Before we end 2021 we need to wish fond farewells to two doyennes of Collins Hume, Val and Robyn, who see the year out with the exciting announcement of their retirements. Ladies, we wouldn’t be the business we are today without your dedication, skill and friendship over the years. We thank you greatly for your many years of unwavering service and commitment to Collins Hume. We wish you both the very best as you embark on new chapters in your lives and to making many more memories with your children and grandchildren.

A lighter look at the complexity of Australian taxation laws and the year that has been. Dear Mr Claus, Thank you for the opportunity to provide strategic business, tax and compliance advice for your operation. We’re pleased you have initiated this advice as the Australian Taxation Office (ATO) has instigated a number of reviews that may impact your operations and your team, and its relationship to contractors. Some of these issues have been exacerbated by the pandemic. We have identified a number of areas of concern as a starting point for further discussions. These include: Business structure viability The fact that you run a global enterprise that generates no income or profit but ‘gifts’ millions of toys each year produced by your offshore factory, has significant brand value, is represented extensively in merchandise, your spokespeople are employed by shopping centres all around the world, but you have never lodged a tax return or paid tax in Australia, is likely to trigger an ATO investigation. There is also a risk that the Serious Financial Crime Taskforce might become involved. As discussed, we do not believe that the “it’s magic” argument will suffice in the event of an investigation. The argument has been tested previously with the ATO to no avail. Your enterprise’s lack of structure also means that you are missing out on significant benefits. For example, tax deductions might be available for expenses you incur. A number of significant changes were made in recent years enabling businesses to immediately deduct the cost of assets used to produce income. Expenses incurred Your flying reindeers are likely to be considered beasts of burden and as such can be depreciated as plant. However, a deduction is only available to the extent that the reindeer are used to produce income that is taxable in Australia. At present, you do not make any claim for expenses incurred during your Christmas Eve deliveries. While we understand food – cookies, reindeer food, glasses of milk and the occasional tipple of scotch – is provided free by the world’s children, there are likely to be other expenses that you incur. The cost of your uniform, dry-cleaning (removing chimney soot), and postage, to name a few. Research & Development We understand that the ‘flying sleigh’ was developed in your workshop and the technology has developed markedly over the years. In addition, your purpose-built ‘naughty or nice’ technology system is unique (we note our concerns about potential privacy breaches and a lack of an opt-in/opt-out system; I know you have been watching the detrimental brand impact on several social media outlets). If incorporated, there is a potential to access the R&D tax incentive that provides entities with a turnover of less than $20m a refundable tax credit of your corporate tax rate plus 18.5%. The value of the tax offset is lower for companies with a turnover of $20m or more. The technology developed in your workshop, if patented and commercialised, could revolutionise logistics and put a whole new meaning to same-day delivery. We are certain that Australia Post, in particular, would be very interested in entering into discussions with you. Global taxation There have been significant shifts over recent years to ensure that multinational enterprises pay tax in the country where they generate their income. The increase of digitalisation has only exacerbated the issue. While not earning an income, your enterprise operates globally with a workshop located in the North Pole and delivers to clients across the globe. Representation in a particular country may also be enough to make your operation subject to local tax laws. You appear to have local agents - several thousand Santa representatives — with authority to operate on your behalf in shopping centres across Australia. These agents commit the operation with the promise of toys to millions of children. A local agent acting with authority may expose you to local tax laws. This is an issue that may extend well beyond Australia and requires urgent assessment. As discussed, there are currently no provisions within Australian tax law to allow the Commissioner the discretion to ignore your tax liabilities as a goodwill gesture. Please contact us urgently regarding these issues. Thank you. Please note that our office will close over Christmas commencing Wednesday 22 December at 4:00 PM and will reopen with a majority of staff on 6 January 2022, with the balance of our team coming back by 10 January 2022.

Every year, we get asked about the tax impact of various Christmas or holiday-related gestures. Here are your top issues: Staff gifts The key to Christmas presents for your team is to keep the gift spontaneous, ad hoc, and from a tax perspective, below $300 per person. $300 is the minor benefit threshold for Fringe Benefits Tax (FBT) so anything at or above this level will mean that your Christmas generosity will result in a gift to the Tax Office as well. To qualify as a minor benefit, the gifts also have to be ad hoc (no ongoing gym membership payments or giving the same person regular gift vouchers amounting to $300 or more). A question we often get is what is the tax impact if you give your team say a hamper and a gift card? The good news is that the tax rules treat each item (the hamper and the gift card) separately. FBT won’t necessarily apply as long as the value of each item is less than $300. However, the minor benefits exemption is a bit more complex than this. For example, you need to look at the total value of similar benefits provided to the employee across the FBT year etc. If you are planning to provide your team with a cash bonus rather than a gift voucher or other item of property, then this will be taxed in much the same way as salary and wages. A cash bonus at Christmas is not a gift; it’s still income for the employee regardless of the intent. A PAYG withholding obligation will be triggered and the ATO’s view is that the bonus will also be treated as ordinary time earnings which means that it will be subject to the superannuation guarantee provisions unless it relates solely to overtime that was worked by the employee. The staff Christmas Party If you really want to avoid tax on your work Christmas party then host it in your office on a workday (COVID rules allowing!). This way, Fringe Benefits Tax is unlikely to apply regardless of how much you spend per person. Also, taxi travel that starts or finishes at an employee’s place of work is also exempt from FBT. So, if you have a few team members that need to be loaded into a taxi after overindulging in Christmas cheer, the ride home is exempt from FBT. If your work Christmas party is out of the office, keep the cost of your celebrations below $300 per person. This way, you won’t generally pay FBT because anything below $300 per person is a minor benefit and exempt. If the party is not held on your business premises, then the taxi travel is taken to be a separate benefit from the party itself and any Christmas gifts you have provided. In theory, this means that if the cost of each item per person is below $300 then the gift, party and taxi travel can all be FBT free. However, the total cost of all benefits provided to the employees needs to be considered in determining whether the benefits are minor. The trade-off to this is that if the costs associated with hosting the party are not subject to FBT then it would be difficult to claim a tax deduction or GST credits for the expenses. If your business hosts slightly more extravagant parties and goes above the $300 per person minor benefit limit, you will generally pay FBT but you can also claim a tax deduction and GST credits for the cost of the event. Client gifts Few of us have that much time in the diary for pre-Christmas entertainment so why not give a gift instead? In addition to a few extra hours saved and a lot fewer calories to work off (most of us are still struggling post lockdown), there is also a tax benefit. As long as the gift you give to the client is given for relationship building with the expectation that the client will keep giving you work (that is, there is a link between the gift and revenue generation), then the gift is generally tax-deductible as long as it doesn’t involve entertainment. Entertaining your clients at Christmas is not tax-deductible. If you take them out to a nice restaurant, to a show, or any other form of entertainment, then you can’t claim it as a deductible business expense and you can’t claim the GST credits either. It’s goodwill to all men but not much more. Charitable gift-giving The safest way to ensure that you or your business can claim a deduction for the full amount of the donation is to give cash to an organisation that is classified as a deductible gift recipient (DGR). And, the charities love it as they don’t have to spend any of their precious resources to receive it. There are a few rules that make the difference between whether you will or won’t receive a tax deduction. The charity must be a DGR. You can find the list of DGRs on the Australian Business Register. If you buy any form of merchandise for the ‘donation’ – biscuits, teddies, balls or you buy something at an auction – then it’s generally not deductible (the rules become more complex in this area). Your donation needs to be a gift, not an exchange for something material. Buying a goat or funding a child’s education in the third world is generally ok because you are generally donating an amount equivalent to the cause rather than directly funding that thing. The tax deduction for charitable giving over $2 goes to the person or entity whose name is on the receipt. If your business is making a donation on behalf of someone else, such as a client or that friend ‘who has everything', it will depend on how the donation is structured. The tax rules generally ensure that the deduction is available to the individual or entity who actually makes the gift or contribution. Having receipts issued in someone else’s name can make this more complex. Let's Talk That’s all we focus on: You, your family, your wealth, your business and the legacy you (and we) leave. That’s it. Join Collins Hume on this amazing journey. Please note that our office will close over Christmas commencing Wednesday 22 December at 4:00 PM and will reopen with a majority of staff on 6 January 2022, with the balance of our team coming back by 10 January 2022.

Collins Hume CEO Christopher Atkinson shares best Christmas wishes from all our team and wraps up 2021 on a positive note. Please note that our office will close over Christmas commencing Wednesday 22 December at 4:00 PM and will reopen with a majority of staff on 6 January 2022, with the balance of our team coming back by 10 January 2022. Let's Talk That’s all we focus on: You, your family, your wealth, your business and the legacy you (and we) leave. That’s it. Join Collins Hume on this amazing journey. Copyright 2021. Collins Hume Accountants & Business Advisors | Ballina & Byron Bay

5 top tips for tax-imising the joy of the festive season As we fly into our second pandemic-impacted festive season, many employers are now, more than ever, looking to bring a little bit of cheer to their employees this Christmas. But the Grinch that can be taxation could spoil the party for employers who are not aware and not prepared. Plan ahead to avoid a tax headache in the New Year and keep your staff happy over the holidays. 1. Choose Christmas gifts wisely Employers can thank employees by providing a Christmas gift. The best outcome for the employer is to provide a non-entertainment gift that costs less than $300 (GST inclusive). These annual Christmas gifts are typically exempt from fringe benefits tax (FBT) because they are minor, provided infrequently and not a reward for service. A non-entertainment gift, such as a gift voucher, hamper or bottle of wine should be tax-deductible for the employer and GST credits can be claimed. If the gift costs less than $300 but is considered to be entertainment, such as tickets to the movies, theatre or sporting event, the FBT exemption may still be available but the employer will not be able to claim a tax deduction or the GST credits. Employers who provide a gift costing $300 or more will be subject to FBT, which almost doubles the cost for the employer. Where the gift is subject to FBT, the cost of both entertainment and non-entertainment gifts is tax-deductible and GST credits can be claimed. 2. Where’s the Christmas party? The annual staff Christmas party provides a chance for employees, who may have been isolated from their colleagues throughout the year, to come together and reconnect. Holding the Christmas party on the employer’s business premises can stretch out the Christmas party budget. Christmas parties held on the employer’s business premises can be exempt from FBT where the employer uses the actual method to value their entertainment benefits. In this case, there is no cap on the value of FBT exempt food and drink which can be provided to employees. Note however these entertainment expenses are not tax-deductible for the employer and the GST credits cannot be claimed. If the Christmas party is held at a venue that is external to the employer’s business premises, FBT will apply unless the minor and infrequent exemption is available. In this case, the cost of the event is important. If the total cost per head is less than $300, the FBT minor and infrequent exemption can apply, but the entertainment expenses are not tax-deductible for the employer and the GST credits cannot be claimed. Alternatively, if the total cost per head is $300 or more, FBT will effectively double the cost of the event, although the employer can claim a tax deduction and the GST credits. 3. Who’s invited? Some employers invite their employees’ families to the annual Christmas party. The FBT exemption for Christmas parties held on the employer’s business premises applies only to employees, not their associates. FBT will apply to expenses that relate to family members attending the Christmas party (either on the employer’s business premises or at an external venue) unless the minor and infrequent exemption is available. Typically there is only one such event per year and so provided the cost per head is less than $300, the FBT minor and infrequent exemption can apply. Alternatively, if the cost per head is $300 or more, FBT will apply to those expenses which relate to family members. 4. Getting home safely If the Christmas party is held on the employer’s business premises, the employee’s taxi or ride-share trip home from the office is exempt from FBT. Alternatively, if the Christmas party is held at an external venue, the employee’s travel costs are subject to FBT unless the FBT minor and infrequent exemption applies. 5. Keep good records As is always the case with FBT, it is critical employers maintain accurate records to support the position taken in the FBT return, especially if claiming an exemption from FBT. For the Christmas party, this includes details of all the costs of the party, who attended it and where it was held. For gifts, this includes the cost of each gift, what it was, who received it and any other gifts provided to that person during the year. Let's Talk At Collins Hume we turn our knowledge into great value for you; it’s as simple as that. Contact our team in Ballina or Byron Bay on 02 6686 3000. This article originally appeared in the 19 November 2021 edition of SmartCompany (Tax)

The ATO has recently issued an alert on gifts or loans from overseas The ATO is particularly concerned about schemes and arrangements designed specifically to circumvent Australian tax laws. In general, Australian-resident taxpayers need to declare their worldwide income in their Australian tax return. Some schemes however disguise offshore capital gains or income as a gift or loan. So, how does the ATO know if money from overseas is a genuine gift or loan? Generally, the ATO will expect to see some form of evidence that the gift is genuine such as a deed of gift prepared by the donor, formal identification of the donor, a copy of the donor’s bank account, or in the case of an inheritance, the will or distribution statement from the estate. If you have received a loan from overseas, the ATO will expect to see properly executed loan documentation, and other documentation supporting why the loan was made and its purpose. Third-party documentation is best as documentation from a family member may not be accepted as conclusive evidence of a loan. The ATO will form its view based on the evidence available. Loans received from companies or trusts can still trigger tax issues in Australia. Let's Talk At Collins Hume we turn our knowledge into great value for you; it’s as simple as that. Contact our team in Ballina or Byron Bay on 02 6686 3000.

Director ID Regime Australia’s Director Identification Number (DIN) regime came into effect on 1 November 2021 and will require you to register for an identification number. A director ID is a 15 digit identifier that, once issued, will remain with you for life regardless of whether you stop being a director, change companies, change your name or move overseas. The DIN is managed by the Australian Taxation Office (ATO) but created through the Australian Business Registry Services (ABRS). DIN Fact Sheets Director IDs — Australian Residents Director ID Factsheet — Non-Residents Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Do you know how cryptocurrency is taxed in Australia? If you buy, sell or trade crypto you need to be aware of your tax obligations. Collins Hume CEO Christopher Atkinson discusses the latest guidance from the ATO in our video summary of the commonly asked questions about cryptocurrencies. Read more in our comprehensive article below or talk with the team at Collins Hume in Ballina or Byron Bay on 02 6686 3000. Tax and the Normalisation of Cryptocurrency Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

The Australian Taxation Office recently updated its guidance on tax and cryptocurrency. In early November, the Commonwealth Bank announced that it is now Australia’s first bank to offer customers the ability to buy, sell and hold crypto assets, directly through the CommBank app. You know when the banks come on board, cryptocurrency has become normal. But cryptocurrency is only one part of the blockchain universe. Non-fungible tokens or NFTs (fungible means interchangeable) are one-of-a-kind digital assets which are part of the Ethereum blockchain. An example is the CryptoKitties game that allows players to purchase, collect, breed and sell unique virtual cats – and, before you laugh, the game transacted over $1 million in virtual cats in its first few days of launching. NFTs are also rapidly rising in popularity in the artworld because ownership of the asset is on the blockchain and in some cases, the artist can take a percentage of every transaction of that artwork – so, no more starving artists because they can generate an income from the asset over time not just on the first sale. A stellar example is the sale of a NFT artwork by the digital artist Beeple, which was sold at auction by Christies in March 2021 for $69 million (USD). Let’s look at what the Australian Taxation Office has to say about some of the commonly asked questions about the implications of investing in blockchain. Is mining cryptocurrency income or an asset? If you receive crypto from providing services to others, this can represent income. If you create crypto, you acquire a capital gains tax (CGT) asset. A taxing event will arise when you exchange crypto for Australian Dollars or another crypto asset. Does the ATO really know about my crypto transactions? The ATO is using various sources for data collection including digital service providers (DSPs) and analysis software to track taxpayer compliance. There are several data-mining projects (no pun intended) underway looking specifically at cryptocurrency and cryptocurrency platforms. What happens if my cryptocurrency is stolen? You may be able to claim a capital loss if you lose your cryptocurrency private key or your cryptocurrency is stolen. Generally, where an item can be replaced it is not lost. A lost private key can't be replaced. Therefore, to claim a capital loss you must be able to provide the following kinds of evidence: When you acquired and lost the private key The wallet address that the private key relates to The cost you incurred to acquire the lost or stolen cryptocurrency The amount of cryptocurrency in the wallet at the time of loss of private key That the wallet was controlled by you (for example, transactions linked to your identity) That you are in possession of the hardware that stores the wallet Transactions to the wallet from a digital currency exchange for which you hold a verified account or is linked to your identity. I mine cryptocurrency as a hobby so I should not have to pay tax on it? Unfortunately, it’s unlikely mining for fun will allow you to avoid tax. The circumstances where you can generate cryptocurrency or transact it without paying tax are very limited. Can I get a tax deduction for computer equipment purchased for mining? If you are in the business of mining, then you can claim a deduction for the equipment you purchase to generate income. If you are not carrying on a business, then the crypto is held as an investment and the equipment is not deductible. How is my NFT artwork taxed? As with any other cryptocurrency, an NFT can be held for personal use. Personal use assets are CGT assets that you keep mainly for your personal use or enjoyment. NFT is not a personal use asset if it is kept or used mainly: As an investment In a profit-making scheme, or In the course of carrying on a business. The relevant time for working out if an asset is a personal use asset is at the time of its disposal. During a period of ownership, the way that an NFT is kept or used may change (for example, NFTs may originally be acquired for personal use and enjoyment, but ultimately kept or used as an investment, to make a profit on ultimate disposal or as part of carrying on a business). The longer an NFT is held, the less likely it is that it will be a personal use asset – even if you ultimately use it for personal use or consumption. Capital gains you make from personal use assets acquired for less than $10,000 are disregarded for CGT purposes. However, all capital losses you make on personal use assets are disregarded. Collectables are not classed as personal use assets and may be subject to CGT. How tax applies to blockchain and the generation of income or assets is still a work in progress. Please contact Collins Hume in Ballina or Byron Bay if we can assist on 02 6686 3000.

New data released Naturally, people aspire to get the most out of their investments, especially if a great opportunity is presented by a ‘trusted’ organisation. However, investment scams occur more often than you may think, highlighting the risk both self-directed investors and SMSF trustees may potentially face when seeking new investment opportunities. New data released from Scamwatch Australia has reinforced the sophistication and rapidly growing number of scams each year in Australia – which has caused a loss of over $851 million* in total in 2020 – $328 million of which related to investment scams. It is extremely important for you to remain vigilant and reach out to me, your trusted SMSF professional, before investing your retirement savings in a new product or service. *ACCC Media Release 7 June 2021 What does the data reported to Scamwatch Australia tell us? During 2020, the average monetary value lost to scams has increased by 23%. Scammers have become more sophisticated in their approach, claiming to be from well-known investment organisations or government bodies, with the aim of extracting personal information from an individual. Investment scams have caused the most financial harm to the Australian population throughout 2020 resulting in $328 million lost. Advancements in both technology and software design allow scammers to recreate websites to look identical to an actual organisation’s site, meaning it is becoming increasingly difficult to identify what is a scam and what isn’t. Older Australians (65+) are often more at risk of being approached by scammers as they perceive this particular age group to have more accumulated wealth. The top contact methods used by scammers include phone (47.7%), email (22%), text message (15%), internet (6.3%) and social networking (4.5%)*. Scammers will often inject a sense of urgency into their messaging, propose threats (particularly with tax scams), and request personal and banking information. *Scamwatch Australia Targeting scams report 2020 What should you do if you suspect a scam? If someone attempts to scam you, there are several things you can do: Report the scam to Scamwatch Australia at www.scamwatch.gov.au/report-a-scam or ReportCyber at Report | Cyber.gov.au immediately. Do not provide any personal information that will allow a scammer to impersonate and retrieve your funds. Do not click on links you have received via text or email that have a substantial number of letters and numbers. If you have lost money to a scam, contact your financial institution immediately. If you have provided personal information and you are concerned your identity may be compromised, you can contact IDCARE for free support on 1800 595 160. Consider contacting the organisation the suspected scammer claims to work for – the organisation may be able to confirm your suspicions. If you have been scammed or believe you have been scammed, you shouldn’t feel embarrassed or ashamed. Financial scams are now crimes that are occurring regularly – many scams are very sophisticated and professional, and very experienced investors have lost money to scams. It is becoming increasingly important to discuss the risk of scams with family, friends, and peers. How can Collins Hume help? If you need assistance with identifying if you are being approached by a scammer, please feel free to give us a call on 02 6686 3000 to discuss in more detail. Our team is here to support you and it’s important that we start the conversation as scamming is a continuous risk in our technologically advanced world. If you would like to seek more information about scams to protect your SMSF, you can refer to the SMSF Association’s trustee education platform, SMSF Connect.

Instead of letting the kerfuffle of COVID get us down, we decided to ghoul it up and come dressed to the office to celebrate Halloween. Thanks, Kim, for snapping our best-dressed contenders!

The ATO has extended COVID-19 relief for SMSF trustees The relief measures, which protect trustees from COVID-19 related contraventions of the super laws, now extend from the 2019-20, 2020-21 and 2021-22 financial years. The relief measures provide: Residency relief where the pandemic has prevented members from returning to Australia. This measure prevents the SMSF from breaching the residency conditions to be an Australian super fund. Rental relief where a COVID-19 reduction, waiver or deferral has been provided to a tenant. Loan repayment relief where relief is provided on commercial terms. In-house asset relief where the SMSF exceeded the 5% in-house asset threshold at 30 June due to the impacts of COVID-19. Let's Talk At Collins Hume we turn our knowledge into great value for you; it’s as simple as that. Contact our team in Ballina or Byron Bay on 02 6686 3000.