December 2021 Newsletter
December and summer have finally arrived, and you can almost hear the collective sigh of relief as 2021 draws to a close.
As November drew to a close all eyes were on the new strain of the coronavirus, Omicron. Global shares fell sharply on fears that Omicron will spread more easily than other variants and existing vaccines may be less effective against it. Europe is already facing a spike in COVID cases and new lockdowns. Global oil prices fell 10% on Black Friday (November 26) on the threat of renewed border closures and reduced demand for air and road travel. Markets are likely to remain volatile until there is confirmation that a new vaccine can be created quickly, which experts believe is likely.
Elsewhere, the economic smoke signals were mixed. Australian company profits rose 4% in the September quarter, and 5.4% over the year, supported by government subsidies. Not surprisingly, the NAB business confidence index rose 11.2 points in October to 20.8, its second highest result on record. But wages growth is lagging, up 0.6% in the September quarter and 2.2% over the year. Unemployment increased from 4.6% to 5.2% in October while underemployment rose from 9.2% to 9.5%. While retail sales jumped 4.9% in October as lockdowns ended in some states, consumers remain jumpy. The ANZ-Roy Morgan consumer confidence rating fell over 2 points in October to 106.0. Adding to hip pocket nerves, the national average unleaded petrol price hit a record high of 170.4c a litre in November. The Aussie dollar fell 4c in November to US71.2c.
On the King & Whittle front, we are thrilled to announce our Wealth Management director Bruce Dyason was recently publicly named in the top 10% of advisors within the financial services industry. This is not only a fantastic personal achievement for Bruce, but also an acknowledgement of the outstanding personalised service that Bruce carries out across our entire Wealth Management client base. Our clients are well aware of Bruce’s great service, but it’s wonderful for Bruce to be now publicly recognised in such esteemed company.
We are also extremely proud to announce that Client Service Manager Jennifer Rapson has recently completed a Mental Health First Aid Certificate with “Counting On U”, a program jointly developed by the Institute of Chartered Accountants Australia & New Zealand and Deakin University. In 2020, nearly 1 in 3 SME owners were diagnosed with anxiety, depression, stress or other mental health issues. This course helps trusted advisers such as Jennifer to provide intermediary business support and mental health support to clients, who are often, especially over the past 2 years, finding themselves in extremely difficult and vulnerable circumstances. The relationship with their advisers has often gone above and beyond the regular, professional relationship and has extended to being able to have more deep and personal discussions with their advisers about their mental health. Jennifer’s completion of this course is an extension of her nurturing and caring persona, and we are proud to promote Jennifer’s recognition in this space.
Finally (and belatedly) the King & Whittle team were able to recently celebrate Robert Barrese’s 50th birthday together. Having been interstate during lockdown, and unable to return back home without quarantining for 2 weeks, the team weren’t able to physically be there for Robert to celebrate this milestone on his actual birthday in September. The team surprised Robert in the boardroom of our Melbourne office with drinks, nibbles, cake, and a video presentation from all the King & Whittle team wishing Robert all the best in his 50th year.
Whatever your plans for the holidays, we wish you and your family a happy festive season.
Until next month,
Your King & Whittle Team
Tax Alert December 2021
As COVID-19 turbulence starts to settle, the ATO is moving away from its supportive position and returning to its more usual compliance focus.
That means taxpayers need to be aware their financial affairs will come under renewed attention in the year ahead.
Data gathering programs increase
In recent months the ATO has announced programs to gather data on various aspects of Australians’ financial lives to use in its ongoing data-matching projects.
Recent programs include gathering data on property management and rental bonds, cryptocurrency, online selling and novated leases for the upcoming financial year (2022-23). The ATO will also be collecting data on payments made by government agencies such as Comcare, the Department of Health, the NDIA, Department of Veterans’ Affairs and the clean energy regulator.
Taxpayers who buy and insure high-value lifestyle assets will also be under the microscope, with the ATO looking to collect details that will “assist with profiling [to obtain] a holistic view of a taxpayer’s wealth”. Under this program, the taxman will be obtaining information from insurance companies for the period 2020-21 to 2022-23 about assets exceeding certain nominated thresholds.
These high-value assets include boats valued over $100,000, motor vehicles (including caravans) and thoroughbred horses valued over $65,000, fine art worth over $100,000 per item and aircraft valued over $150,000. Data obtained from insurers will include individual client identification and policy details.
Overseas gifts or loans under scrutiny
The ATO has also announced it will be increasing scrutiny of undeclared foreign gifts or loans from related overseas entities, including family and friends.
The regulator says it has encountered many situations where Australian taxpayers are deriving assessable income or capital gains offshore but failing to declare these in their income tax returns. The ATO will be looking at arrangements where taxpayers are attempting to avoid tax on foreign assessable income by disguising amounts as gifts or loans.
Anyone receiving genuine monetary gifts or loans should keep supporting documentation. Inheritances count as gifts, so if you receive an inheritance from overseas, get a certified copy of the person’s will or estate distribution statement.
Focus on working from home deductions
On a positive note, if you are still working from home due to COVID-19, you can continue using the shortcut method for claiming deductions until 30 June 2022.
From 1 July 2022, you will need to use either the traditional fixed rate or actual cost methods and meet their eligibility and recordkeeping requirements.
The ATO says it’s currently reviewing the 52 cents per hour fixed rate method to make it easier and simpler to use, given more people will be working from home in the longer term.
Backpacker tax under fire
Employers paying working holidaymakers will need to keep a close eye on developments in this area following a decision by the High Court that tax rates applied to these employees is discriminatory as it is based on nationality.
The decision could affect the applicability of the backpacker tax for workers from countries with double tax agreements with Australia. According to the ATO, this means working holidaymakers from Chile, Finland, Germany, Japan, Norway, Turkey, UK, Germany or Israel.
The ATO is currently considering the implications of the High Court decision and will provide further guidance for employers. In the meantime, employers should continue using the tax rates in the ATO’s published withholding tables for backpackers.
Self-education expense threshold to go
The government has made good on its May 2021 Budget promise to remove the $250 non-deductible threshold for claiming work-related self-education expenses.
The Treasury Laws Amendment (2021 Measures No.7) Bill 2021 is currently before Parliament. If passed, it will remove the current threshold for taxpayers claiming self-education expenses. It’s also expected to simplify the claims process in your annual tax return.
The start date for the change is likely to be 1 April or 1 July 2022.
Reminder on super stapling
If you are an employer, don’t forget to request super fund details from new employees, now the government’s super stapling rules are in place.
If a new employee doesn’t choose a super fund, you must request their stapled super fund from the ATO if they have one. This fund is linked to them and must be used for your Superannuation Guarantee (SG) contributions unless the employee requests otherwise.
If you would like help getting your tax affairs in order for the new year, contact our office today.