Articles and Company News
We aim to keep our clients up-to-date with news and relevant opinions which concern your finances. Our regular email bulletin is designed to inform and share views with our members.
2024
RBA Media Release, December 2024

Statement by the Reserve Bank Board: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.
Underlying inflation remains too high.
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Measures of underlying inflation are around 3½ per cent, which is still some way from the 2.5 per cent midpoint of the inflation target.
The most recent forecasts published in the November Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026. The Board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain.
The outlook remains uncertain.
While underlying inflation is still high, other recent data on economic activity have been mixed, but on balance softer than expected in November.
Growth in output has been weak. National accounts for the September quarter show that the economy grew by only 0.8 per cent over the past year. Outside of the COVID-19 pandemic, this is the slowest pace of growth since the early 1990s. Past declines in real disposable income and the ongoing effect of restrictive financial conditions continued to weigh on household consumption spending, particularly on discretionary items.
A range of indicators suggest that labour market conditions remain tight; while those conditions have been easing gradually, some indicators have recently stabilised. The unemployment rate was 4.1 per cent in October, up from 3.5 per cent in late 2022. That said, employment grew strongly over the three months to October, the participation rate remains close to record highs, vacancies are still relatively high and average hours worked have stabilised. At the same time, some cyclical labour market indicators, including youth unemployment and underemployment rates, have recently declined.
Wage pressures have eased more than expected in the November SMP. The rate of wages growth as measured by the Wage Price Index was 3.5 per cent over the year to the September quarter, a step down from the previous quarter, but labour productivity growth remains weak.
Taking account of recent data, the Board’s assessment is that monetary policy remains restrictive and is working as anticipated. Some of the upside risks to inflation appear to have eased and while the level of aggregate demand still appears to be above the economy’s supply capacity, that gap continues to close.
The central projection is for growth in household consumption to increase as income growth rises. September quarter data suggest that both incomes and consumption had recovered a little slower than forecast, but more recent information has suggested a pick-up in consumption in October and November. There is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market. More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slow growth in the economy and weak productivity outcomes at a time of excess demand, and while conditions in the labour market remain tight.
There remains a high level of uncertainty about the outlook abroad. Most central banks have eased monetary policy as they become more confident that inflation is moving sustainably back towards their respective targets. They note, however, that they are removing only some restrictiveness and remain alert to risks in both directions, namely weaker labour markets and stronger inflation. Geopolitical uncertainties remain pronounced.
Sustainably returning inflation to target is the priority.
Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer term inflation expectations have been consistent with the inflation target and it is important that this remains the case.
While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high. The November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint. Recent data on inflation and economic conditions are still consistent with these forecasts, and the Board is gaining some confidence that inflation is moving sustainably towards target.
The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.
2021
Franking Credits

There can be no better example of a fair and just tax than Australia’s system of Franking Credits.
Firstly, what are Franking Credits?
Also known as ‘Imputation Credits’, Franking Credits are the allowance made for Company Tax deducted before you receive your dividends on your company shares.
A little like Pay As You Go (PAYG) tax on wages.
Bear in mind that virtually every adult in Australia is a shareholder, via their Super or Pension Fund, in most of Australia’s major companies.
As we know, personal Income Tax is paid at varying levels according to total taxable income, rising from Zero, to 45% at the top ‘marginal’ rate.
Other entities, such as Companies, SuperFunds and PensionFunds pay tax too, and at different levels.
The Company Tax deducted from your dividends is at the rate of 30%. This means that when you receive your ‘nett’ dividend, it is ‘after tax’. So, for example, if today you received your after tax dividend cheque for $700, then $300 tax would already have been paid on your behalf. Thus, your ‘gross’ (before tax) dividend would have been $1,000.
When it comes time to do your tax return, you show the nett $700 you received, plus the franking Credit of $300, together totalling $1,000.
Your personal tax liability on your total income (including your dividend and franking credit) is then calculated.
Then, depending on the top ‘marginal’ rate of tax (0-45%) applicable to your income, this rate is applied to your dividend and to your franking credit.
For example, total taxable income (including dividend and franking credit) $95,000 (marginal tax rate 32.5%). Then your tax would be (32.5% x $1,000), that is $325.
However, because tax of $300 has already been paid, your liability is only $25. ($325 - $300)
But say your total income came to $18,000 (Zero marginal tax rate), then your liability would be Zero. Therefore the $300 tax ‘pre-paid’ would be fully refundable to you.
One of the major tax advantages of SuperFunds is that Income Tax of only 15% is payable on investment income.
This means that your fund receives, on your behalf, a tax credit/refund of half the Franking Credit. Effectively a 21% increase to the rate of Income Return!
And - when you reach retirement and convert your Super to a PensionFund, your Pension enjoys a Zero tax liability, and will receive a full refund of the pre-paid tax (this makes a Pension Fund an unbeatable tax shelter). A 42% increase to the Income Return!
A current example of the value of franking credits is Commonwealth Bank (CBA), having recently declared
its fully-franked dividend for the year of $3.50 per share. With its franking credit of $1.50 per share, this takes the total dividend to $5.00.
This would be a 5.8% return if you’d bought your shares six months’ ago. Or a 10.6% return if you’d bought 10 years’ ago.
But that’s another story.
Figures current at 23/8/21
2020
What happens next..?

The correct answer is “we don’t know.” No one does.
Let’s guess – we may as well, in the absence of any intelligent analysis.
Share prices are down.
We know that.
But unless we are about to cash in our shares, does it matter? They aren’t down because the companies are out of business – though many may be struggling. Share prices in fact reflect anticipated future company earnings – that is, profitability – and that could mean this year’s profitability or that in ten years’ time.
You could say that the buyers are the optimists, and figure their expectations of future profitability into their preparedness to buy the shares.
Sellers, on the other hand, may be pessimistic about the same company shares, or may have a different time-frame for their expectations.
So what do we learn from this?
Once again, the lesson is – “It’s all about Income.” But, then again, why are we investing? As our Client, we assume you are investing for your financial security – in most cases this means to be debt-free and have an adequate lifetime income-stream (ie a pension).
Well, – and stating the obvious – its not about gambling on share-price increases. (Did someone say ‘Which increases?”)
Whilst there’s never any absolute certainty of outcome, both reason and history have clearly demonstrated that the best chance of reliability of a consistent and growing income-stream is that which flows from a well-managed, reasonably diversified, Australian share portfolio – ideally within one or more managed funds such as those that have for many years made up the Superannuation and Pension funds of our many Clients.
Australian Shares. Managed Funds. Add to these, the (generally unrecognised) benefit of Imputation Credits that enhance your income-return, and we have a potent formula for seeing us – and our savings – through whatever the future holds.
With the right investments, we can have cause for optimism.
Here’s to a Covid-free future.
2020
Australian Government Benefits

To help you navigate the Government benefits available as a consequence of Covid-19, here's a breakdown of the latest Australian Government announcements.
JobKeeper
Applications now open. Main criteria business income reduced by at least 30%.
$100,000 Cash Flow Boost
Main criteria business income reduced by at least 30% and pays wages.
Instant Asset Write-Off Accelerated Depreciation
Main criteria acquired and installed between 12th March 2020 and 30th June, 2021.
Lease Code of Conduct
Commercial and Retail Lease Code of Conduct
Bank Loans
Bank Loans and rearrangements may apply depending on your bank (subject to conditions).
NSW Covid-19 Small Business Support Grant
$10,000 NSW Covid-10 Small Business Support Grant applications open 17th April, 2020 and close 1st June, 2020.
The key criteria is a 75% decline in turnover.
City of Sydney Council Small Business Grant
$10,000 City of Sydney Council Small Business Grant applications are now open and close on 27th April, 2020 (subject to conditions).
Exporters
Exporters affected by Covid-19 may be eligible for finance.
Landlords
Eligible landlords can apply for NSW Land Tax reduction (up to 25%) of their 2020 Land Tax liability on NSW properties (subject to conditions).
Payroll Tax
A Payroll Tax discount of 25% or deferral may apply to employers with Grouped Australian wages (subject to conditions).
NSW Fees and Charges
Removal and/or deferral of various industry fees and charges in NSW (subject to conditions).
Superannuation
Access to $10,000 of your superannuation before 30th June, 2020 and $10,000 after 30th June, 2020 (subject to conditions).
Some benefits and concessions also apply depending on your region.
Please call us if we can help in any way on (02) 9476 2200 or contact us here.
Your financial security is our concern.
2020
The Next Virus

Beware of the Next Virus... It’s Coming!
The Corona Virus is the forerunner. This one is unavoidable! It will infect every living soul, no exceptions. It’s not fatal, but it is potentially disastrous.
It is a direct consequence of the Corona Virus, and no-one can escape this one.
Where is this horror-virus coming from?
We are breeding it. Deliberately. Here in Australia. So is every other country in the World.
Why? How? What is it?
As we know, our government - and governments everywhere - are embarking on “economic stimulus packages” to counter the disastrous effects of the current pandemic.
This is commendable and necessary.
However, it means one thing: they are spending money. But it's money they don’t have! They will have to print it!
This translates to one inevitable result: a highly infective economic virus.
It’s called INFLATION.
Inflation means RISING PRICES - of everything. Your Cash will lose value. Your money will buy less at the shops. Everything will cost more.
You will be poorer - inevitably.
Australia has enjoyed almost three decades of economic prosperity and negligible Inflation.
No doubt, we are well placed to weather the economic storm, but - unavoidably - the price will be high inflation - the disease of the 1970’s and 1980’s, but this outbreak will likely be worse.
Here’s the Question
Is Cash (in the bank, or under the bed, or in your SuperFund) the safest asset?
Interest rates are the lowest in living memory and are destined to fall further. Couple this fact with the government’s printing money and we have a potent formula for personal financial disaster.
The Lesson - The Safeguard
Do not be tempted to turn your investment assets - whatever they are - into Cash.
Inflation means that you will need more cash to pay for goods and services, certainly. But equally, you’ll need more cash to buy shares and real estate. They - notwithstanding the present (and future) volatility - will hold, and increase their value.
From past experience, real property - that is, shares and real estate, and not cash - will prove to be the safe haven for your investments.
In summary, we know the economic virus is coming, but - to the wise and the practical - and the faithful - we can avoid infection.
Cash is certainly not the medicine. Cash could be the problem.
Please call us if you have any concerns on (02) 9476 2200 or contact us here.
Your financial security is our concern.
2020
Who’s not worried - about their investments, their life savings?

Well, correct that everyone is concerned - and should be. After all, in our lifetimes, at least, we’ve never experienced the current situation.
But who should be concerned about their investments?
Answer: They whose investments are structured to rely on Capital Growth - as are 95% of holders of Superannuation or Pension Funds.
The present ‘market downturn’ is a potential calamity for those folks.
For SuperFund holders, at least they have time on their side - given the market recovers before they reach retirement. If not, well...
But for Pension holders it’s a tragically different story. Today, they are having to draw down on their capital, at a time when their capital has shrunk, and they face the real risk of exhausting their capital. No more capital means no more Income (other than CentreLink).
So, where do you stand - whether retired or not?
In a few words; if your have listened - and acted - on our advice over the past few years, your investments are as safe as they could be, especially throughout periods such as the present, because they are structured essentially to generate a continuing and growing Income Stream.
As such, your funds will inevitably have suffered a reduction in their market value, BUT because your funds are now structured to maximise INCOME (essentially through share-dividend Income), and because the number of shares you own (call them ‘units’ in your Super/Pension fund), hasn’t changed, and because dividends are paid PER SHARE, your Investment Income continues.
Time and circumstances will tell whether company dividends will be reduced pending the end of the present pandemic, but - given you now have this investment structure - you are in the best possible position to withstand the negative effects of this present episode in human history.
Footnote
If your funds have not been structured as we advocate, should you be worried?
Yes, and NOW is the time to act. It’s Better Late Than Never.
We can, and will, assist you. We want to, and you only need to contact us.
Call us on (02) 9476 2200 or contact us here.
Your financial security is our concern.
2020
Oh! The Markets

“More than $130 billion wiped off ASX as coronavirus bloodbath continues”
“ASX faces worst week since GFC”
Oh dear, here we go again - the end of the World is nigh!
BUT ISN'T IT NICE TO KNOW that if your investments (including your Superannuation or Pension Fund) have been wisely structured to generate INCOME (from share dividends), rather than gambling on Capital Gains, then your income is not under threat?
It’s as Simple as This...
Dividends are paid PER SHARE.
They are NOT paid according to the SHARE PRICE.
So, markets rise, markets fall. But the number of shares you own stays the same.
Falling - or rising - share-prices doesn’t change the number of shares you (or your Super or Pension fund, on your behalf) owns.
Worth Repeating...
Dividends are paid PER SHARE.
Whilst it may transpire to be the case that some companies may have their profits trimmed and consequently have less to pay to their shareholders, others may actually benefit from the downturn. For example, building materials companies are booming following the devastation of the recent bushfires and floods, as rebuilding gets underway. Commercial opportunities abound in every situation.
It is not the purpose of this brief article to discuss the coronavirus outbreak, but simply to send a note of calm and caution.
Doubtless, markets will recover anyway, as they inevitably do. It’s in the nature of our advanced economy, and those of the developed World.
In the meantime, as said, your Investment Income remains safe and secure.
Best Wishes,
Your Team at Wellings & Associates
2019
Your Franking Credits are Safe.

The cloud has lifted. You are not going to lose your Franking Credits. What a boost for the moral - and financial well-being - of retirees!
The retention of Franking Credits means there will be no reduction to pensions and share-dividend income.
The depressing prospect of up to a 30% reduction in share dividend income that has seemed to be a foregone conclusion for the past several months suddenly disappeared late Saturday evening.
All retirees - but especially low-income retirees - were in grave danger of experiencing up to 30% reduction to their living income. This will now not take place.
Politics notwithstanding, we regard this as a victory for common sense and honesty.
Also bear in mind that it wasn’t just investment Income that was going to be affected. Capital Gains Tax was also going to increase - by a massive 50%! That isn’t going to happen either.
Neither will we see the loss of tax deductibility of negative gearing.
(Negative gearing essentially means that where the ‘running costs’ (mortgage interest, maintenance, rates, insurance, etc) exceed the rental income of the property, then the investment runs at a loss; such loss then being offset against the taxpayer’s other income earnings.)
We should recognise that tax deductibility of negative gearing has been an underlying principle in the supply of rental housing in Australia for the past half-century or more. We should also recognise that the vast majority of residential property investors are not, as often portrayed, ‘the top end of town’, but are typical Mum & Dad investors seeking to provide for their own and their children’s future financial security.
And let's not ignore the salient fact that this ‘loss of taxation revenue to Treasury’ is actually ‘money in the bank’ for Treasury, as Treasury ultimately gains revenue - by Capital Gains Tax - when the property is eventually sold. Up to 23.5% of the gain, in fact.
Couple the loss of tax deductibility of negative gearing with a 50% increase to Capital Gains Tax, and why would anyone have wished to invest in residential real estate?
In summary, it's a case of the classic maxim “If it ain’t broke, don’t fix it.” Thank goodness, we didn’t.
So here’s to the continuing prosperity of our great nation, and thereby to the financial security and well-being of each of us who are privileged to be Her beneficiaries.
2018
Let's Change the Headline

Dow Jones Industrial Average Share index drops 4.6%, or 1,175 points, in biggest drop since 2008 financial crisis.
In Sydney, the ‘All Ords’ dropped 1.63%, or 101 points yesterday, and will likely do the same again today.
WHOOPEE! Crack the bubbly! Let’s celebrate!
Let’s Change the Headline:
‘The price of cars, petrol, electricity, bread, milk, clothes, wine, beer, all fell by 4.6% yesterday!'
What would you do?
GO SHOPPING, OF COURSE! AND HOPE THE PRICES DON’T RISE AGAIN TILL YOU’VE FINISHED SHOPPING.
Does this reasoning seem weird to you? Well, yes it does - if you are a share-trader. A speculator. A gambler.
But if you bought your shares to secure a reliable, consistent income-stream, what does today’s price matter? Apart from the fact that you could buy that same income-stream for less today.
In fact, if you are a regular contributor to your SuperFund, you ARE buying cheaper today. Whoopee!
OK, so it’s the same old message we’ve been preaching since 2002; ie ‘It’s not about the All Ords. It’s about the economy, Stupid!’
The simple fact is that lower share-prices means that you can buy more dividend-producing shares. Just like you could buy more bread, milk, petrol, etc.
And, incidentally, if you’re now retired and living on your dividend income, your income doesn’t change because there’s a temporary (they all are) fall in share prices. In fact the prognosis for dividends this year and next year (because it’s about the economy, Stupid) is nothing less than very positive.
Enjoy your day. Have a glass of bubbly. Celebrate.
I will.
Securely yours,
Jack Wellings
2017
Please Update your Records

After 22 years in our Lindfield office, we have relocated to Hornsby on Sydney's upper north shore.
You will now find us at:
Suite 604, Avanti Building
90 George Street
Hornsby 2077
Our new land-line is (02) 9476 2200
We look forward to welcoming you at your earliest opportunity.