We look at the current state of play and the likely impact Climate change featured heavily during the election and now the Albanese Government is putting into place some of the promises it made. The Government’s Climate Change Bill passed the House of Representatives in early August and is now before the Senate Environment and Communications Legislation Committee for review. But what impact does the legislation have on business and consumers in Australia? Under the Paris Agreement, a legally binding international treaty, Australia and 192 other parties committed to substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees. At this level, the more extreme impacts of climate change - floods, heatwaves, rising sea levels, threats to food production - can be arrested. As part of this commitment, the parties are required to communicate their emissions reduction ambitions through a Nationally Determined Contribution (NDC). On 16 June 2022, Australia communicated its updated NDC to the UN, confirming Australia’s commitment to achieve net zero emissions by 2050, and a new, increased target of 43% below 2005 levels by 2030 (a 15% increase on the previous target). The Climate Change Bill enshrines these emission targets into legislation. The Bill itself sets an accountability framework for climate targets but does not introduce mechanisms to cut emissions. Impacted industries The energy sector is at the heart of climate change producing around three-quarters of global greenhouse gas emissions. In Australia, the CSIRO says energy contributes approximately 33.6% of all emissions, with a further 20.54% from stationary energy (from manufacturing, mining, residential and commercial fuel use), transport 17.6%, and agriculture 14.6%. The future of the energy industry is also at the crux of the Government Powering Australia policy. Emissions reduction is not just a social obligation but a necessity as investment tilts towards lower emission suppliers. As an example, the 2022-23 Federal Budget committed a $120 billion 10-year infrastructure pipeline. The June 2022 Business Council of Australia Infrastructure in a world moving to net zero report provides a series of recommendations to address the way in which Government invests including the adoption of low carbon materials on public projects and options for reducing emissions during construction, understanding the whole of life emissions impact of infrastructure projects and potentially adopting the UK style PAS2080 standard on carbon management infrastructure, and a shift in procurement to lower carbon supply chains. If these considerations have not made it into business production and supply chain planning, they will soon. Amongst other initiatives the Government have committed to: $20bn investment in Australia’s electricity grid to accelerate the decarbonisation. An additional $300m to deliver community batteries and solar banks across Australia. Up to $3bn investment in the new National Reconstruction Fund to support renewables manufacturing and low emissions technologies. Powering the Regions Fund to support the development of new clean energy industries and the decarbonisation priorities of existing industry. Double existing investment in electric vehicle charging and establish hydrogen refuelling infrastructure (to $500m). Review the effectiveness of the Emissions Reduction Fund that provides businesses with the opportunity to earn Australian carbon credit units for every tonne of carbon dioxide equivalent a business stores or avoids emitting through adopting new practices and technologies. New standardised and internationally-aligned reporting requirements for climate risks and opportunities for large businesses. Reduce the emissions of Commonwealth Government agencies to net zero by 2030. In essence, business can expect directed funding for co-investment in emission reduction technology, Government spending to be through the lens of the renewed emissions targets, and for new funding opportunities to advance low emission technology. But emissions reduction is not just about industry. Land use change can have a significant impact on emissions through reductions. For example, a reduction in forest clearing in 2020 reduced emissions by 4.9%. One initiative needs to go hand in hand with the other. In 2021, fossil fuels represented 67.5% (59.1% coal) of the total annual electricity generation and renewables 32.5% (an increase of 5% on the previous year with the spike contributed by small-scale solar, and large-scale solar and wind farms).

The ATO has released updated information on claiming cryptocurrency losses and gains in your tax return The first point to understand is that gains and losses from crypto are only reported in your tax return when you dispose of it — you sell it, convert it to fiat currency, exchange it for another type of asset, buy something with it, etc. You cannot recognise market fluctuations or claim a loss because the value of your crypto assets changed until the loss is realised or crystallised. Gains and losses from the disposal of cryptocurrency should be reported in your tax return in the year that the disposal occurred. If you made a capital gain on crypto that was held as an investment and you held the crypto for more than 12 months then you may be able to access the 50% Capital Gains Tax (CGT) discount and halve the tax you pay. If you made a loss on the cryptocurrency (capital loss) when you disposed of it, you can generally offset the loss against capital gains you might have (unless the crypto is a personal use asset). But, you can only offset capital losses against capital gains. You cannot offset these losses against other forms of income like salary and wages, unfortunately. If you don’t have any capital gains to offset, you can hold the losses and carry them forward for another future year when you can use them. If you earned income from crypto such as airdrops or staking rewards, then these also need to be reported in your tax return. And remember, keep records of your crypto transactions. The ATO has sophisticated data matching programs in place and cryptocurrency reporting is a major area of focus. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

The RBA lifted the cash rate to 1.85% in early August 2022 The increase comes a few weeks after Reserve Bank Governor Philip Lowe told the Australian Strategic Business Forum that “…we're going through a process now of steadily increasing interest rates, and there's more of that to come. We've got to move away from these very low levels of interest rates we had during the emergency.” He went on to say that we should expect interest rates of 2.5% - how quickly we get there really depends on inflation. The RBA Governor has come under increasing pressure over comments made in October 2021 suggesting that interest rates would not rise until 2024. At the time however, Australia was coming out of the Delta outbreak, wage and pricing pressure was subdued, and inflation was low. That all changed and changed dramatically. Inflation is now forecast to reach 7.75% over 2022 before trending down. We’re not expected to reach the RBA’s target inflation rate range of 2% to 3% until the 2023-24 financial year. In the UK, the situation is worse with the Bank of England predicting that inflation will reach around 13% over the next few months. The UK has been heavily impacted by the war in Ukraine with the price of gas doubling, compounding pressure from post-pandemic supply chain issues and price increases. With interest rates rising, what can we expect? Deputy RBA Governor Michele Bullock recently said that Australia’s household credit-to-income ratio is a relatively high 150%, increasing in an environment that enabled households to service higher levels of debt. But it is not all doom and gloom. “Strong growth in housing prices over 2021 and early 2022 has boosted asset values for many homeowners, with housing assets now comprising around half of household assets,” she said. The recent downturn in house prices has only marginally eroded the large increases over recent years. Plus, households have saved around $260m since the pandemic creating a buffer for rising interest rates. This, however, is a macro view of the economy at large and individual households and businesses will face different pressures depending on their individual circumstances. For businesses, the rate increase has a twofold effect. It is not just the rate rise and the higher cost of funds in their borrowings. That by itself is significant but at this stage, if anything, it is the lesser issue. The more significant impact comes from negative consumer sentiment and the flow through effect on sales and cash flow. In general, your debts should not exceed around 35-40% of your assets. There will be some exceptions to this with new business start-ups and first home buyers. Review the cost of cash in your business, reviewing rates, and the configuration and mix of loans to ensure you are not paying more than you need to. If possible, avoid having private debt as well as business and investment debts. You can't get tax relief on your private debt. Keep an eye on debtors and don’t become your customer’s bank. How to contact us We’re available to assist your business. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

Aged care planning and the 'sandwich' generation Too many things to do ... pulled in many directions ... and never enough time Setting the scene Jean is in her early 60’s working hard in a busy professional career and has retirement on her mind. But that’s not all that was on her mind ... Jean’s husband is about the same age and thinking of retirement as well. They have two young adult children who have just started their working lives and both are still cozied up in the family home with no departure date in sight. In her “spare time” Jean does most of the jobs around the house and generally keeps her household together. Jean’s Mum is in her mid-80s and lives in her own home across town. Sadly, Jean’s Dad suddenly passed away a few years back. Jean visits her Mum regularly and she is starting to get concerned about how her Mum is managing alone at home. Jean has a brother and a sister who aren’t living close by and therefore don’t visit their Mum anywhere near as often as Jean does, instead relying on news from Jean about how Mum is going. Sound familiar? This scenario plays out in many households across Australia. Welcome to the “sandwich (or “caught in the middle”) generation” ... where your “daily balancing act” is to look after your own children and your parents ... oh and don’t forget about looking after yourself along the way. The job is often highly time-consuming, emotionally straining and stressful. What typically happens As much as Jean has tried to talk to her Mum about getting some “extra” help, the discussion often starts and ends with words spoken such as “I don’t want to talk about it”, “I’m fine”, “it’s not me yet”, “you’re so busy and I didn’t want to bother you” to name a few. Have you heard this before? Exasperated, Jean (literally) struggles on. And often the struggle continues until there is some form of crisis. Then things have to happen ... and seemingly fast. It’s best to talk ... but that’s often not easy How does Jean get everyone on board to sit down and have a meaningful conversation? There are many articles written about asking parents what they need or want both now and into the future. Sometimes these strategies work ... and sometimes they go nowhere. Getting everyone around the dinner table who needs to be there and talking about things often produces great outcomes. Putting a written plan together about what’s important and who does what and when is a big contributing success factor. But, many Australians don’t want to do this ... and even fewer actually do it (until a crisis occurs of course). Logistically, actually doing something like this often proves difficult. If Jean could only do one thing right now ... what would it be? Do this ... Jean’s Mum had always been in-charge of her family finances – from when she was married until now. She kept great records of everything (and that means “everything” without throwing “anything” away). However, in recent times, Jean had noticed things weren’t being kept as organised by her Mum – she would often see documents sitting on the dinner table and around the house and found boxes (and boxes ... and boxes) of all types of paperwork stored in cupboards and drawers. Of all the conversations that families can and should have, finances are never the easiest. So, Jean went out and purchased (for only a few dollars) an A4 plastic hardcover folder with plastic inserts and gave it to her Mum. She suggested that Mum keep all her latest statements, such as cash and term deposit accounts, superannuation and age pension, shareholdings, house and content insurance, rates, telephone and electricity bills; even copies of her latest legal documents such as her Will, Enduring Power of Attorney, etc in the folder. If one of these statements arrives – Mum simply had to take out the previous statement and replace it with the new statement. Mum could store or file the old statement wherever she wanted to. Mum then simply had to put the folder in a place where she knew to find it and let Jean know where that was as well ... just in case. Periodically, when Jean visited her Mum, she would ask where the folder was and how was it going. She would then have a look through it “over a cuppa” to make sure things were being kept and stored properly and update it with her Mum if needed. No deep and meaningful discussions about money and finances ... Jean just knew where the folder was if she needed to find it and it was a great starting point for her if she ever needed to step in and stand up to run her Mum’s financial affairs. There would never be any time-consuming, and stressful, “search” through Mum’s home for these important documents. The folder also served as a useful “conversation starter” about how things were going for her Mum and what she might want now, or need in the future. And this conversation led to the next conversation and the next conversation ... in a relaxed and casual environment. How Family Aged Care Advocates fit in That’s where Family Aged Care Advocates can step in, with guidance and support to help families identify the relevant options to help you make informed decisions to get the best care outcomes for the people you love and care for most. FACA are independent aged care specialists only interested in the right outcomes for Jean and her Mum, and your family. Sidenote Among the many jobs that Jean had in her busy life as a professional career woman, wife, Mum, peace-keeper and carer, she was also the “chief finance officer and record keeper” at her own home. She must have missed the family meeting for that job nomination as well. Jean was so impressed with the idea for her Mum that she also implemented the same “folder” system in her own household and told her husband and children where to find the folder if she wasn’t around (just in case for whatever reason).

One of the biggest complaints from salespeople in a tight economy is the time it takes to achieve a sale. So, what can you do to speed up the sales process? Sell the solution, not the product Branding is wonderful but unless your brand is as mighty as Coca-Cola, it’s unlikely people will purchase what you have based on brand alone. It’s more important than ever to have clarity about why your product or service is valuable to your audience and why they should be buying it from you. The point is to understand what the most meaningful message is for your customer and that is unlikely to be a product feature list. Sell the savings Does your product offer your customer any efficiency gain or benefit beyond value over time? Can you justify it with real examples such as testimonials and worked examples? If it does, you need to ensure that you articulate this message. If there is a benefit, ensure you highlight it and emphasise the result. Try and stay away from long-range forecasts. If it is going to take a few years to see the real value then this is not a compelling selling point in the current market. You are only as strong as the weakest link in your sales process If your first point of contact is the weakest link in your sales chain, then you need to fix it. Help your team identify and capitalise on opportunities by giving them the training and structure they need. Value-added discounts Discounting is a common strategy to increase sales but it comes at the cost of your margin. If you are going to discount, do it strategically. For example, when David Jones wanted to build the number of customers holding a David Jones AMEX, they offered a limited-time 30% discount storewide to everyone who either held or applied for the card on the spot. And, staff were trained to encourage the adoption of the AMEX at the checkout. Yes, it was a big discount, but it created an event for existing store card holders and ramped up acquisition to the store card program. The added benefit is that loyalty programs work; the probability of selling to an existing customer is around 14 times higher than a new customer. In tough economic times, it’s common for the volume of products purchased by customers to go down. You can overcome some of this reticence by packaging items together and encouraging sales volume by offering a discount on the second item or on bundles. If you are going to package, ensure you are not packaging low-margin products and then discounting them. Packaging works best when you package products with higher profit margins or when you boost the sales volume of slow-moving stock by combining it with faster selling stock. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

Partner spotlight on Jamie Doyle Jamie Doyle is Collins Hume’s small business specialist working with established businesses and start-ups, streamlining their setups, structuring and software so they can realise their full potential. The key to small business success is ensuring that the right processes are in place and continue to be kept in check. Anyone in a business can have a great idea and seeing a great idea seized upon and implemented, big or small, will fire up even the most timid of us. Jamie is all about setting entrepreneurs on the right path from the outset. Using cloud accounting data Jamie is also able to assist business owners on a deeper level with Virtual Chief Financial Officer (VCFO) reporting and insight to enhance business performance. For both start-up and established enterprises, Jamie is on hand as a cloud specialist with a breadth of knowledge spanning Australia’s major accounting software solutions and the add-ons specific to each industry. He is behind some remarkable business efficiency projects where business owners have experienced better efficiency, fewer errors and faster payment times thanks to Jamie transitioning their accounting to the cloud. More and more we're seeing successful businesses tapping into Collins Hume’s strategic business advice and reporting to take advantage of having a financial mentor on tap to help them make important decisions. A common trait of successful business people is that they look to specialists for help. Collins Hume Partner, Jamie Doyle CPA, holds a Bachelor of Business (Accounting) and is a Registered Tax Agent, Xero Certified Advisor and Law Society of NSW External Examiner.

Everyone knows you don’t pay tax on your family home when you sell it, right? We take a closer look at the main residence exemption that excludes your home from capital gains tax and the triggers that reduce or exclude that exemption. Capital gains tax (CGT) applies to gains you have made on the sale of capital assets (assets you make money from). Unless an exemption or reduction applies, or you can offset the tax against a capital loss, any gain you made on an asset is taxed at your marginal tax rate. What is the main residence exemption? Your main residence is the home you live in. In general, CGT applies to the sale of your home unless you have an exemption, partial exemption, or you are able to offset the tax against a capital loss. If you are an Australian resident for tax purposes, you can access the full main residence exemption when you sell your home if your home was your main residence for the whole time you owned it, the land your home is on is or is under 2 hectares, and you did not use your home to produce an income – for example running a business from your home or renting it out. If the home is on more than 2 hectares, if eligible, you can treat the home and up to 2 hectares of the land it is on as one asset and claim the main residence exemption on this asset. However, if you use your home to produce an income by running a business from home or renting it out, CGT can apply to the portion of the home used to produce income from that time onwards. What’s a main residence? For CGT purposes, your home normally qualifies as your main residence from the point you move in and start living there. However, if you move in as soon as practicable after the settlement date of the contract, that home is considered your main residence from the time you acquired it. If you cannot move in straight away because you are in the process of selling your old home, you can treat both homes as your main residence for up to six months without impacting your eligibility to the main residence exemption. For example, where you have moved into your new home while finalising the sale of your old home. This applies if you were living in your old home for a continuous period of 3 months in the 12 months before you disposed of it, you did not use your old home to produce an income (rented it out or used it as a place of business) in any part of that 12 months when it was not your main residence, and your new property becomes your main residence. If the sale takes more than six months and if eligible, the main residence exemption could apply to both homes only for the last six months prior to selling the old home. For any period before this it might be possible to choose which home is treated as your main residence (the other becomes subject to CGT). If your new home is being rented to someone else when you purchase it and you cannot move in, the home is not your main residence until you move in. If you cannot move in for some unforeseen reason, for example you end up in hospital or are posted overseas for a few months for work, then you still might be able to access the main residence exemption from the time you acquired the home if you move in as soon as practicable once the issue has been resolved. Inconvenience is not a valid reason and you will need to ensure that you have documentation to support your position. Proof that your property is first established or continues to be your main residence is subjective and if the issue is ever queried, some of the factors the ATO will look at include: The length of time you have lived in the dwelling Where your family lives Whether you moved your personal belongings into the dwelling The address you have your mail delivered Your address on the Electoral Roll Your connection to services such as telephone, gas and electricity, and Your intention. Foreign resident or resident? The main residence rules changed in 2017 to exclude non-residents from accessing the main residence exemption.[1] The rules focus on your tax residency status at the time of the CGT event (normally the time the contract of sale is entered into). That is, in most cases if you are a non-resident at the time you enter into the contract of sale, you will be unable to access the main residence exemption. This is the case even if you were a resident for part of the ownership period. Conversely, if you are a resident at the time of the sale, and you meet the other eligibility criteria, the rules should apply as normal even if you were a non-resident for some of the ownership period. For example, an expat who maintains their main residence in Australia could return to Australia, become a resident for tax purposes again, then sell the property and if eligible, access the main residence exemption. It’s important to recognise that the residency test is your tax residency not your visa status. Australia’s tax residency rules can be complex. If you are uncertain, please contact us and we will work through the rules with you. The tax rules also contain integrity provisions that can deny the main residence exemption where someone circumvents the rules by deliberately structuring their affairs to access the exemption – for example, transferring the property to a related party prior to becoming a foreign resident to access the main residence exemption. Can I treat my home as my main residence even if I don’t live there? Once you have established your home as your main residence, in certain circumstances, you can treat it as your main residence even if you have stopped living there. The absence rule allows you to treat your home as your main residence for tax purposes: For up to 6 years if it's used to produce income, for example you rent it out while you are away; or Indefinitely if it is not used to produce income. Applying the absence rule to your home normally prevents you from applying the main residence exemption to any other property you own over the same period. Apart from limited exceptions, the other property is exposed to CGT. Let’s say you moved overseas in 2019 and rented out your home while you were away. Then, you came back to Australia in 2021 and moved back into your house. Then in early 2022, you decided it is not your forever home and sold it. You elected to apply the absence rule to your home and didn’t treat any other property as your main residence during that same period. In this case, you should be able to access the full main residence exemption assuming you are a resident for tax purposes at the time of sale. The 6-year period also resets if you re-establish the property as your main residence and subsequently stop living there but rent it out in between. So, if the time the home was income-producing is limited to six years for each absence, it is likely the full main residence exemption will be available if the other eligibility criteria are met. What happens if I have been running my business from home? If your home is also set aside as a dedicated place of business (i.e., you do not have another office or workshop), then you might only be able to claim a partial main residence exemption. This is because income-producing assets are excluded from the main residence exemption. If you are running a business from home, you can usually claim a tax deduction for occupancy expenses such as interest on the mortgage, council rates, and insurance. If you claimed or were eligible to claim these expenses, then you will only be able to access a partial main residence exemption. These rules apply even if you have not claimed these expenses as a deduction; the fact that you are eligible to make a claim is enough to impact your access to the main residence exemption. In many cases, if your home would have qualified for a full main residence exemption before it is used as a dedicated place of business, the cost base of your home for CGT purposes should also be reset to its market value at that time. Also, if only a partial main residence exemption is available, you will need to check whether you can access the small business CGT concessions on any remaining capital gain. As these rules are complex, please contact us and we will work through the rules with you. However, if you have only been working from home out of convenience and there is another office that you normally work from, then your eligibility to access the main residence exemption should be unaffected. The ATO has confirmed that all that time working from home temporarily during the pandemic should not impact your ability to access the main residence exemption. If I rent out a room on AirBnB, can I still claim the exemption? If your home has been used to produce income while you are living in it, the portion used to produce income will be excluded from the main residence exemption. The rules might apply differently if you move out of the home completely – see Can I treat my home as my main residence even if I don’t live there? Before you start renting out a portion of your home, it is a good idea to have it valued. If you would have qualified for the main residence exemption just before it was rented out, there are some rules that can apply in most cases and for CGT purposes, you are taken to have re-acquired your home for its market value at that time. So, if your home has increased in value over and above its cost base, this should reduce any gain when you eventually sell. Can I have a different main residence to my spouse? Let’s say you and your spouse each own homes that you have separately established as your main residences for the same period. The rules do not allow you to claim the full CGT exemption on both homes. Instead, you can: Choose one of the dwellings as the main residence for both of you during the period; or Nominate different dwellings as your main residence for the period. If you and your spouse nominate different dwellings, the exemption is split between you: If you own 50% or less of the residence chosen as your main residence, the dwelling is taken to be your main residence for that period and you will qualify for the main residence exemption for your ownership interest; If you own greater than 50% of the residence chosen as your main residence, the dwelling is taken to be your main residence for half of the period that you and your spouse had different homes. The same rule applies to the spouse. The rule applies to each home that the spouses own regardless of how the homes are held legally i.e. sole ownership, tenants in common or joint tenants. Divorce and the main residence rules The last two years have seen the highest divorce rate in Australia for a decade. When a property settlement occurs between spouses and if the conditions are met, the marriage breakdown rollover rules apply to ignore any CGT gain on the property settlement. Assuming the home is transferred to one of the spouses (and not to or from a trust or company), both individuals used the home solely as their main residence over their ownership period, and the other eligibility conditions are met, then a full main residence exemption should be available when the property is eventually sold. If the home qualified for the main residence exemption for only part of the ownership period for either individual, then a partial exemption might be available. That is, the spouse receiving the property may need to pay CGT on the gain on their share of the property received as part of the property settlement when they eventually sell the property. I have inherited a property, if I sell it, do I have to pay CGT? Special rules exist that enable some beneficiaries or estates to access a full or partial main residence exemption on the inherited property. Assuming the house was the main residence of the deceased just before they died, they did not then use the home to produce an income, and the other eligibility criteria are met, a full exemption might be available to the executor or beneficiary if either (or both) of the following conditions are met: The dwelling is disposed of within two years of the deceased’s death; or The dwelling was the main residence of one or more of the following people from the date of death until the dwelling has been disposed of: The spouse of the deceased (unless they were separated); An individual who had a right to occupy the dwelling under the deceased’s will; or The beneficiary who is disposing of the dwelling. An extension to the two-year period can apply in limited certain circumstances, for example when the will is contested or complex. If the deceased did not actually live in the property prior to their death and other eligibility criteria are satisfied, it still might be possible to apply the full exemption where the home was treated as their main residence under the absence rule. If the full exemption is not available, a partial exemption might apply. If you have any questions about how the main residence rules might apply to you, please drop us a line and we will be happy to work through it with you. [1]Transitional rules ended on 30 June 2020.

A reminder of what changed on 1 July 2022 Business Superannuation guarantee increased to 10.5% $450 super guarantee threshold removed for employees aged 18 and over Small business GST and PAYG tax instalments lowered (the total tax liability remains the same, just the amount the business needs to pay through the year is lowered) ATO guidance on how profits of professional firms are structured comes into effect introducing new risk criteria New guidance on unpaid trust distributions to corporate beneficiaries comes into effect that may treat some unpaid distributions as loans and trigger tax consequences Individuals Superannuation guarantee increased to 10.5% Work-test repealed for those under 75 to make or receive non-concessional or salary sacrifice super contributions (the work test still applies to personal deductible contributions) Age for downsizer super contributions reduced to 60 years and older Value of voluntary super contributions that can be withdrawn under the First Home Saver Scheme increased to a total of $50,000 New ATO guidelines on trust distributions come into effect primarily impacting distributions to adult children Home loan guarantee scheme extended to 35,000 per year for first home buyers and 5,000 per year for single parents Australia’s minimum wage increased How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000. Read more tax planning topics here »

Collins Hume Accountants & Business Advisers, one of the Northern Rivers’ preeminent and proactive accounting firms specialising in small and medium business strategy, conducted four Recover. Rediscover. Reimagine. business workshops last month to sold out sessions! Designed to support local business owners during what has been a very challenging time in the region, each workshop inspired business owners to achieve business and lifestyle success in powerful and meaningful ways. All ticket proceeds were donated to those affected by floods via Collins Hume’s global giving partner, B1G1.com. Workshop presenter Peter Fowler said, “It was great to see so many business owners attend and learn how to improve their businesses after a few tough years.” Talking about business and life purpose, resiliency and innovation, both Collins Hume clients and members of the general public were invited to attend. “With 100% of ticket sales going to Northern Rivers flood victims, we were fortunate to be able to raise nearly $3,000 in flood support to help our local community.” Each Recover. Rediscover. Reimagine. workshop encouraged attendees to think about their businesses and get inspired about being practical, reinvigorate as part of a vibrant supportive community and kickstart with a positive mindset. If you missed the Recover. Rediscover. Reimagine. workshops but would like to talk to Collins Hume on how we can assist to improve your business and lifestyle, contact us in Ballina or Byron Bay today on 02 6686 3000. Chris' workshop sessions Peter's workshop sessions

Anthony Albanese has been sworn in as Australia’s 31st Prime Minister and a Government formed We look at what we know so far about the policies of the new Government in an environment with plenty of problems and no easy fixes. The economy The Government has stated that its economic priority is, “creating jobs, boosting participation, improving and increasing productivity, generating new business investment, and increasing wages and household incomes.” A second Federal Budget will be released in October this year to set the fiscal policy direction of the Government. The Albanese Government has stated that its focus is on growing the economy as opposed to increasing taxes, but it is a delicate balance to keep growth ahead of inflation. Treasurer Jim Chalmers has said that the Government will look to “redirect spending from unproductive purposes to more productive purposes.” In a recent speech, Treasury Secretary Dr Steven Kennedy, summed it up when he said that the most significant economic development of late has been the, “…higher-than-expected surge in inflation. Headline inflation reached 5.1% in the March quarter of 2022, the highest rate of inflation in more than 2 decades… Price increases are reflecting a range of shocks, some temporary and some more persistent.” These shocks include: Increased global demand for goods straining supply chains, increasing shipping costs, and clogging ports; The Russian invasion of Ukraine which sharply increased the price of oil, energy and food. Russia accounts for 18% of global gas and 12% of global oil supply. Together Russia and Ukraine account for around one-quarter of global trade in wheat; and COVID-19 lockdowns in China impacting supply chains. China maintains a zero-COVID policy. In Australia, energy prices have contributed strongly to inflation (the temporary reduction in fuel excise ends on 28 September 2022). Personal income tax The 2019-20 Budget announced a series of personal income tax reforms. Stage 3 of those reforms is legislated to commence on 1 July 2024. Stage 3 radically simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000. Mr Albanese told Sky News, “People are entitled to have that certainty of the tax cuts that have been legislated… We won’t be changing them. What we want going forward is that certainty.” Where will the money come from? It is unclear at this stage how the Government intends to tackle the $1.2 trillion deficit. The general commentary from Finance Minister Katy Gallagher is that Treasury and Finance have been tasked with working through the Budget line by line to, “…see where there are areas where we can make sensible savings and return that money back to the Budget.” Multinationals Multinationals paying their fair share of tax was a go-to target during the election campaign. The plan for multinationals implements elements of the OECD’s two-pillar framework to reform international taxation rules and ensure Multinational Enterprises (MNEs) are subject to a minimum 15% tax rate from 2023. Australia and 129 other countries and jurisdictions, representing more than 90% of global GDP, are signatories to the framework. The Government’s multinational policy supports the OECD framework by: Limiting debt-related deductions by multinationals at 30% of profits, consistent with the OECD's recommended approach, while maintaining the arm's length test and the worldwide gearing ratio. Limiting the ability for multinationals to abuse Australia's tax treaties when holding intellectual property in tax havens from 1 July 2023. A tax deduction would be denied for payments for the use of intellectual property when they are paid to a jurisdiction where they don’t pay sufficient tax. Introducing transparency measures including reporting requirements on tax information, beneficial ownership, tax haven exposure and in relation to government tenders. The reforms will follow consultation and are not anticipated to take effect until 2023. No change to SG rate and rate increase No change to the legislated superannuation guarantee rate increase. The SG rate will increase to 10.5% on 1 July 2022 and steadily increase by 0.5% each year until it reaches 12% on 1 July 2025. ATO refocus on debt collection The ATO has not pursued many business tax debts during the pandemic and allowed tax refunds to flow through even if the business had a tax debt. That position has now changed and the ATO has resumed debt collection and offsetting tax debts against refunds. If you have a tax debt that has been on hold, expect the ATO to offset any refunds against this debt, and take steps to actively pursue the payment of the debt. Small business account for around two-thirds of the total debt owed to the ATO. If you have a tax debt, it is important that you engage with the ATO to work out how this debt will be paid. The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000. Read more tax planning topics here »

Tax time targets If you dispose of an asset — property, shares, crypto or NFTs, collectables (costing $500 or more) — you will need to calculate the capital gain or loss and record this in your tax return. Capital gains tax (CGT) does not apply to personal use assets such as a boat if you bought it for less than $10,000. Crypto and capital gains tax A question that often comes up is when do I pay tax on cryptocurrency? If you acquire the cryptocurrency to make a private purchase and you don’t hold onto it, the crypto might qualify as a personal use asset. But in most cases, that is not the case and people acquire crypto as an investment, even if they do sometimes use it to buy things. Generally, a CGT event occurs when disposing of cryptocurrency. This can include selling cryptocurrency for a fiat currency (e.g., $AUD), exchanging one cryptocurrency for another, gifting it, trading it, or using it to pay for goods or services. Each cryptocurrency is a separate asset for CGT purposes. When you dispose of one cryptocurrency to acquire another, you are disposing of one CGT asset and acquiring another CGT asset. This triggers a taxing event. Transferring cryptocurrency from one wallet to another is not a CGT disposal if you maintain ownership of the coin. Record keeping is extremely important – you need receipts and details of the type of coin, purchase price, date and time of transactions in Australian dollars, records for any exchanges, digital wallet and keys, and what has been paid in commissions or brokerage fees, and records of tax agent, accountant and legal costs. The ATO regularly runs data matching projects, and has access to the data from many crypto platforms and banks. If you make a loss on cryptocurrency, you can generally only claim the loss as a deduction if you are in the business of trading. Gifting an asset might still incur tax Donating or gifting an asset does not avoid capital gains tax. If you receive nothing or less than the market value of the asset, the market value substitution rules might come into play. The market value substitution rule can treat you as having received the market value of the asset you donated or gifted for the purpose of your CGT calculations. For example, if Mum & Dad buy a block of land and then eventually gift the block of land to their daughter, the ATO will look at the value of the land at the point they gifted it. If the market value of the land is higher than the amount that Mum & Dad paid for it, then this would normally trigger a capital gains tax liability. It does not matter that Mum & Dad did not receive any money for the land. Donations of cryptocurrency might also trigger capital gains tax. If you donate cryptocurrency to a charity, you are likely to be assessed on the market value of the crypto at the point you donated it. You can only claim a tax deduction for the donation if the charity is a deductible gift recipient and the charity is set up to accept cryptocurrency. The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000. Read more tax planning topics here »

Tax time targets For landlords, the focus is on ensuring that all income received, whether long-term, short-term, rental bonds, back payments, or insurance pay-outs, are recognised in your tax return. If your rental property is outside of Australia, and you are an Australian resident for tax purposes, you must recognise the rental income you received in your tax return (excluding any tax you have paid overseas), unless you are classified as a temporary resident for tax purposes. You can claim expenses related to the property, although there are some special rules that need to be considered when it comes to interest deductions. For example, if you have borrowed money from an overseas lender you might be subject to withholding tax obligations. Co-owned properties For tax purposes, rental income and expenses need to be recognised in line with the legal ownership of the property, except in very limited circumstances where it can be shown that the equitable interest in the property is different from the legal title. The ATO will assume that where the taxpayers are related, the equitable right is the same as the legal title (unless there is evidence to suggest otherwise such as a deed of trust etc.,). This means that if you hold a 25% legal interest in a property then you should recognise 25% of the rental income and rental expenses in your tax returns even if you pay most or all of the rental property expenses (the ATO would treat this as a private arrangement between the owners). The main exception is where the parties have separately borrowed money to acquire their interest in the property, then they would claim their own interest deductions. The ATO has flagged four priority areas this tax season where people are making mistakes. With tax season upon us the Australian Taxation Office (ATO) has revealed its four areas of focus this tax season. Record-keeping Work-related expenses Rental property income and deductions, and Capital gains from crypto assets, property, and shares. In general, there are three ‘golden rules’ when claiming tax deductions: You must have spent the money and not been reimbursed. If the expense is for a mix of work-related (income producing) and private use, you can only claim the portion that relates to how you earn your income. You need to have a record to prove it. How to contact us We’re available to assist you with tax planning including tax deductions. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000. Read more tax planning topics here »