again? Oh, they don’t actually say that. They say they’re worried that advice isn’t affordable enough.

See, having to act in clients’ best interest is apparently too expensive. And if they don’t have to do that any more, they can make advice cheaper.

Sure, it may not be in our best interest any more, but at least it’s affordable. If that sentence doesn’t strike you as completely absurd, you need to read it again.

Apparently the options are:

  • We’ll do what’s in your best interest, but it’ll be expensive; or
  • You can pay less, but we can’t promise the advice is in your best interest

Frankly, I’m not sure I have the words.

Some people will say the administrative burden of the ‘best interests test’ excludes those who can’t afford the fee. I’m sure that’s right. After all, most financial advisors are driving 15-year old Toyota Camrys, right?

A cheap shot? Maybe. And they're not bad guys and girls. Frankly, they're right -- the admin burden is a debacle.

They're not wrong about the problem. But it's the proposed solution that stinks.

See, there IS a problem.

But it’s not the one you think. It’s not the ‘best interests’ duty that’s the problem. It’s the fact our system is so bloody complex that so many of us need, or could possibly benefit from, financial advice in the first place.

Which, if you’re a financial planner, you’re not really going to complain about, are you? Because it’s that very patchwork of tax complexity that is your meal ticket.

I don’t blame those advisers for helping us navigate it, by the way.  But if they were honest with themselves, I’m pretty sure they’d admit that the complexity isn’t actually necessary for our society to function.

And many of their clients, if they were being honest, would suggest the same.

(Don’t believe me? Compare the number of people who want less red tape for business with the number of people who love it, when it helps them get one over the taxman. Ideology is kinda Swiss-cheesy like that – it gets very holey when you might benefit.)

So they’re right – much of the financial advice regulation requires lots of overheads to make sure its in the client’s best interest… which is as it should be. 

Who honestly thinks ‘Ah, close enough’ is okay? Financial advice should always be in the clients’ best interest.

So the answer isn’t to give advice which is okay-ish, to save a few bob. It’s to change the law so that the financial advice isn’t needed.

Seriously, when I can pay a financial adviser a few thousand dollars, and still make more than that based on the advice she gives me, the system is broken. 

Super, family trusts, company structures, negative gearing, estate planning, work deductions… the list goes on.

Why? Because the politicians and regulators have been captured by the industry and its wealthiest clients.

How many people got formal financial advice (other than an accountant helping them lodge their tax) a few decades ago? Probably a small fraction of the adult population.

These days?  The dog’s breakfast of loopholes and (legal) tax dodges gets bigger by the year. And it’s no wonder the industry keeps growing.

If the government is serious, and Treasury is fair dinkum, they won’t repeal the best interests test. They’ll change the law so that my financial adviser says ‘Sorry, mate. I can’t justify taking you on as a client. There’s nothing I can do for you’.

Or, ‘taking you on as a client is expensive, because my advice needs to be in your best interests, and I can save you enough to offset my fee’. 

The middle ground – slightly less expensive advice that isn’t in my best interest – is something only a government (or a financial advice industry looking for a payday) could love. 

I guess we’ll see who has the ear of those in power, and whether they’re truly trying to improve things.

Over to you, Prime Minister.

www.fool.com.au

  • Scott Phillips is the chief investment officer for The Motley Fool and a regular financial issues commentator online, on radio and on television. He also produces podcasts and can be found on Twitter, Facebook and Instagram. He also appears on The Motley Fool's subscription YouTube channel.

 

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