September 30, 2022

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The Optus Hack – and what you

(and I) need to do with our business data!

It has become common knowledge that Optus has had its database breached.

And this has personal relevance to me, as I am an Optus mobile subscriber, with my business (mobile) number and those of my entire family impacted by the breach. I received the ‘generic’ email from Optus on Saturday (12:51 am. Nice they got it out at a time when it was likely to be buried under a plethora of spam emails), so the awareness of the issue came more from the press reports than the ‘genuine communication’ to its customers.

The key issues we need to look at here are:

What was taken, and
How did it happen?
What does this mean in my situation?
Stuart, is the data you hold on me safe?

It APPEARS (as Optus has not been crystal clear yet with this information) that their basic database information has been ‘taken’.

This includes:
Full customer name
Date of birth
Phone numbers
Email addresses
Account addresses

They claim that payment details (Bank and credit card numbers?) and passwords have not been taken – just the identification data. But that is bad enough.

Access may also have been obtained to the I.D. document details provided for the ‘100-point check’ each account holder needs to provide.

This would also mean access to items like:
Driver’s licence – state, number and expiry date;
Medicare card number and details; (They have reported that details of at least 35,000 current and expired medicare cards were accessed)
Passport details;
Other items used for verification could be your electricity account details, rates notice, etc.

The danger here is that these details are potentially enough to create a fraudulent I.D. or to assume someone’s identity to do things like:

Change your bank account details, and get new cards issued to defraud you;
Alter phone account details, and have your calls and mobile account redirected to someone else;
Create new credit card accounts in your name that someone else controls (and leave you with a debt or bad credit record).

How did it happen?
While Optus has been claiming that it was a sophisticated attack, it seems the reality is that they left their backdoor unlocked and the lights on. The door might not have been wide open, but it was not far removed from that situation.
Many business systems are set up to ‘talk’ to each other using an interface or ‘API’ to do so.

To explain this, here is an explanation from The New Daily
In basic terms, APIs are ways for computers to pass code between each other (such as instructions). They are often used to enable services such as Google’s weather alerts, which make use of Bureau of Meteorology data.
They are supposed to be safe because companies usually have authentication rules attached to their APIs – but Optus allegedly did not.
“What we’ve seen is there was an API where you pass a phone number, and a phone number’s just … you just keep adding one, and you cover them all eventually,” Mr Hunt said.
“So why was there an API [without user] authentications? That could be a programming error.”

So the system that Optus was using did not have enough security built into it to stop a systematic ‘guessing’ of the key to access the data. It would be like if I could get hold of your ATM card and just keep guessing your PIN time after time without ever being locked out of the process. In time, with enough guesses, I will get access and can get all of your money. In this case, it only takes one correct ‘guess’, and access is obtained to potentially the whole database.

Data security is becoming increasingly important, and more attention needs to be given to this by everyone in business – even if you are a ‘business of one’ and freelancing or self-employed. Again, look at your contact details, the data you hold on your associates, customers, and finance arrangements and think about what data you need to hold – and how secure it is.
It is often considered that your database is one of your greatest assets in a business, and the reality is, that it is also potentially one of your greatest liabilities or risk factors, as you need to ensure you are ‘protecting’ your position and that of your customer base when you undertake your activities.
So, the potential danger here is that the data obtained won’t just impact activity with Optus. It can impact people in other areas.

Like in activity with the Tax Office.

I have been asked by a concerned client to check data on the Tax Agents portal, as it appears that some hackers are trying to change details with the ATO. This could result in tax refunds landing in the wrong bank accounts, GST or other tax claims being made incorrectly, or business entities being created to defraud the government, using false names obtained via a data hack to draw funds out from the ATO.

We will be doing random checks of client data on the ATO site to make sure nothing has changed (and if you are an Optus customer, don’t hesitate to get in touch with us, and I will check your ATO data to make sure it is all ok)

So, what can you do about this?

After spending over 4 hours on the Optus ‘chatbot’ trying to get some clarity on what has been taken – and running into the same brick wall as everyone else on finding out ‘exactly’ what was released, the action that I took was as follows: (and what I would suggest is done by anyone else who is a current Optus Mobile system user)

Contact VicRoads (or, if you are not in Victoria, your local roads authority) and request a new driver’s licence with a new number. They will also ‘flag’ that the current licence may have been compromised and can’t be used for I.D. verification. I don’t think it will get you out of any speeding or redlight fines, however. Sorry about that!
I found the process with VicRoads took all of 5 minutes and 5 lines of information. So unlike dealing with Optus, it was painless;
Contact Medicare via MyGov, and request a new Medicare card for you and your entire family. They will issue a new card with essentially the same details but ‘moved on’ sequentially. Again, this will override the ‘old’ cards and make the number redundant.Again, the Medicare website has been set up to deal with this Optus issue, and the process is simple.
Passports – this appears to be a harder scenario. Currently, it does not appear that the Passport office will ‘simply’ process new passports to replace any that ‘may’ have been compromised. And it will come down to finding out precisely what data Optus received and held regarding I.D. for their customers.News Flash! Optus has now agreed (Been made to!) to pay the cost of passports that need to be replaced due to data being released through this breach. The replacement process is still to be determined, so keep an eye on the Passports Australia website and contact Optus to confirm if these details have been accessed. As mentioned above, they are still to provide full details of what data has been accessed and what I.D. documents they retained on their files.
There are various ‘data monitoring’ sites available (Optus is funding a 12-month subscription to Equifax to those impacted who shout loud enough) that will let you know if changes have been made to any of your accounts. It may take a bit of work to set everything up, but it will only take one notification of fraudulent change to make the subscription worthwhile.
Contact your banks and financial institutions, change your passwords, online pin numbers, etc. Make sure that the systems are set up to contact you with any changes made on your accounts, so you can act quickly if any suspicious activity has occurred.

The need for security over a business’s data is significant, and everyone in business needs to look at this situation and identify the lessons relating to their own data.

As business owners, we hold a large amount of data on our clients – and also on our suppliers, financiers and associates. And, the more ‘automated’ we make things, the more data we hold to make that possible. E.G. ID numbers such as ACN, ABN, TFN, Director IDs, driver’s licences, bank accounts, addresses, date of birth, etc., are all recorded. If that data is hacked, it becomes easy for an identity to be duplicated or to change and divert the information.

Look at what data you hold for your customers., clients, suppliers etc., and what security is used to access those details. And what do you need to retain once identification has been confirmed, or the ‘transaction’ has been completed?
How is this stored and saved? Who has access to this data? What checks can you make to see if changes have been made without your knowledge?
What is needed to access your database? – is it just a password, or have you set up 2-factor authentication? Many online systems require this, but I have noted that many people fail to take it up if they can avoid it. The lesson is – DON’T AVOID IT. It is like leaving the key under the mat for your front door. Sure, the door is locked, but finding the key is not as hard as you want to believe it is.
Do you use the same password for multiple sites? I know, remembering multiple passwords is a Pain in the pass-word, but the frequency of database hacks makes keeping them unique more and more important. You can use programs like Last Pass to keep track of your different passwords – and create unique, hard-to-crack passwords or passphrases for each site you use. This type of system will also ‘flow’ through to all your devices, so you don’t have to keep track of them separately. (At Fiscal Artisans, we are using Last Pass, and it works well on computer browsers and mobile phone systems)Most mobile phones can also help you create unique passwords stored on the phone, so you don’t have to remember them (Just keep your phone security tight!)
If you use your mobile phone to access most sites, it is not hard to see which sites have duplicated passwords – and which ones have potentially been compromised. You can usually find this in Settings/passwords/security recommendations. Your web browser (such as Google) or your computer setup may help you with this process. Keep them unique, combining UPPER and lower case letters, numbers, and special characters. And don’t use easy-to-remember words or numbers that relate to you, like your birthday, middle name, or kids’ names.

Ok, so what are we doing about this?

This is how we operate in terms of Fiscal Artisans with our data.

All of our operating system access requires 2FA, meaning that as well as a password, all access requires a code that can only be obtained via my phone (which is pretty much permanently embedded with me). All staff use unique 2FA access, log-ins and passwords for their access to our systems as well.
Unique passwords are used for all systems, and these are kept secure at all times.
All paperwork and related data for clients, such as questionnaires and paper copies of data that have been emailed to our clients, is scanned, then shredded if it does not need to be saved or stored or sent as a hard copy (and the shredded paper is turned into garden compost and worm food!) so no data or client information is disposed incorrectly, or kept beyond the time it is needed.
Where former clients have ‘moved on’ and are no longer using our services, any data we hold for them is taken ‘off line’ from our systems and kept in a separate archive system until the required period has elapsed. Then, after around 7 years, that data is deleted and completely purged from our systems.
We only share data that you have agreed to be shared with associates and will always ‘copy you in’ to communications of data provided to third parties like finance associates, legal advisers etc.
We review our systems frequently to ensure that data is stored correctly, security is maintained at a high level, and superfluous data that is not needed is removed.

We suggest that all business operators look at their systems and determine if changes need to be made to increase their security over the data they hold.

We are happy to assist and advise around your data management, and we can assist you with associates who can provide you with the services needed to improve your data security.

Meanwhile, please check your own systems and make sure that they are as secure as possible.

After all, you wouldn’t leave your front door open or leave the keys in your car would you?

Treat your data with the same level of security.

Enjoy your weekend – and check your data security!

For more information, or to discuss your own data situation, please email me at stuart.smith@fiscalartisans.com.au or call me on 0409788399.

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Thank you for your response. ✨

Stuart Smith CPA
Director
Fiscal Artisans.

by Fiscal Artisans

September 19, 2022

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Australian Domain name changes are about to go live.

Australians have until 20 September 2022 to seek priority allocation of an .au direct domain name that matches their existing domain name.

Anyone with an Australian presence (including businesses, organisations and individuals) can now register a new domain name category, known as .au direct. These shorter, simpler domain names will end in simply ‘.au’ (e.g. mybusiness.au) and complement existing namespaces such as ‘com.au’, ‘net.au’, ‘org.au’, ‘asn.au’, ‘id.au’, ‘gov.au’ and ‘edu.au’.

Existing domain name licence holders have been provided priority to register the .au direct equivalent of their domain names until 20 September 2022, after which domain names that have not been allocated will become available to the general public.

This new option for domain names creates opportunities for businesses, organisations and individuals. However, it could also provide another opportunity for cybercriminals by facilitating fraudulent activity like business email compromise. For example, by registering yourbusiness.au where you have already registered yourbusiness.com.au to impersonate your business.

The ACSC recommends that all Australian businesses, organisations and individuals consider taking advantage of the priority allocation process to register the .au direct equivalents of their existing domain names. In cases where conflicts occur, such as when different organisations own similar domain names (e.g. mybusiness.com.au and mybusiness.net.au), priority allocation will help determine who can register their .au direct equivalent. Until 20 September 2022, registrants of .au domain names licensed before the launch of .au direct have priority to apply for the matching .au direct domain name.

After this date, it may be possible for ‘cyber-squatters’ to register ‘your’ domain name and seek to impersonate your website or use it for various fraudulent activities, or simply ‘squat’ on your name and potentially look to sell your own site back to you.

Businesses, organisations and individuals who have registered a domain name outside of Australia can also consider registering an .au direct domain name. For example, a business that currently holds mybusiness.com should consider registering mybusiness.au. This will prevent cybercriminals from registering these domain names and using them for attempted financial fraud.

You can reserve your .au direct domain name by visiting an auDA accredited registrar.

If your business or organisation is a victim of business email compromise or other fraudulent activity, please report the incident to the ACSC through ReportCyber or contact 1300 CYBER1 for support. auDA also has a complaints process available you can access through their website.

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by Fiscal Artisans

March 30, 2022

Australian Federal Budget 2022
The AfterPay Budget
Vote Now Pay Later!

Last night, Treasurer Josh Frydenburg delivered the Australian Federal Budget for the next 12 months. But in reality, with the election about to be announced – with an expected poll date of May 14, 2022, (the PM mentioned this date on 2GB this morning) the budget’s main aim is solely to get the Government to that date, and, they hope, elected, despite all polling indications, for a further term of Parliament. The key elements announced and widely reported relate to what the Government calls ‘cost of living’ support. With costs rising over the last few years and significantly in the last few months due to rising fuel prices, supply issues and a lack of wage rises for most Australians, a ‘correction’ in the economy, with an easing of the financial pressure that many have been feeling over the last few years is desperately needed. So what has been offered and forecast?

$250 one-off payment to those on the following payments:

Age Pension.
Disability Support Pension.
Parenting Payment.
Carer Payment.
Carer Allowance (if not in receipt of a primary income support payment).
Jobseeker Payment.
Youth Allowance.
Austudy and Abstudy Living Allowance.
Double Orphan Pension.
Special Benefit.
Farm Household Allowance.
Pensioner Concession Card holders.
Commonwealth Seniors Health Card holders.
Eligible Veterans’ Affairs payment recipients and Veteran Gold cardholders.

The payments are exempt from tax and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under two or more categories outlined above. The payment will only be available to Australian residents. This is a one-off payment and NOT an ongoing increase to any of these benefits. The ongoing discussion of the appropriate level of support for pensioners and Jobseekers has not been addressed In the budget. The payment will occur in April 2022 – i.e. after the election has been called but before the polling date.

Temporary reduction in Fuel Excise

The Government will help reduce the burden of higher fuel prices by halving the excise and excise-equivalent customs duty rate that applies to petrol and diesel, and all other fuel and petroleum-based products except aviation fuels, for six months. This measure will commence from 12.01 am on March 30 2022, and will remain in place for six months.

However, this may take 2-3 weeks to be seen ‘at the bowser’ as existing stocks are sold and then replaced. Ongoing fluctuations of the crude oil price, production costs and exchange rates may add to or diminish any benefit actually seen at the bowser.

Note that the calculation of indexation will continue to happen over the 6 month period that this ‘relief’ will occur, so when the excise is returned to its ‘normal’ levels in October, we may see a price increase that is well above the 22 cents per litre reduction that we are currently hoping for.

Increase in low and middle-income tax offset

For a number of years, there has been a ‘non’ cash refundable’ tax offset that has been continually extended for ‘one more year’. We have this situation again, but this time with a last ‘bonus’ of $420.

This is the “$420” relief payment that has been described as a ‘cost of living’ tax offset in the budget.

It will apply to everyone who has a taxable income of LESS then $126,000, and its timing is dependent on the lodgement of your 2022 tax returns. i.e. it will NOT be paid before July 1, 2022, and may not be received by many until well into the second half of the year.

Note also that if your total tax payable is less than the total value of the rebate, you may not receive all or any of the benefits.

What has not been mentioned is that this is – at this stage – the FINAL year of this offset, which has been extended year after year for some years now. With the stage 3 tax cuts due to be introduced in 2024-25, people on ‘middle incomes’ ($45,000 to $126,000) will face an effective tax increase in the 22/23 year (i.e. from July 1), So while anyone with an income under $126,000 will receive a benefit of an extra $420 after July this year, they face an additional tax take of $1,080 after July next year. The ‘Afterpay’ effect!

Changes effective for business – and ‘creating growth opportunities’

Skills and training boost.

The Government will introduce a skills and training boost to support small and medium-sized businesses to train and upskill their employees. The boost will apply to eligible Expenditures incurred from 7:30 pm (AEDT) on March 29 2022 (i.e., Budget night) until June 30 2024, by Small and medium-sized businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of Expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.

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. (Without any legislation, this is open to debate, but it may mean that directors of companies/self-employed business owners CANNOT claim their OWN external training. But until we get details, we cannot be certain. That is not likely to occur until after the election as the changes required for this are not likely to pass through Parliament before the election.)

But while this applies to eligible Expenditure incurred from today, the actual benefit (tax deduction) will not occur until June 30, 2023. i.e. Expenditure from today to June 30, 2022, can ONLY be claimed in the NEXT tax year.

So, using Frydenburgs example from budget night. If you spend $100 on training your staff ‘today’, you can claim a $120 tax deduction (which, with a corporate tax rate of 25%, gives a tax benefit of $30 in 2023 instead of $25 in 2022) and reduce your tax sometime after July 1, 2023.

Technology Investment Boost

The Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses. The boost will apply to eligible Expenditures incurred from 7:30 pm (AEDT) on March 29 2022 (i.e., Budget night) until June 30 2023.

Small and medium-sized businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of Expenditure incurred on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems or subscriptions to cloud-based services).

An annual cap will apply in each qualifying income year so that Expenditures up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.

For eligible Expenditure incurred by June 30 2022, the boost will be claimed in tax returns for the following income year. For eligible Expenditure incurred between July 1 2022, and June 30 2023, the boost will be claimed in the income year in which the Expenditure is incurred.

Whether this applies to current subscriptions (such as Xero, office 365 etc.) that are being used or only ‘new’ acquisitions is unclear. And, in the same way, as the ‘skills’ boost, anything incurred that can be claimed in the current year will not be claimed – or provide a tax benefit – until the end of the 22/23 tax year – so the ‘financial benefit’ will not be seen until after July 2023.

Varying the quarterly tax instalments

For those who have ongoing PAYG instalment payments (company tax instalments, investment income or sole traders), the annual calculation of the instalment has often been based on ‘last year’s income plus 10%’ to work out the expected income on which the tax is calculated.

For the next 12 months, the Government has reduced this ‘uplift’ to 2%, so the amount required to ‘cover’ the quarterly instalment will be lower.

While this will assist cash flow in the short term, the kicker is that if your business HAS increased its profit substantially in the year, it will have a LARGER year-end tax bill, as you will have paid less tax ‘as you go’.

The next change – proposed for January 2024 – is to base PAYG instalments on the ACTUAL quarterly performance “Where Business accounting software permits this”. i.e. we may be approaching the need to lodge ‘adjusted profit reports each quarter’ to calculate the tax instalment that needs to be paid. This may have some benefits where income and expenses are very ‘seasonal’ or where there is a large fluctuation in profit each quarter, meaning less tax is paid when times are harder and more paid when funds are flowing – but it will also require all businesses to be ‘on the ball’ with their accounts every month to keep track of their tax liabilities as they go. There will be more on this AFTER the election!

Apprentices and trainees

The Government has extended its support in boosting the apprenticeships scheme, providing A$5000 payments to new apprentices over two years and extending subsidies of up to A$15,000 for employers who take them on.

Frydenberg said the Government would also support an additional 800,000 training places with a A$3.7 billion investment.

Will there be sufficient funding for the TAFE places required for these apprentices? And will they be limited to specific industries? We await more details.

Infrastructure

The budget also makes commitments to several strategic infrastructure projects around the country.

There are budget commitments for faster rail projects from Brisbane to the Sunshine Coast, from Sydney to Newcastle, Perth’s METRONET project, the North-South Corridor in South Australia, Great Eastern Drive in Tasmania, and Central Australian Tourism Roads in the Northern Territory.

There is also an investment in the Melbourne Intermodal Terminals to increase the efficiency of the national freight network, and more than A$500 million for local councils to deliver priority projects and A$880 million to better connect regional Australia with ports, airports and other transport hubs.

The worry here is the usual – announcements, not action. And As Leigh Sales on 7:30 last night stated – if you overlay the location of most of the announced plans with the electoral map, they are focused on marginal seats, or seats that the Government need to retain or win. Infrastructure Australia has approved only 12% of the projects, so the announcements don’t tie in with economic or social priority or need in many cases.

Ok, so what are the costs and the losses?

Renewable energy

Federal government spending on climate change measures will decline every year for the next four years. This includes the spending on carbon credit purchases, the Clean Energy Finance Corporation, Australian Renewable Energy Agency and the Clean Energy Regulator. Spending will drop from $2 billion in 21/22 to $1.3 billion on 25/26. We are 7 years from the 2030 ‘threshold’, and the Government is reducing its activity in this area. Any change will need to come purely from the ‘market’ or state government action.

You would think that the Lismore floods, the bleaching great Barrier Reef, and the constant downpours in Sydney would have affected policy action.

The Rise and Fall of The Arts

It seems that far too many see this area as being ‘just a nice thing to have’, forgetting the size of the industries involved – Film, TV, Music, Theatre, galleries, pubs, clubs, dance etc. But it falls away for some when it comes to the economic factors. A $111.7 billion sector in 2018 – 6.4% of GDP. But not considered worthy of a separate ministerial portfolio in the current Parliament.

Total Federal spending is forecast to reduce by 20% in 22/23, with a $140 million reduction in the RISE funding – from $160 million to $20 million, and then no further after the 22/23 year. This funding supported the ‘rebuild’ of various festivals, tours, exhibitions etc., but needs to continue to help rebuild a sector that was decimated over the last 2 years. There is no growth (beyond marginal CPI increases) in any other part of the Arts funding either. In fact, the total funding is expected to fall from $799 million in 22/23 to $744 million in 25/26. Australian Music Administration spending drops from 6.3 million in 22/23 to nothing in 24/25. Regional Arts funding falls from $18 million to $7 million in 22/23.

At a time when Film Production and post-production, animation, gaming, and music production has the ability to grow and be globally significant, with an “Australian flavour”, the support to grow the sector in all parts of the country is being removed.

Do you wanna build a submarine, I mean a snowman?

Ring the bell – its closing time…

With the ‘end of the pandemic’ and lockdown provisions, a number of the policies put in place over the last few years are now ending.

Temporary Full expensing will finish June 2022 – so if you want to claim a full 100% tax deduction ‘up front’ for your equipment or business vehicle purchase, it now MUST be ordered by this June 30 and installed for use by June 30, 2023. Any expectations that this would continue have now finished, and from July 1, 2022, the previous depreciation rates will apply again.

This may also have implications for other ‘instant asset write-offs’, which will need to be examined as regulations and legislation are put in place.

The forecasts!

The budget forecasts that a ‘strong labour market’ will mean an unemployment rate of less than 4%. They say that this will drive wages growth with a forecast increase of 3.25% in wages over the coming year.

But, Unemployment is being defined as Less than 1 hour of work per week. If we used the same definition as the last time Australia had a sub 4% unemployment rate, we would be looking at something closer to 16.3% taking into account the underemployed levels, so the expectation of wage growth, being based on ‘supply and demand issues alone’ has to be tempered by this factor. Wages won’t necessarily rise if a large pool of underemployed staff can simply have their hours extended instead of being paid ‘more per hour’.

Inflation is forecast to reduce from 4.25% to 3% 2.75% in 23/24, but this will be very dependent on commodity prices falling (including oil), supply change improvements, and exchange rate stability. Any or all of these factors could see inflation stay over 4% p.a. or climb higher – which may lead to interest rate adjustments happening sooner rather than later.

The deficit for the current year is now forecast to be $80 Billion – down by $20 Billion on last year’s forecast (due to higher commodity prices for what we dig up and ship overseas), and ‘stabilise’ at around $78 Billion for the 22/23 year. With ongoing tax revenue increases – arising out of wage and profit growth leading to more tax being paid – the budget is still expected to be $40 Billion in deficit in 25/26.

The Treasurer claims that we have ‘turned the corner’ because the debt peak will now be ‘not as high’ and ‘a bit sooner’ than previously forecast. This sounds like the “Back in Black” pronouncements in the year before the pandemic – which were already proven wrong before that nasty little virus shut most of us into our homes and 5 km walk zones for the last 2 years! A treasurer’s forecasts are often as accurate as the old Lou Richards Kiss of Death Football Tips, so we take much of this with a large pinch of salt.

Total Government spending is around 26% of GDP – It never peaked above 23% of GDP under the previous Labor government. Tax revenue is around 24% of GDP (also higher than the Labor years). So, currently, the Government has what is called a ‘structural deficit’ (in basic terms – it is spending much more than it is earning). While I won’t fall into the simplistic’ home budget’ comparisons, and there are many who will argue that it does not matter if a government runs deficits all the time (as who is going to bankrupt them?), it is much like developing a business – at some point in time, you DO expect that the revenue is going to be greater than the spending, and you recover some or all of the money that you have spent or invested in getting the business going. Repeated waste and inefficiency or politically motivated decisions make this harder to overcome, and governments need to improve their performance in this aspect regardless of their political colours. Much of the deficit could be recovered in this way. E.g. Defence spending, while overall being necessary, has seen so many examples of botched equipment purchases that have cost billions and produced nothing. This money could have been re-purposed for far better uses and saved considerable money and pain.

In the words of Ross Gittens in the Age / Sydney Morning Herald:

This budget is not as fiscally responsible as the Government would like you to believe when it’s claiming to be the party of good economic management, but nor is it as fiscally irresponsible as it would like you to believe when it is claiming to have fixed your problem with the cost of living.

We await the Opposition’s reply, and let the election campaign begin!

by Fiscal Artisans

June 3, 2021

Victorian Business Costs Assistance
Lockdown 4.0 support payments

Through Business Victoria, the Victorian State Government has released the guidelines for its latest round of support for businesses and sole traders that the current Victorian lockdown has impacted.

There are two specific schemes – the Business Costs Assistance Program (round two) and the Licensed Hospitality Venue Fund. I am focusing here on the Business Costs Assistance Program in this piece.

It needs to be noted that not all businesses will qualify automatically, as the support has been targeted primarily at businesses and industries that have been shut down as a result of the lockdown and are unable to continue income-earning activities in a work from home basis. The list of industries are listed in the blog, as well as the guidelines for the scheme.

In addition, there are effectively two levels of support, based on the different periods of lockdown between Metropolitan Melbourne and Regional Victoria. Essentially, this equates to a $2,500 per week payment for businesses affected by the lockdown.

The guidelines are shown below (extracted from the Business Victoria guidelines), as are the industry sectors that qualify for the support.

This is not limited to incorporated businesses, so sole trader businesess (with a registered ABN AND GST registration) can also apply.

We can assist you with the submission (as we did for many clients with the various support grants in 2020), and can discuss the eligibility guidelines with you as needed.

Please feel free to contact us on 0409788399 or info@fiscalartisans.com.aufor more information.

GUIDELINES

Business Costs Assistance Program Round Two

COVID-19 assistance to businesses

Program Summary

On 30 May 2021, the Victorian Government announced a $250.7 million Circuit Breaker Business Support Package to support Victorian businesses most affected by the May-June 2021 circuit breaker action. An additional $209.3 million was announced by the Acting Premier on 2 June 2021.

The $371 million second round of the Business Costs Assistance Program (the Program) will provide grants of either $2,500 or $5,000 for eligible businesses directly affected by the circuit-breaker industry restrictions.

1. Standard Eligibility Criteria

1.1 To be eligible for the Program, a business must:

a) Be located within Victoria (primary operating address, and Victoria address registered with Worksafe Victoria) ; and

b) Be registered as operating in an eligible industry sector identified in the List of Eligible ANZSIC classes (as defined by the ANZSIC class linked to the business’ ABN ; and

c) Have incurred direct costs as a result of the circuit breaker action and the business cannot predominantly operate remotely; (For example, but not limited to: booking cancellations, utilities, wages, paid leave for staff unable to attend work, rent or the loss of perishable good or any other direct costs affecting the operation of the business related to the May-June 2021 circuit breaker action. These costs may have been incurred prior to, on or after 27 May 2021. The costs must be incurred by the applying business, as defined by its ABN.) and

d) Have an annual Victorian payroll of up to $10 million in 2019-20 on an ungrouped basis ; and

e) Be registered for Goods and Services Tax (GST) on 27 May 2021; and

f) Hold an Australian Business Number (ABN) and have held that ABN at 27 May 2021.

g) Be registered with the responsible Federal or State regulator

For employing businesses only :

h) Be registered with WorkSafe Victoria ; and

i) Attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the circuit breaker action, and supporting their casual workers, where possible

2 Other eligibility conditions

2.1 Businesses that have received assistance through the Business Support Fund, payroll tax rebate/waiver, or other COVID-19 programs may apply for assistance under the Program.

2.2 Businesses that receive a grant under the 2021 round of the Licensed Hospitality Venue Fund (LHVF21) are not eligible for a grant under the Program.

2.3 Organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program.

3 Demonstration of eligibility

3.1 Applicants must attest that they meet the eligibility criteria at the time of application and intend to remain trading at the end of the circuit breaker action. Applicants will also need to meet the eligibility criteria at the time the application is assessed by the Department of Jobs, Precincts and Regions (DJPR).

3.2 Industry sector: To be eligible, an Applicant’s primary business activity must be in an eligible industry sector and this must be reflected in the Applicant’s ABN registration information. Applicants should check that their details on the Australian Business Register website are correct prior to submitting an application. This includes ensuring that the industry classification (ANZSIC class code) linked to their ABN registration correctly captures their primary business activity.

3.3 Identity Documents: Applicants must provide details of a current proof of identity document. This must be one of the following:

a driver licence or learner permit issued in any Australian jurisdiction; or
an Australian Passport; or

a Medicare Card; or
a foreign passport for those issued with an Australian Visa.

The identity document details must be for a person listed on the Australian Business Register as either the owner, co-owner, associate or authorised contact of the business

3.4 If the current proof of identity is unable to be confirmed, Applicants will receive a follow-up email with instructions to amend their proof of identity details. If the applicant does not then rectify proof of identity details before the Program close date, the application will not be considered by the Department for this Program.

4 Available funding

4.1 From 4 June 2021, changes to the existing industry circuit breaker restrictions (from 28 May 2021) affect businesses differently depending on the businesses location and industry type.

4.2 The total value of a grant under the Program is up to $5,000. For businesses that meet the standard eligibility criteria:

• businesses that were directly affected by the circuit breaker industry restrictions between 28 May up to and including 3 June 2021 will be eligible for funding of $2,500;

• businesses that remain directly affected by the circuit breaker industry restrictions on and from 4 June 2021 will be eligible for funding of $5,000.

4.3 The Department will determine the value of the grant based on an assessment of the Applicant’s business location and ANZSIC class.

4.4 A business as defined by its ABN can only receive one grant under the Program.

5 Funding use

5.1 Grant funds must be used to assist the business, for example on:

• Meeting business costs, including utilities, wages or rent;

• Seeking financial, legal or other advice to support business continuity planning;

• Developing the business through marketing and communications activities; or

• Any other supporting activities related to the operation of the business.

6 Assessment Process

6.1 Funding will be allocated through a grant application process, through which businesses are invited to apply for a grant.

6.2 As part of the assessment process, any information provided by Applicants will be shared and subject to verification with other government agencies (state and federal) including the Victorian State Revenue Office, WorkSafe Victoria, the Australian Business Register and the Commonwealth Department of Home Affairs.

6.3 Any of the following circumstances may be taken into consideration in any decision whether to award a grant:

• Any adverse findings by a Government agency or local council regarding a business or its operation;

• A business is, or notice has been given that it will be, placed under external administration;

• There is a petition for bankruptcy or to wind up or deregister a company or business; and

• The business is or becomes deregistered or unregistered (including cancellation or lapse in registration or any relevant permit).

6.4 Businesses must ensure that their ABN registration information is current and accurate as at the time of application.

6.5 Each application will be carefully considered and assessed against the eligibility criteria. If an unsuccessful Applicant considers that their application has been incorrectly assessed, they will have the opportunity to lodge a complaint. More information on the complaints process and a complaint form can be found at https://business.vic.gov.au/contact-us/complaints.

6.6 Only final applications that are lodged with the Department will be considered and assessed, and applications in draft stage will not be considered.

7 Compliance and Audit

7.1 Applications may be subject to audit by the Victorian Government, its representatives or the relevant Auditor-General and will be required to produce evidence (such as payroll reports to demonstrate impact) at the request of the Victorian Government for a period of four years after the grant has been approved.

7.2 If any information in the application is found to be incomplete, inaccurate, false or misleading, or grants are not applied for the purposes of the business in accordance with the terms of funding as set out in these Guidelines and any attached application, the grant will be repayable on demand.

8 Other information about this Program

8.1 DJPR reserves the right to amend these guidelines and application terms at any time as it deems appropriate.

8.2 DJPR will endeavour to notify all Applicants of the outcome of their submitted application within 10 business days.

There may be delays if your application:

• does not meet all the eligibility criteria

• does not have correct evidence or documentation

• requires you to make changes • is a duplicate application for the same business

• has incorrect information, such as ABN or bank details (for successful Applicants)

• does not include current or accurate information registered with relevant regulators or partner agencies, such as the State Revenue Office, Australian Business Register or WorkSafe Victoria.

9 Closing date and how to apply

9.1 The Program will be open for applications until program funds are exhausted or 11.59pm Thursday 24 June 2021, whichever is earlier.

9.2 Applicants are required to submit an application online via the Business Victoria website (business.vic.gov.au). All questions in the application need to be completed and requested information is to be provided to ensure timely assessment and grant payment.

9.3 If you have any queries about your application or require further information on the program visit business.vic.gov.au or contact the Business Victoria Hotline at 13 22 15.

ANZSIC Industry codes for Business Support Grants

Please note:

If your ANZSIC industry code is not on this list, you are not eligible for funding through the Business Costs Assistance Program Round Two. This list applies to both employing and non-employing businesses in Metropolitan Melbourne and Regional Victoria.

* Regional businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in regional Victoria.

# Businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in metropolitan Melbourne and regional Victoria.

Which sectors are eligible for a grant?

To see if your business is in an eligible industry sector you should:

check the four-digit ANZSIC class linked to your Australian Business Number (ABN) on the Australian Business Register and confirm it matches your primary business activity

check if the four-digit ANZSIC class linked to your ABN is in the list of eligible ANZSIC classes for this program.

If your four-digit ANZSIC class linked to your ABN is not on the list of eligible ANZSIC classes for this program, then your business is not eligible for a grant under this program.
If you need to update your ANZSIC class, more information is available on the Australian Business Register.

You should only change your ANZSIC class if your current one does not accurately reflect your business activity.

Which sectors are NOT eligible for a grant?

Businesses that are continuing to operate or can work from home during restrictions are not eligible to apply for a grant. For example:

essential retail (i.e. supermarkets, food retailers, pharmacies)

manufacturing

construction

mining

agriculture, forestry and fishing

professional services (with some exceptions, such as wedding and events photographers).

My business is able to partially operate during restrictions. Can I apply for this grant?
Businesses in eligible sectors continuing to operate but unable to carry out their usual business activity can apply and may be eligible for a grant.
For example:

a retail business unable to open for normal trading but changed its operation to ‘click and collect’

a restaurant unable to have dine-in service but can operate a limited takeaway service.

Why are some businesses getting $2500 when others get $5000?

The grant amount payable is determined by the business’ industry sector (see Eligible ANZSIC classes) and its location.
Businesses that were subject to restrictions between 28 May 2021 and 3 June 2021 (inclusive) will be eligible for funding of $2500.
Businesses that continue to be subject to restrictions on and from 11:59pm on Thursday 3 June 2021 will be eligible for funding of $5000.

My business is a gardening business, why am I only eligible for a $2500 grant?

Gardening service providers in regional Victoria and metropolitan Melbourne are able to resume operating from 11:59pm on Thursday 3 June 2021, so they are only eligible for a $2500 grant rather than the $5000 grant, which is only for businesses that remain subject to restrictions after Thursday 3 June 2021.

How do I update my Australian and New Zealand Standard Industrial Classification (ANZSIC) on the Australian Business Register?

Only update your ANZSIC class if your current class does not reflect the activities of your business.

Business Victoria is not able to advise you on which ANZSIC class your business falls into. If you are unsure about your business’ ANZSIC class, please seek independent advice, from your accountant for example, or by contacting the Australian Business Register.
If you need to update your ABR details, there is a step-by-step guide on the Australian Business Register and the Business Victoria website.

Why do I have to be registered for Goods and Services Tax (GST) to receive this grant?

For the purposes of this program, being registered for GST indicates that your business was actively trading prior to 27 May 2021 up to now.

A business must register for GST when it has a GST turnover (gross income minus GST) of $75,000 or more.

Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.

Businesses with annual 2019-20 turnover of more than $75,000 that are not required under relevant taxation legislation to be registered for GST are also eligible to apply.

I previously applied for the Business Support Fund (or another COVID-19 related grant) and was not eligible. Can I still apply for this program?

Yes, but you must meet all this program’s eligibility criteria to be eligible for a grant.

I have applied for a Licensed Hospitality Venue Fund 2021 grant, can I also apply for this program?

Businesses can only receive a grant from either the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021, not both.
If you submit applications to both programs and are found to be eligible under both programs, you will only receive one grant – the program that delivers the highest level of financial support.

However, applying for both programs may result in delays to application processing and receiving your grant payment.

My business is a hospitality venue with a liquor licence and I incurred direct costs as a result of restrictions but I wasn’t eligible for the Licensed Hospitality Venue Fund. Can I apply to this program?

Licensed hospitality venues that do not receive a grant under the Licensed Hospitality Venue Fund 2021 may apply for assistance under the Business Costs Assistance Program Round Two if they meet the eligibility requirements.

What types of businesses are eligible?

Employing and non-employing businesses, companies, partnerships, and trusts are eligible to apply for a grant from the Business Costs Assistance Program Round Two. Superannuation trusts are not eligible. For more information, please read the program guidelines.
Business Costs Assistance Program Round Two guidelines (PDF 272.46 KB)

Business Costs Assistance Program Round Two guidelines (DOCX 1553.88 KB)

I received a grant/support through another COVID-19 business support program. Can I apply for the Business Costs Assistance Program Round Two?

Yes. If you meet the eligibility criteria you can apply for a grant from the Business Costs Assistance Program Round Two unless you receive a grant through the Licensed Hospitality Venue Fund 2021.

My business lost more than $5000 during restrictions. Can I apply for more?

No, the grant is capped at $5000 per eligible business.

If I incurred less than my grant amount in costs, will I need to pay some of the money back?

No. But businesses must attest they have incurred costs as a direct result of the restrictions to be eligible for a grant.

I am a performer/artist who has lost work during restrictions, but I am not registered for GST. Can I still access support?

No, under the program guidelines all applicants must be registered for GST. A business or enterprise must register for GST if it has a turnover of $75,000 or more.
Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.

Which identification documents should I submit with my application?

I’ve received notification that my identification check has returned an invalid result or could not be validated. How do I update my proof of identity?
Update your contact details by following the steps outlined in our Proof of Identity Verification User Guide.
Download a copy of these instructions: Updating Proof of Identity Details in Grant Hub forms (PDF 633.93 KB)

How do I know what the status of my application is?

The status of your application will appear in the Business Victoria Grants Portal:

Draft – you have started an application

Submitted – you have accepted the terms and conditions and submitted

Under assessment – your application has been received and is being assessed by the Business Victoria team

Successful – your application was successful

Unsuccessful – your application was unsuccessful.

From the time you submit your application, you will receive progress notifications.
We cannot contact you while your application remains in ‘draft’ as you haven’t yet given permission for the department to use your contact details.

I wasn’t eligible for a grant from the first round of the Business Costs Assistance Program. Can I apply for this round?

Yes, you can apply for the second round of the Business Costs Assistance Program. This round has an expanded list of eligible sectors compared to the previous round, to cover businesses most impacted by the May and June 2021 restrictions, and reflect that businesses no longer have JobKeeper or other safety nets to fall back on.
You will be eligible for a grant from the Business Costs Assistance Program Round Two if you meet all the program’s eligibility criteria.

How do I provide evidence that my business is registered for WorkCover Insurance with WorkSafe Victoria?

If you are an employing business, you will need to include your unique WorkCover Employer Number (WEN) on your application.

Your WEN can be found on the top right-hand corner of your 2020-21 invoice from WorkSafe Victoria. Your WEN is also printed on your WorkSafe Certificate of Currency. Note you do not need to provide your certificate of currency when applying for this grant.
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
Non-employing businesses do not need to provide a WEN on their application.
I’ve recently applied for a WorkCover Employer Number (WEN) but haven’t received it. What can I provide in my application as evidence that I’m registered with WorkSafe Victoria?
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
A WRN is issued in the format of NR-XXXXXX-XXXXXX when you submit an online application for WorkCover insurance. It appears in printable form once the application is submitted. You will also receive an email with the number.
When your WEN is issued, your information will be updated in our systems automatically and we will progress your application. You do not need to take any action.
Please note that applications with a WRN may take longer to process because the WorkCover registration process must be complete before we can start assessing your application.

You must provide details of a current proof of identity document. This must be one of the following: a driver licence or learner permit issued in any Australian jurisdiction; or an Australian Passport; or a Medicare Card; or a foreign passport for those issued with an Australian Visa.

by Fiscal Artisans

May 12, 2021

The Australian Federal
Budget 2021

Once in a lifetime…

Last night – Tuesday, May 11, 2021, the Treasurer handed down the budget for the 21/22 year.

While the government won’t describe it this way, it is clearly an election budget – given the next election is due by Mid May 2022, so unless they go with a February 2022 budget announcement, there is no time for a follow up before we next go to the polls.

And in the current environment, and with a Government hooked on announcements and re-announcements, rather than significant new action, there is very little in the budget that was not already announced, or simply a continuation of what was already in place but dressed up as a ‘new initiative’.

Many of the forecasts and expectations in the budget are predicated on the assumption that ‘everything will go so very well’ in terms of the vaccine roll-out – despite actual vaccination numbers being less than one-third of the way to what was originally planned. The Federal Government expects interstate borders to remain open, while international borders will stay closed until at least July 2022. (and probably much later).

And they hope and expect that we will all feel good about everything and get back into the shops (and interstate holiday resorts) and spend like there is nothing to worry about!

They don’t expect wages to rise (they have given up on that fallacy) but that spending will increase, and unemployment will reduce (which it will if you define employment as one hour per week of any gainful activity). The economy is expected to rebound with a 4.5% growth in the coming year (off the low 2020 base, mind you), with growth of around 2.5% p.a. after that.

And, at the end of the budget forecast period, the total Federal Debt is expected to exceed one TRILLION dollars, an amount Dr Evil would not be able to get his head around. And this from the party that wants us to believe ‘are the better economic managers’. That debt will be 40%+ of GDP by 2025 (compared to 10% of GDP under Wayne Swan in 2013). This is a government of high tax, high spending and higher deficits – at least until they get re-elected again in 2022 (and 2025 if they have played their cards right with this budget). In summary the Australian Economy is facing a decade or more of budget deficits, no matter who is in power. or what their historical (or hysterical) philosophical viewpoint is. Goodbye Mr. Freidman, Welcome back Mr. Keynes, come and sit at the big table again!

Andrew Probyn on the ABC described it as “the Hot Chocolate Budget – Everyones a winner”.

I see it much more as a Talking Heads one. Once in a lifetime…

And you may ask yourself.

Let’s go through the main details related to individuals, professionals, creatives, small business operators, investors, and Super funds.

Personal Income Tax changes

Low and Middle Income Tax Offset for the 2022 year.

This is the first of the Talking Heads announcements. i.e. it is not a new change to the tax rate; it is a continuation of a previously announced rebate that was due to expire on June 30, 2021.

What this will mean is that a tax offset of UP TO $1,080, that applies to low and middle-income levels, will continue on, and avoids what would have been a tax increase applying to these income levels on the 21/22 year

Proposed LMITO for 2022

$37,000 or less	Up to $255
$37,001 to $48,000	$255 + 7.5% of excess over $37,000
$48,001 to $90,000	$1,080
$90,001 to $126,000	$1,080 – 3% of excess over $90,000
$126,001 +	Nil

This tax offset is not made in regular wages – it is paid out when the tax returns are lodged and based on your net taxable income once all income and deductions are taken into account.

And, again, it only applies for ‘one more year’. So after July 1, 2022, this offset is currently due to expire. But the tax cuts legislated for incomes above $120,000 will continue beyond that date.

Same as it ever was.

Medicare Levy Low-income thresholds.

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:

The threshold for singles will be increased from $22,801 to $23,226.
The family threshold will be increased from $38,474 to $39,167.
The threshold for single seniors and pensioners will be increased from $36,056 to $36,705.
The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.
For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

Tax residency rules being changed.

This is being touted as a ‘simplification’. What it really is doing is capturing a lot more people under the definition of Australian Residence for Tax Purposes.

The primary test will be a simple ‘bright line’ test – a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.

So, what this means is that people from overseas who are in Australia for 183 days or more, say on a working visa – are treated as Australian Residents for tax purposes – meaning that any income earned overseas (i.e. in their ‘homeland’) will also be subject to Australian tax.

This is significantly different from past arrangements, where people who had a ‘permanent abode’ and family overseas would be seen as non-resident for tax purposes. As Australian Residents, they may also be liable to the Medicare levy – even if they are not entitled to Medicare entitlements! We await the detail of this announcement once legislation is put into place.

Self Education deductions – removing the $250 exclusion

Currently, the first $250 of a prescribed course of education expense is not tax-deductible.

Removing this $250 exclusion is expected to reduce compliance costs for individuals claiming self-education expense deductions. In reality, this ‘exclusion’ is commonly covered by deduction claims in other areas (like vehicle use or home office expenses anyway)

This measure will have effect from the first income year after the date of Royal Assent of the

enabling legislation. This will inevitably mean that this will not apply until the year BEGINNING July 1 2022, so it will not be able to be claimed on your tax return until after June 30, 2023.

Employee Share Scheme changes – ‘cessation of employment’ no longer a taxing point

The Government will remove the ‘cessation of employment’ taxing point for tax-deferred Employee Share Schemes (‘ESS’) that are available for all companies.

This change will apply to ESS interests issued from the first income year after the Royal Assent of the enabling legislation. (So not likely to occur before July 1 2022)

Currently, under a tax-deferred ESS, where certain criteria are met, employees may defer tax until a later tax year (‘the deferred taxing point’). The deferred taxing point is the earliest of:

(a) cessation of employment;

(b) in the case of shares, when there is no risk of forfeiture and no restrictions on disposal;

(c) in the case of options, when the employee exercises the option and there is no risk of forfeiting the resulting share and no restriction on disposal; and

(d) the maximum period of deferral of 15 years.

This change will remove the ‘cessation of employment’ taxing point (i.e., point (a) above) and result in tax being deferred until the earliest of the remaining taxing points (i.e., points (b) to (d) above).

So, should you receive shares under an ESS from an employer and then leave the employer before the shares become ‘available’ to you, then leaving the employer will not automatically mean that the share issue is now subject to Income Tax. Of course, this does not necessarily change the scheme’s rules (nor will it have any impact on shares already issued under the current rules) – which may have an ‘automatic issue or default’ clause in the scheme that will take effect on your departure anyway.

Business Taxpayers – Changes And Continuations

Temporary Full expensing Extended

In the prior year (2020/21) Federal Budget, the Government announced amendments to allow businesses with an aggregated turnover of less than $5 billion to access a new temporary full expensing of eligible depreciating assets until June 30 2022. Temporary full expensing became law on October 14 2020.

In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months to allow eligible businesses with aggregated annual turnover or the total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30 pm AEDT on October 6, 2020, and first used or installed ready for use by June 30 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.

Same. As. It. Ever. Was. If they repeat this again in the following tax year, they won’t be able to call it ‘temporary’ any more – it might even qualify for a permanent emplyment contract!

So, if you did not buy the equipment you needed for your business (any ABN registered business with a turnover up to $5 Billion p.a. – so we know who this is really aimed at), you can safely look to order that equipment now and up to June 30, 2022, and have it installed and ready to use on or before June 30, 2023, to be able to claim 100% of the purchase price against your business income in the same tax year. June 26 to 30 will be frantic days at the likes of Officeworks, Harvey Norman, Commercial vehicle yards and various plant and equipment places!

So can you buy a Porsche and get a 100% deduction? – only if it is under the luxury car limit and can show enough business use! Maybe that EV order might finally be possible though – so long as it does not ruin your weekends.

Temporary Loss Carryback extension

In the 2020/21 Federal Budget, the Government announced amendments to introduce a temporary loss carryback measure. Broadly, this initial measure allowed ‘corporate tax entities’ with an aggregated turnover of less than $5 billion to carryback tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years. The rules relating to the temporary loss carryback regime have been enacted and are contained in Division 160 of the ITAA 1997.

In the 2021/22 Federal Budget, the Government has announced that the loss carryback measure will be extended to allow eligible companies (i.e., with an aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year as well to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

So, again, this is not a new provision. It is a continuation of what has already been in place. This was announced in the 20/21 budget – In October 2020, and is yet to take effect as the first year in which the loss carryback can be claimed is the (current) 20/21 tax year. So this is effectively a re-announcement of an announcement with an extension. Olympic diving trials, anyone?

This policy has been in place in the past – Wayne Swan as the Labour treasurer, implemented this in 2012 to take effect from the 2014 year – and this was repealed in Joe Hockey’s ‘leaners and lifters’ budget!

Still, it may benefit businesses (not sole traders though – they are not eligible) who have been impacted by the Covid lockdowns in the 2021 and 2022 years, where they can reclaim some or all of the the tax paid in past years. Review your business position when preparing your 2020/21 tax returns later this year.

Coupled with the instant asset write off and ‘temporary full expensing’ provisions, there is scope for businesses to purchase large equipment items (perhaps on finance arrangements) before June 30 and use the losses to claim back tax previously paid. Again, seek advice on this and get an accurate poicutre of your business’ operating results before taking action.

Digital economy strategy (including self-assessing the effective life of intangible depreciating assets)

The Government will provide $1.2 billion over six years from 2022 for the Digital Economy Strategy, ‘to support Australia to be a leading digital economy and society by 2030’. From an income tax, investment incentive perspective, the Digital Economy Strategy includes the following:

(a) The Government will allow taxpayers to self-assess the tax-effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and in-house software. This measure will apply to assets acquired from July 1 2023, after the temporary full expensing regime has concluded. (So its impact is still years away in terms of investment potential)

The tax-effective lives of such assets are currently set by statute. Allowing taxpayers to self-assess the tax effective life of an asset will allow for a better alignment of tax outcomes with

the underlying economic benefits provided by the asset. It will also align the tax treatment of

these assets with that of most tangible assets.

Taxpayers will continue to have the option of applying the existing statutory effective life to

depreciate these assets.

(b) The Government will provide $18.8 million over four years from 2022 for a Digital Games Tax Offset to provide a 30% refundable tax offset for qualifying Australian digital games expenditure ongoing from July 1 2022, with the criteria and definition of qualifying expenditure to be determined through industry consultation.

(c) The Government will provide $200.1 million over two years from the 2022 income year to develop and transition government services to a new, enhanced myGov platform, providing a central place for Australians to find information and services online.

Well, it’s a start.

Where innovations or ‘new work’ creates assets like patents and copyright, the traditional approach was that the cost of developing these assets was written off over a legislated ‘life’.

For most copyright (like music copyright), this was over a 25 year period. With these changes – which will not apply until after July 1, 2023 (after the next election again) the creator can’ self assess’ the life of the patent or copyright etc. This will have benefits in claiming the cost of developing or creating the patent or copyright over a shorter period of time, which is ’a start’.

The Digital Games offset – well, all I can say is that it is about time!

The video game industry globally is bigger than Film and TV ($250 BILLION p.a. annually). The cost of developing high-quality material is akin to a Movie or TV production. The benefits for digital artists, music composers, film crew, computer programmers and the like is self-evident. Australia has some incredible people ion these fields, and compared to extractive and other industries, they have ben chreonically undersupported, leading to much of this talent going over seas to continue careers – and build busineses. This is among the many ‘new industries’ that virtually did not exist just a few decades ago, that need to be developed, enhanced and enabled to grow in Australia. The future is creating new things, not digging up fossilised dinosaurs and burning them.

But the amount allocated so far is pitiful. Breaking this down, they are estimating $4.7 million p.a. in offsets will be paid – again starting from July 1, 2023. Based on a 30% offset, this equates to $15.6 million p.a. in Digital Games production costs. And, like the Film Production offsets, the minimum spend to make a claim appears to be $500,000. (Note that the Film offset threshold is also being lifted to $1 million as of July 1, 2021.) Lets see the detial and how this wil be maanged – as it is we have to wait over 15 months before it starts to take effect, and potnetially 3 yesrs before it has an impact on the tax revenues of the government.

So, while it is good that the Federal Government is starting to recognise the value of the Digital Games industry and following the lead (again) of states like South Australia and Victoria in this area, the announcement itself is well short of what it needs to be.

And when you compare it to the $100 million p.a. being allocated to actually making MyGov useful, it gives greater context on this as well. Hopefully, this is just a starting point, and we see this industry being developed and supported in the same way as film and TV production has been supported over the years, even though much more needs to be done there.

Superannuation changes

Removing the work test for voluntary contributions

The Government has announced that it will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps. (i.e. the annual caps and the total balance caps) Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.

The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred before July 1 2022.

Currently, individuals aged 67 to 74 years (inclusive) can only make voluntary contributions (both concessional and non-concessional) to their superannuation fund or receive contributions from their spouse if they satisfy the work test (subject to a limited work test exemption). Generally, to satisfy the work test, an individual must be working for at least 40 hours over a period of not more than 30 consecutive days in the income year the relevant contribution is made.

Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and will increase flexibility for older Australians to save for their retirement through superannuation.

Reducing the age limit for downsizer contributions – sell your house and add to your super!

The Government will reduce the age limit from which downsizer contributions can be made by eligible individuals, from 65 to 60 years of age.

The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred before July 1 2022. (So this would take effect from July 1, 2022, if Royal Assent is received.)

The downsizer contribution allows eligible individuals to make a one-off, after-tax contribution to their superannuation fund, of up to $300,000 per person, following the disposal of an eligible dwelling, where certain conditions are satisfied.

Under the current requirements, an individual must be at least 65 years of age at the time of making the relevant contribution for the contribution to qualify as a downsizer contribution.

Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility

The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid SG contributions by their employer.

The measure will have effect from the start of the first income year after Royal Assent of the

enabling legislation, which the Government expects to have occurred before July 1 2022. (so again, it is likely to commence from 22/23, not in the coming tax year.

This means for small business and the self-employed (through companies and trusts) that superannuation payments will be compulsory for ALL employees – full or part-time – no matter what the monthly or annual income levels are. This will have implications regarding payments made to business owners as directors fees or ‘end of year bonuses’ from profits, where super had not been paid during the year. An SGC’ trap’ can occur for business owners, so tax planning and cash flow budgeting will be important to ensure that business owners do not fall foul of these implications.

While it is a good move to ensure that all employees are eligible for superannuation contributions, regardless of the number of hours worked or monthly salaries paid, proper planning will be required in the lead up to this being implemented.

“The Women’s Budget”

With the uproar around Canberra, following the Brittany Higgins disclosures (and a certain former minister who has been on medical leave that no one can refer to, for fear of litigation), much was touted before the budget about the increased level of support for ‘women’s services and issues’. And the numbers on a broad level look substantial – but break it down and compared to other measures, and you are left wondering.

There’s $8 billion on residential aged care and $7.5 billion on aged care home packages (both over a 5 year period – 2 elections!) with another $6 billion on infrastructure (women still like roads) and $2 billion-sized chunks disbursed to mental health, vaccines and child care.

There’s a billion dollars for “women’s safety”, which breaks down into $261 million towards domestic and sexual violence prevention programs with the states (over 2 years), resulting in, amongst other things, an additional $10 per day per resident for residential daycare (How many chicken nuggets is that going to provide?) a $164 million trial of cash-and-kind grants for women fleeing violence, $90 million on consent education, and $320m for women’s legal services and children’s contact centres for the safer management of children in families undergoing separation or dispute.

But that is not per annum.

That is “over the forward estimates”, meaning that is the funding generally for the next 3 – 4 years. Compared to spending on other areas (like defence equipment and support for fossil fuel industries or the Diesel Fuel Rebate), it is paltry and will not go very far towards improving the health and safety of many women and families impacted by Domestic Violence. It is likely that more will be spent on political advertising over this time than will be spent helping to stop family violence.

It has also been stated that the elimination of the $450 per month Superannuation threshold will ‘substantially assist women with their ability to build up their retirement incomes.” Let that sink in. The way to help women is to provide super to them when they are earning less than $103 per week. Interesting outlook!

JobSeeker Increase (already in place).

It was mentioned again that the base JobSeeker payment has been increased by $50 per fortnight – but that increase was announced and started on April 1, at the end of JobKeeper, so it’s a bit disingenuous to have it mentioned as a ‘new increase’. (and what it really was, was a reduciton form the ‘temporary Covid inspiroed boost” that applied for 6 months and was phased out in line with the JobKeeper arrangmeents.

What IS increasing is the need to apply for 20 jobs per month – up from 15 – as of July 1, 2021!

A good way to increase activity in the economy is to bring people up from below the poverty line and give them the ability to survive and get out to find work. The increase does not do enough to achieve this.

Childcare changes

Subsidies for second and subsequent children in Childcare will be increased to 95 per cent. The annual cap of $10,560 per child (or $203 per week) will be removed, benefitting higher-income earners impacted by the Income threshold. Again, this will not apply until July 1, 2022. This applies to Child care (or early learning), not after school care – so those with Primary school children won’t get additional support from this announcement.

Infrastructure

Break out the HiViz vests! $110 Billion in the announcements. But this is over 10 years, with very little actually being undertaken in the next 12 months. Victoria has been allocated $3.3 Billion over the 10 years – but only $397.7 million over the next 4 years. Even the much-vaunted ‘inter-modal hub’ is more than 4 years away. So what has been allocated will be announced to us many times over the coming years. Over and over again.

The Unannounced Budget items.

An area that has had little or no discussion in the main press is the ‘allocated but unannounced’ component of the budget. Over 9 Billion dollars of funding has been allocated in the budget process, but what that is for and how it will be allocated, is yet to be announced. Apparently, $3.75 BILLION of this is to be ‘announced’ over the next 12 months

This is the spending that will likely be targeted – one way or the other – for promises to be made leading up to the 2022 and possibly the 2025 election campaigns. Stand by for a raft of ‘community programs’ support schemes and targeted funding aimed at marginal electorates in the coming 6 – 12 months.

So, we face 6 months or more of additional announcements aimed squarely at keeping eyes distracted from what is not happening in regards to renewable energy matters, climate change, education, universities, returning Australians, Quarantine in Hotels and of Refugees, bushfire remediation, flood and reef repairs and the like. Instead, there will be a succession of ‘big cheques’, road and rail announcements in the regions, sports halls and barbeques, HiViz vests, Rugby Tops and Baseball caps. all the way to the next election – which will probably be announced when we finally get to over 15 million people vaccinated ‘at least once.’

While some are praising this budget – bascially because the Government has abandoned austerity and continued some benefits in the hip pocket areas, there are many, missed opportunities. When a Government is incurring a $160 Billion+ deficit, and not looking at significant reductions in that level for many years, the money can be better spent on improving the society (not just the economy) and providing a significant reset for many areas. Accept that this is a long term plan – not just look over the horizen to the next political cycle – and plan for the major changes that are needed.

You know, like a well managed business, corporation or dictatorial regime woud do. Make your own choices about the comparision you prefer.

So as David Byrne or Kermit would say:

‘You might ask yourself – how did I get here?’

Lets leave it to Kermit to explain…Once in a Lifetime

To discuss any matters arising out of the Budget, or relating to your business, investment, taxation or related financial matters, please call us at Fiscal Artisans on

0409 788 399

or email to

stuart.smith@fiscalartisans.com.au

by Fiscal Artisans

April 16, 2021

Din Din Din!

Your days as a director are

about to be ‘numbered.’

The Federal Government is working on implementing a Director ID number system, which will allow for the tracing of directors across companies.

This system is to be implemented from November 30, 2022, and Directors will be required to apply for a new Directors ID Number (or DIN) by that date.

This system will be managed separately to the Tax File Number (TFN) and Australian Business Number (ABN) system now in operation and will be managed by the Commonwealth Registrar, operating as a separate statutory function of the ATO as part of the Governments “Modernising Business Registers (MBR) program.

In the 2020 federal budget, additional funding was announced to integrate the system with the government’s Modernising Business Registers (MBR) program.This integration will create a super registry by bringing together the Australian Business Register and 31 other registers currently administered by the Australian Securities and Investments Commission, forming the Commonwealth Registrar.

It is hoped this system will prevent the use of false identities and help prevent illegal phoenix activity, where directors deliberately liquidate companies to avoid paying debts, which is estimated to cost the Australian economy between $1.8 billion and $3.2 billion each year. i.e. It ‘should’ make it easier to trace directors who move operations from one company to another, or who have a record of ‘companies closing’ year on year.

How the Director ID system will work

All directors will be required to establish their identity with the Commonwealth Registrar before receiving their unique director ID, which they will retain throughout their lifetime, even if they cease to be a company director.

This process will involve directors providing their names and former names, addresses and former addresses, contact details, and their date and place of birth.

Directors will also need to prove their identity using key identifying documents, such as a driver’s licence, passport, birth certificate or visa, and may be asked to provide their tax file number (TFN). I expect that this last part will become a critical aspect so that it is harder for people to obtain multiple DIN’s. It is currently relatively simple for a person to have two different sets of details listed with ASIC, depending on whether or not middle names are included in the filings, address details, etc., are maintained correctly.

While the Commonwealth Registrar will operate separately from the ATO, it may ask the ATO to provide the TFN of applicants to verify their identities, and details provided to the registry may be cross-checked against the taxation office’s records.

Directors will face significant civil and criminal penalties if they fail to apply for a director ID by the deadline and for conduct that contravenes the new rules, including falsifying identify information or intentionally apply for multiple director IDs

For companies registered under the Corporations Act, directors face potential civil penalties of up to 5,000 penalty units, or $1.1 million.

What Happens next?

According to the proposed arrangements, the director ID regime will go through a testing phase, which will run until October 31 this year. As part of this phase, the Commonwealth Registrar will invite a group of existing directors to test the system to make sure it has a robust, reliable and consistent user experience.

After this testing is completed, existing directors and those who became directors during the testing phase will have a little over 12 months to apply for their director ID number.

Anyone who wishes to become a company director after November 30, 2022, will need to apply for a director ID before being appointed as a director. This may slow down new company setup processes for small businesses, depending on the approval processes involved, which is why I expect the submission of the TFN will be crucial in the identification process.

So by early 2023, anyone in business will need to add a new identification number to their lists! TFN, ABM, ACN and now DIN.

What has not been reported on so far is the impact of this process on directors of Australian companies that reside overseas. What will the process be for these individuals, and what forms of ID will be accepted? Will they be required to apply for an Australian TFN if they don’t already hold one? Time will tell on that one.

I recall the chaos when the ABN system was first implemented, Hopefully, 20 odd years later, some lessons have been learned, and the ‘trial process’ will consist of a bit more than a few ‘mates filling in some forms to check it all out’ to test the process. There will be a flurry of activity with various corporate register and management systems that will need to update systems to record the DINs and changes to every single ASIC form that needs to be lodged for company activities to incorporate the DINs into the system.

As the systems become apparent, we will liaise with our clients to arrange the application process to ensure it is as smooth as possible.

For more information or to discuss what you need to do as part of this process, please email us at info@fiscalartisans.com.au, or call me on 0409 788 399.

The Optus Hack – and what you

(and I) need to do with our business data!

Like in activity with the Tax Office.

So, what can you do about this?

Ok, so what are we doing about this?

Thank you for your response. ✨

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Australian Domain name changes are about to go live.

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Australian Federal Budget 2022 The AfterPay Budget Vote Now Pay Later!

$250 one-off payment to those on the following payments:

Temporary reduction in Fuel Excise

Increase in low and middle-income tax offset

Changes effective for business – and ‘creating growth opportunities’

Skills and training boost.

Technology Investment Boost

Varying the quarterly tax instalments

Apprentices and trainees

Infrastructure

Ok, so what are the costs and the losses?

Renewable energy

The Rise and Fall of The Arts

Ring the bell – its closing time…

The forecasts!

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Victorian Business Costs Assistance Lockdown 4.0 support payments

Which sectors are eligible for a grant?

Which sectors are NOT eligible for a grant?

Why are some businesses getting $2500 when others get $5000?

My business is a gardening business, why am I only eligible for a $2500 grant?

How do I update my Australian and New Zealand Standard Industrial Classification (ANZSIC) on the Australian Business Register?

Why do I have to be registered for Goods and Services Tax (GST) to receive this grant?

I previously applied for the Business Support Fund (or another COVID-19 related grant) and was not eligible. Can I still apply for this program?

I have applied for a Licensed Hospitality Venue Fund 2021 grant, can I also apply for this program?

My business is a hospitality venue with a liquor licence and I incurred direct costs as a result of restrictions but I wasn’t eligible for the Licensed Hospitality Venue Fund. Can I apply to this program?

What types of businesses are eligible?

I received a grant/support through another COVID-19 business support program. Can I apply for the Business Costs Assistance Program Round Two?

My business lost more than $5000 during restrictions. Can I apply for more?

If I incurred less than my grant amount in costs, will I need to pay some of the money back?

I am a performer/artist who has lost work during restrictions, but I am not registered for GST. Can I still access support?

Which identification documents should I submit with my application?

How do I know what the status of my application is?

I wasn’t eligible for a grant from the first round of the Business Costs Assistance Program. Can I apply for this round?

How do I provide evidence that my business is registered for WorkCover Insurance with WorkSafe Victoria?

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The Australian Federal Budget 2021

Once in a lifetime…

Personal Income Tax changes

Low and Middle Income Tax Offset for the 2022 year.

Medicare Levy Low-income thresholds.

Tax residency rules being changed.

Self Education deductions – removing the $250 exclusion

Employee Share Scheme changes – ‘cessation of employment’ no longer a taxing point

Business Taxpayers – Changes And Continuations

Temporary Full expensing Extended

Temporary Loss Carryback extension

Digital economy strategy (including self-assessing the effective life of intangible depreciating assets)

Superannuation changes

Removing the work test for voluntary contributions

Reducing the age limit for downsizer contributions – sell your house and add to your super!

Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility

“The Women’s Budget”

JobSeeker Increase (already in place).

Childcare changes

Infrastructure

The Unannounced Budget items.

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Din Din Din! Your days as a director are

about to be ‘numbered.’

How the Director ID system will work

What Happens next?

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Like this:

Australian Federal Budget 2022
The AfterPay Budget
Vote Now Pay Later!

Victorian Business Costs Assistance
Lockdown 4.0 support payments

The Australian Federal
Budget 2021

Din Din Din!

Your days as a director are