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To cut tax or not to cut? In September, amid a climate of startling interest rates, UK Chancellor Kwasi Kwarteng announced a series of tax cuts, including the reduction of the top personal income tax rate that applies to those earning more than £150,000 from 45% to 40%. Just ten days later, following market turmoil that saw the British Pound drop at one point to a low of $1.035 USD, its lowest level since 1985, the decision was reversed calling the cuts “a massive distraction.” Heading into the 2022-23 Federal Budget on 25 October, the question for the Australian Government is different. It is not whether to introduce personal income tax cuts but whether to keep, amend or repeal the cuts legislated to commence on 1 July 2024. In Australia, the 2018-19 Budget introduced the Personal Income Tax Plan. The plan implemented three stages of income tax cuts over seven years that will, by 2024-25, simplify the tax brackets and enable taxpayers to earn up to $200,000 before paying a new top marginal tax rate of 45%. Stages of the plan, bringing relief for low and middle-income earners, were brought forward in the 2019-20 Budget and again in 2020-21. Labor’s pre-election Lower Taxes policy states, “An Albanese Labor Government will deliver tax relief for more than 9 million Australians through the legislated tax cuts that benefit everyone with incomes above $45,000.” But this month, the Treasurer has subtly changed the narrative from simply “our policy has not changed on stage three tax cuts” to “We do need to ensure that spending in the Budget, particularly in these uncertain global times, is geared toward what's affordable and sustainable and responsible and sufficiently targeted. I think that's one of the lessons from the UK.” The public appeal of repealing the final stage three tax cuts is understandable. Back in 2018-19 when the plan was first introduced, the economy was in surplus and Australia was yet to feel the effects of a global pandemic, environmental extremities, and the Russian invasion of Ukraine. The tax cuts forego around $240bn of tax revenue over the next 10 years, and because it is percentage based, favours high-income earners. The public policy think tank, the Grattan Institute, previously warned that if the government progressed with the stage three cuts “Australia’s income tax system will be less progressive than it’s been since the 1950s”. Conversely, the rationale for reforming the current personal income tax regime where the highest marginal tax rate applies from around 2.5 times average full-time earnings (compared to around 4 times in Canada and 8 times in the US), is also understandable. When it comes to international competitiveness, New Zealand’s top marginal tax rate is 33% (from $180,000) and Singapore’s is 22%, increasing to 24% in 2023-24. If implemented, stage 3 of the income tax plan would see around 95% of taxpayers paying a marginal tax rate of 30% or less. The 1 July 2024 tax cuts Stage three of the Personal Income Tax Plan is legislated to take effect from 1 July 2024. What the tax stats say Personal income and withholding tax represents around 48% of the annual Commonwealth tax collections. Company tax, by comparison, is around 16%, and the goods and services tax (GST) just under 15% of total tax revenue collected. Australia has a progressive personal tax system. That is, those with higher incomes pay not only a higher amount of tax, but a higher proportion of their income in tax. As a result, the 3.6% of taxpayers with taxable incomes of over $180,000 pay 31.6% of the total. Where to from here? The second 2022-23 Federal Budget will be announced on 25 October 2022. If the Government make no mention of the stage three tax cuts, they have another opportunity to refine their position in the 2023-24 Federal Budget released in May 2023, more than a year before the 1 July 2024 tax cuts come into effect. Our best guess? The Government will announce a review of the stage three tax cuts, then open the issue to consultation, locking in the position, whatever it is, in the 2023-24 Federal Budget. We’ll keep you posted! Look out for our 2022-23 Federal Budget update on 26 October!

Do you think you can spot a cyber threat? Cyber security is more important than ever. Protecting your and your customers’ data from cybercriminals should be one of your top business priorities. Now is the time to ensure you know how to identify and respond to cyber threats. Increasing your knowledge and awareness is the best way to protect your business. Luckily, you don't have to be an IT expert to step up your cybersecurity. Protect your business now with these five ways to increase your online account security: 1. Make 2 Factor-Authentication Mandatory 2 Factor-Authentication (2FA) helps prevent a hacker from getting into your account, even if they steal your password. To avoid common phishing techniques associated with text message codes, choose to apply 2-Factor Authentication. Alongside the traditional password, 2FA enabled users are required to enter a one-time security code that they receive via text which is the best way to authenticate the user. You don’t have to make 2FA mandatory in your business, but we strongly recommend it as do most good cloud computing platforms. Related reading: Changes to multi-factor authentication are coming for Xero customers » 2. Close shared login accounts Shared logins mean multiple people in your business know a password and can make it harder to track any work or issues you may have. 3. Remove risky access to your data Consider removing account access for any staff who are no longer with you. 4. Update your software If your browser operating system or apps are out-of-date, the software might no longer be safe from hackers. Keep your software updated to help protect your account. 5. Use unique, strong passwords It’s risky to use the same password on multiple sites. If your password for one site is hacked, it could be used to access your accounts on multiple sites. Instead, consider using a password manager. If you’re ever unsure about a phone caller, SMS, voicemail or email claiming to be genuine but seems suss, do not reply. You can also follow the latest scams and advice on how to protect yourself on the ATO website or at Scamwatch. Contact Collins Hume in Ballina or Byron Bay »

To assist local residents to navigate their aged care options, Family Aged Care Advocates will be holding a local community event — Ageing Well At Home: Your definitive guide to growing older and getting help at home. Aged care specialists Shane Hayes and Whenua Oner will be joined by various Northern NSW organisations that will come together to share facts, tips and advice and answer any questions you may have. When: Sunday 30 October, 1.30 pm to 4.30 pm Where: Ballina Surf Club Entry: By gold coin donation with limited seating so bookings are essential. RSVP at familyagedcareadvocates.com.au/events/ageing-well-at-home or call Shane on 0411 264 002. Family Aged Care Advocates work to keep people living in their homes as long as possible. Through individual and family consultation their aim is to provide support and close the gap in understanding what options are available to people when they require additional care. "We meet with people and their families who are uncertain of the actual steps to take or who have simply given up because it’s all just too hard," said Shane. "We want people to know what is possible, how to go about it and who can help them achieve their ideal outcome." "We also know that living at home longer is not just about services that we can wrap around people. It’s about being proactive in managing health, understanding the implications of certain conditions, thinking about available resources and planning," Shane added. It sounds like a lot of work and it can be, but it can also empower people to really own how they want to live their lives in this time."

Clients with self-managed superannuation funds (SMSF) often ask what assets the SMSF can acquire ‘Why’? The golden rule for acquiring assets inside your SMSF is why? To be compliant, your fund must be maintained for the sole purpose of providing retirement benefits to members, or to their dependants if a member dies before retirement. The sole purpose test (section 62 of the Superannuation Industry (Supervision) Act 1993), is your starting point. If the collectable you are looking to acquire does not fulfil this purpose, then you have an immediate problem. Let’s assume you are looking to acquire vintage cars. The question to ask is, is the acquisition a viable investment or simply a desire of the members to own vintage cars. Does the investment ‘stack up’ relative to other forms of investment to build/protect the retirement savings of members? The sole purpose test extends to how the collectable is managed once acquired. Given the asset is for the sole purpose of the member’s retirement benefits, the members (or their associates) cannot use or enjoy the asset in any way. This means: Storage of the collectable cannot be at the trustee’s residence or displayed at their office. The ATO says, “You can store (but not display) collectables and personal use assets in premises owned by a related party provided it is not their private residence. They can’t be displayed because this means they are being used by the related party. For example, if your SMSF invests in artwork it can’t be hung in the business premises of a related party where it is visible to clients and employees.” Leasing or use of the collectable can only be undertaken with an unrelated party. The collectable must have its own insurance policy owned by the SMSF (multiple items can be listed on the same policy i.e., wines of different brands). The insurance policy must be in place within 7 days of acquisition. Like all other assets, if a collectable is sold to a related party, then it must be sold at market value. Collectables also require a qualified independent valuation if sold to a related party. This means you cannot stay in a holiday home owned by your SMSF, you cannot drive a vehicle owned by the SMSF, and you cannot enjoy artwork held by the SMSF. And, those bottles of Penfolds Grange owned by the SMSF that broke (wink, wink) are likely to trigger an audit as they should have been properly stored in a way that prevents breakage. Your investment strategy An SMSF investment strategy should articulate the plan trustees have for a fund and the investments they choose to hold. It should drill down into the reasons why certain assets will be acquired (or sold) and how these choices align to the retirement goals of the members. If your SMSF is considering purchasing collectables, it is essential that your investment strategy is aligned to these types of investments and articulates why the asset fits within the strategy. This is particularly important if the collectible/s will dominate the types of assets held by the fund, its liquidity, and diversity. A common question is, can my SMSF purchase, let’s say artwork, from a member or a related party of the fund? The answer is no. SMSFs are not allowed to purchase assets, other than listed shares and business real property, from related parties. But, the SMSF could transfer the artwork to a member as an in-specie lump sum payment if the member meets a condition of release, or sell the asset to the member but only if the transaction is at arms length, and an independent valuation confirms the market value of the asset. 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 »

The Government has reinvigorated the 120% skills training and technology costs deduction for small and medium businesses. An election ago, the 2022-23 Budget proposed a 120% tax deduction for expenditure by small and medium businesses on technology, or skills and training for their staff. This proposal has now been adopted by the current Government and details released in recent exposure draft by Treasury. Timing Two investment ‘boosts’ will be available to small and medium businesses with an aggregated annual turnover of less than $50 million: Skills & Training Boost Technology Investment Boost The Skills and Training Boost is intended to apply to expenditure from 7.30pm ACT time on Budget night, 29 March 2022 until 30 June 2024. The business, however, will not be able to start claiming the bonus deduction until the 2023 tax return. That is, for expenditure incurred between 29 March 2022 and 30 June 2022, the additional 20% ‘boost’ deduction will not be claimable until the 2022-23 tax return (assuming the announced start dates are maintained if and when the legislation passes Parliament). The Technology Investment Boost is intended to apply to expenditure from 7.30pm ACT time on Budget night, 29 March 2022 until 30 June 2023. As with the Skills and Training Boost, the additional 20% deduction for eligible expenditure incurred by 30 June 2022 will be claimed in the 2023 tax return. The boost for eligible expenditure incurred on or after 1 July 2022 will be included in the income year in which the expenditure is incurred. When it comes to expenditure on depreciating assets, the bonus deduction is equal to 20% of the cost of the asset that is used for a taxable purpose. This means that, regardless of the method of deduction that the entity takes (i.e., whether immediate or over time), the bonus deduction in respect of a depreciating asset is calculated based on the asset’s cost. Technology Investment Boost The Technology Investment Boost is a 120% tax deduction for expenditure incurred on business expenses and depreciating assets that support digital adoption, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services. The boost is capped at $100,000 per income year with a maximum deduction of $20,000. To be eligible for the bonus deduction: The expenditure must be eligible for deduction (salary and wage costs are excluded for the purpose of these rules) The expenditure must have been incurred between 7.30pm (AEST), 29 March 2022 and 30 June 2023 If the expenditure is on a depreciating asset, the asset must be first used or installed ready for use by 30 June 2023. To be eligible, the expenditure must be wholly or substantially for the entity’s digital operations or digitising its operations. For example: digital enabling items – computer and telecommunications hardware and equipment, software, systems and services that form and facilitate the use of computer networks; digital media and marketing – audio and visual content that can be created, accessed, stored or viewed on digital devices; and e-commerce – supporting digitally ordered or platform enabled online transactions. Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria. Where the expenditure has mixed use (i.e., partly private), the bonus deduction applies to the proportion of the expenditure that is for an assessable income producing purpose. The bonus deduction is not intended to cover general operating costs relating to employing staff, raising capital, the construction of the business premises, and the cost of goods and services the business sells. The boost will not apply to: Assets that are sold while the boost is available Capital works costs (for example, improvements to a building used as business premises) Financing costs such as interest expenses Salary or wage costs Training or education costs Trading stock or the cost of trading stock For example: A Co Pty Ltd (A Co) is a small business entity. On 15 July 2022, A Co purchased multiple laptops to allow its employees to work from home. The total cost was $100,000 (GST-exclusive). The laptops were delivered on 19 July 2022 and immediately issued to staff entirely for business use. As the holder of the assets, A Co is entitled to claim a deduction for the depreciation of a capital expense. A Co can claim the full purchase price of the laptops ($100,000) as a deduction under temporary full expensing in its 2022-23 income tax return. It can also claim the maximum $20,000 bonus deduction in its 2022-23 income tax return. The $20,000 bonus deduction is not paid to the business in cash but is used to offset against A Co’s assessable income. If the company is in a loss position, then the bonus deduction would increase the tax loss. The cash value to the business of the bonus deduction will depend on whether it generates a taxable profit or loss during the relevant year and the rate of tax that applies. Skills and Training Boost The Skills and Training boost is a 120% tax deduction for expenditure incurred on external training courses provided to employees. External training courses will need to be provided to employees in Australia or online, and delivered by training organisations registered in Australia. To be eligible for the bonus deduction: The expenditure must be for training employees, either in-person in Australia, or online The expenditure must be charged, directly or indirectly, by a registered training provider and be for training within the scope (if any) of the provider’s registration The registered training provider must not be the small business or an associate of the small business The expenditure must be deductible Enrolment for the training must be on or after 7.30pm, 29 March 2022. The training must be necessarily incurred in carrying on a business for the purpose of gaining or producing income. That is, there needs to be a nexus between the training provided and how the business produces its income. Only the amount charged by the training organisation is deductible. In some circumstances, this might include incidental costs such as manuals and books, but only if charged by the training organisation. Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees. The training boost is not available to: Sole traders, partners in a partnership, or independent contractors (who are not employees) Associates of the business such as a relative, spouse or partner of an entity or person, a trustee of a trust that benefits an entity or person and a company that is sufficiently influenced by an entity or person. For example: Cockablue Pets Pty Ltd is a small business entity that operates a veterinary centre. The business recently took on a new employee to assist with jobs across the centre. The employee has some prior experience in animal studies and is keen to upskill to become a veterinary nurse. The business pays $3,500 (GST exclusive) for the employee to undertake external training in veterinary nursing. The training is delivered by a registered training provider, whose scope of registration includes veterinary nursing. The bonus deduction is calculated as 20% of 100% of the amount of expenditure that can be deducted under another provision of the taxation law. In this case, the full $3,500 is deductible under section 8-1 of the ITAA 1997 as a business operating expense. Assuming the other eligibility criteria for the bonus deduction are satisfied, the bonus deduction is calculated as 20% of $3,500. That is, $700. In this example, the bonus deduction available is $700. That does not mean the business receives $700 back from the ATO in cash, it means that the business is able to reduce its taxable income by $700. If the company has a positive amount of taxable income for the year and is subject to a 25% tax rate, then the net impact is a reduction in the company’s tax liability of $175. This also means that the company will generate fewer franking credits, which could mean more top-up tax needs to be paid when the company pays out its profits as dividends to the shareholders. 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 »

New legislation before Parliament, if enacted, will make zero or low emission vehicles FBT-free. We explore who can access the concession and how. Electric vehicles (EV) represent just under 2% of the new car market in Australia but it is a rapidly growing sector with a 62.3% jump in new EV registrations between 2020 and 2021. Making EVs FBT-free is just the first step in the Government’s plan to make zero and low emission vehicles the car of choice for Australians, focussing on affordability and overcoming “range anxiety” by: Cutting import tariffs Placing EV fast chargers once every 150 kilometres on the nation’s highways Creating a national Hydrogen Highways refuelling network, to deliver stations on Australia's busiest freight routes Converting the Commonwealth fleet to 75% no-emissions vehicles It is on this last point, fleet cars, that the FBT exemption on EVs is targeted. In Australia, business account for around 40% of light vehicle sales according to a research report by Griffith and Monash Universities. However, EV sales to business fleets comprised a mere 0.08% of the market in 2020. The Government can control what it purchases and has committed to converting its fleet to no-emission vehicles, but for the private sector, there is a wide gap between the total cost of ownership of EVs and traditional combustion engine vehicles. It’s more expensive overall and the Government is looking to reduce that impediment through the FBT system. How the EV FBT exemption will work The proposed FBT exemption is intended to apply to cars provided by an employer to an employee under the following conditions:fuel-efficient If an electric car qualifies for the FBT exemption, then associated benefits relating to running the car for the period the car fringe benefit is provided, can also be exempt from FBT. Government modelling states that if an EV valued at about $50,000 is provided by an employer through this arrangement, the FBT exemption would save the employer up to $9,000 a year. While the measure provides an exemption from FBT, the value of that fringe benefit is still taken into account in determining the reportable fringe benefits amount of the employee. That is, the value of the benefit is reported on the employee’s income statement. While income tax is not paid on this amount, it is used to determine the employee’s adjusted taxable income for a range of areas such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments. Can I salary sacrifice an electric car? Assuming your employer agrees, and the car meets the criteria, salary packaging is an option. While some FBT concessions are not available if the benefit is provided under a salary sacrifice arrangement, the exemption for electric cars will be available. In order for a salary sacrifice arrangement to be effective for tax purposes, it needs to be agreed, documented and in place prior to the employee earning the income that they are sacrificing. Government modelling suggests that for individuals using a salary sacrifice arrangement to pay for a $50,000 electric vehicle, the saving would be up to $4,700 a year. Who cannot access the FBT exemption Your business structure makes a difference By its nature, the FBT exemption only applies where an employer provides a car to an employee. Partners of a partnership and sole traders will not be able to access the benefits of the exemption as they are not employees of the business. When it comes to beneficiaries of a trust and shareholders of a company it will be important to determine whether the benefit will be provided to them in their capacity as an employee or director of the entity. Exemption is limited to cars As the FBT exemption only relates to cars, other vehicles like vans are excluded. Cars are defined as motor vehicles (including four-wheel drives) designed to carry a load less than one tonne and fewer than nine passengers. EV State and Territory tax concessions The Federal Government is not alone in using concessions to encourage electric vehicle ownership. New South Wales Reimbursement of stamp duty paid on purchases of new or used full battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), with a dutiable value up to and including $78,000. Queensland Discounted registration duty for hybrid and electric vehicles. And, a limited $3,000 rebate for new eligible zero emission vehicles with a purchase price (dutiable value) of up to $58,000 (including GST) on or after 16 March 2022. ACT The ACT Government offers a stamp duty exemption on new zero emission vehicles, and up to two years free registration for new or second hand zero emission vehicles (registered between 24 May 2021 and before 30 June 2024). Victoria A limited $3,000 subsidy is available for new eligible zero emission vehicles purchased on or after 2 May 2021. More than 20,000 subsidies are available under the program. Plus, stamp duty for ‘green passenger cars’ is set at the one rate regardless of value ($8.40 per $200 or part thereof). Zero emission vehicles receive a $100 annual registration concession but are also subject to a per kilometre road user charge. Northern Territory For plug-in electric vehicles (battery and hybrid plug-in), from 1 July 2022 until 30 June 2027, access free registration for new and existing vehicles and a stamp duty concession of up to $1,500 on the first $50,000 of the car’s market/sale value – 3% thereafter. South Australia A limited $3,000 subsidy and a 3-year registration exemption on eligible new battery electric and hydrogen fuel cell vehicles first registered from 28 October 2021. Tasmania From 1 July 2022 until 30 June 2022, no stamp duty applies to light electric or hydrogen fuel-cell motor vehicle (including motorcycles). Vehicles with an internal combustion engine do not qualify. Western Australia A $3,500 rebate on the purchase of a new zero emission, hydrogen fuel cell or battery light vehicle with a value of up to $70,000 purchased on or after 10 May 2022. Contact Collins Hume in Ballina or Byron Bay on 02 6686 3000.

23:59 UTC on 20 September 2022 is the cut-off to register for your .au direct domain The .au domain is the new, general-purpose, shorter Australian domain name option. If you do not register the direct match of your existing domain for the direct .au domain, you risk your brand equity being consumed by someone else, rivals redirecting your clients to their products and services, squatters holding the domain, or cybercriminals impersonating your business. The opening of the new .au domain is the single biggest shift in Australian cyber real estate in decades and the risks for business are high. If you are registering: an exact match of your existing domain name, for example .com.au or net.au; and you held your domain name prior to 24 March 2022 then you have priority access but only up until 23:59 UTC on 20 September 2022 (9:59am AEST on 21 September). Once this deadline has passed, the .au direct domain name will be available to anyone with a connection to Australia to register from 21:00 UTC 3 October 2022 (8:00am AEDT 4 Oct). While you can register for the .au domain through any number of providers, the most efficient method is to utilise your existing provider. To do this, you will need your domain’s access information. If these details cannot be found, for example, the details were held by a former staff member, it can take some time to recover them so do not leave the registration process until the last minute. Once you have applied for your matching .au domain, if your application is uncontested, you will be able to use the .au direct name soon after applying for priority status. What happens if .com.au and .net.au both apply for the .au name? If you share a domain name with another entity, for example, one entity owns .com.au and the other .net.au, the right to register the .au domain will cascade according to priority. Category 1 is those that secured the domain on or before 4 February 2018. Category 1 applicants have priority over Category 2 applicants who registered their domain after 4 February 2018. If the name is contested by a Category 1 and a Category 2 applicant, the Category 1 applicant will secure the name. If two Category 2 applicants apply for the name, the name is allocated to the applicant with the earlier domain license creation date. But, it gets tricky when two Category 1 applicants apply for the name. In these circumstances, both parties must agree on the allocation or the name remains unallocated.

1% for the Planet membership announcement Collins Hume has recently joined 1% for the Planet, pledging to donate 1% of annual revenue to support organisations focused on the environment. “We wanted to announce that Collins Hume has officially joined 1% for the Planet starting this financial year,” said Partner Peter Fowler. “It’s important to us that we witness first-hand the positive difference we make. We want to make a living legacy that will be timeless — one that’s about contribution as opposed to consumption.” Collins Hume’s living legacy Collins Hume can choose to partake in any number of lifestyle choices on our doorstep. We thrive in our locale, and our kids are healthy and strong. ​ “Given this, it would be remiss of us not to play a small part in bringing basics such as clean drinking water, sustenance, education, and hope to people worldwide,” says Peter. ​ ​“That’s the kind of legacy of which we can all be proud. To make that happen, we work both locally AND globally.” "Currently, only 3% of total philanthropy goes to the environment and, only 5% of that comes from businesses. The planet needs bigger support than this, and our growing network of business members is doing its valuable part to increase giving and support on-the-ground outcomes. We're excited to welcome Collins Hume to our global movement," says Kate Williams, CEO of 1% for the Planet. In addition to joining 1% for the Planet, Collins Hume is also working hard behind the scenes to achieve its climate-neutral certification. “We are thrilled that by coming to work every day, we can add value to our clients’ business and lifestyle, whilst doing our bit to make the planet a healthier and happier place,” Peter added. Read more about Collins Hume’s living legacy at https://www.collinshume.com/legacy. About 1% for the Planet 1% for the Planet is a global organisation that exists to ensure our planet and future generations thrive. They inspire businesses and individuals to support Environmental Partners through membership and everyday actions. They make environmental giving easy and effective through partnership advising, impact storytelling and third-party certification. By contributing 1% of their annual revenue, thousands of 1% for the Planet members have raised over $300 million to support approved Environmental Partners around the globe. Environmental Partners are approved based on referrals, track record and environmental focus. Thousands of Environmental Partners worldwide are currently approved. Look for the logo to purchase for the planet, learn more or join at onepercentfortheplanet.org.

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).