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It’s tax time and scammers are targeting your myGov account. Here’s how to stay safe

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/cassandra-cross-122865">Cassandra Cross</a>, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> For many, tax time is an exciting part of the year – there’s the potential for a refund. However, it’s also an attractive time for fraudsters looking for ways to get money and deceive unsuspecting victims. Each year Australians lose large amounts of money to scams. In 2023, Australians reported <a href="https://www.accc.gov.au/media-release/scam-losses-decline-but-more-work-to-do-as-australians-lose-27-billion">losses of more than A$2.7 billion</a>. While this is a slight reduction from the $3.1 billion in 2022, there are still millions of victims who’ve suffered at the hands of scammers. Impersonation scams are one common approach. Scamwatch reports that in 2023, <a href="https://www.scamwatch.gov.au/news-alerts/shopping-for-online-bargains-this-black-friday-weekend-make-sure-its-the-real-deal">70% of reports to them</a> involved impersonation. A large number of these were linked to the Australian Taxation Office (ATO) and myGov. <h2>What is an impersonation scam?</h2> Impersonation scams are what they sound like: when an offender pretends to be someone or something they are not. Offenders may pretend to be family members or friends in our contact lists. In many cases, they will say they’re from an organisation such as a bank or a well-known retailer, or a government department – like the ATO. Offenders take on the identity of a known and trusted organisation to increase the chances of success. While we may ignore communications from unknown entities and strangers, we’re more likely to engage with what’s familiar. Additionally, the ATO has a powerful status as a government agency, and we are unlikely to ignore its messages – especially at tax time. <h2>What are they trying to get out of my myGov account?</h2> myGov is the gateway to a range of government services, including Medicare, Centrelink, My Health Record, the National Disability Insurance Scheme, and of course, the ATO. Being able to log in to myGov gives offenders access to a wide range of your personal details. This can help them build a fuller profile of you to potentially commit identity theft (such as opening new accounts in your name). There’s also the potential for direct fraud. With access to myGov, offenders can change your bank account details and redirect any refunds into their accounts, whether from the ATO or other linked services. They can even submit false tax returns, medical claims or other forms to obtain fraudulent funds. As the legitimate owner of the account, you may not immediately notice this. <h2>What does a myGov scam look like?</h2> In most instances, a myGov scam will look like one of the many phishing attempts we all receive on a daily basis. While each approach can be worded differently, their desired outcome is the same: to acquire your personal information. Fraudsters are sending text messages and emails pretending to be from the ATO, advising you there’s a refund available if you click the provided link. Another approach is to flag a “problem” with your tax return or bank account, and direct you to take immediate action via a link. Creating a sense of urgency can trick users into acting in the moment, without thinking through the request. The text or email may also be very neutral, simply stating there’s a new message waiting – with a link to where you can read it. Regardless of what the message says, the goal is to direct you to a website that looks genuine, but is fake. If you enter your myGov details into such a fake site, the offender can capture your login details and use them to log into your actual myGov account. <h2>What to do if you’ve been a victim?</h2> If you have clicked on a scam link and provided your personal details, there are steps you can take. Change your password and review your account settings if you still have access to your myGov account. Check your bank accounts, to see what, if anything, has been lost. Contact your bank or financial institution immediately if you notice any withdrawals or suspicious transactions. Contact any other organisation linked to your myGov account to see if any unauthorised actions have been taken. For anyone who has lost personal information and experienced identity crime, <a href="https://www.idcare.org/">IDCARE is the national support centre</a> for identity crime victims. They will be able to assist with a personalised response plan to your specific situation. <h2>How do I keep my account safe?</h2> Never click on links in text messages or emails that direct you to log in to your accounts. Always access your accounts independently, through details you have found independently of any text or email. Review your security settings. There have been recent reports of people’s myGov accounts being targeted <a href="https://www.theguardian.com/australia-news/article/2024/aug/01/ato-mygov-tax-return-refund-scam">with repeated login attempts</a>. Using your unique eight-digit myGov username for logging in can be safer than <a href="https://my.gov.au/en/about/help/mygov-website/help-using-your-account/manage-sign-in-details#updatingyourusername">using your email address</a>. Enable <a href="https://theconversation.com/what-is-multi-factor-authentication-and-how-should-i-be-using-it-191591">multi-factor authentication</a> where possible. myGov uses two-factor authentication in the form of a text message in addition to an online login. While this is not foolproof, it offers an additional layer of protection and can stop offenders accessing your account with only partial pieces of your information. Be vigilant on all communications. Always keep in mind that all may not be what it seems and the person you are communicating with may not be who they say they are. It is okay to be sceptical and do your own checks to verify details of what is presented to you. Remember, fraudsters thrive on the silence and shame of those who respond or fall victim to their scams. We need to communicate openly about these schemes and talk to family and friends, to increase everyone’s knowledge and awareness.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/235785/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/cassandra-cross-122865">Cassandra Cross</a>, Associate Dean (Learning & Teaching) Faculty of Creative Industries, Education and Social Justice, <a href="https://theconversation.com/institutions/queensland-university-of-technology-847">Queensland University of Technology</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/its-tax-time-and-scammers-are-targeting-your-mygov-account-heres-how-to-stay-safe-235785">original article</a>. </div>

Money & Banking

7 health investments that are tax deductible

When someone says “investment”, we tend to think of money and wealth creation: property, shares, superannuation, savings accounts and so on. However, an investment is the contribution of something you value towards the anticipation of growing that value. That contribution could be money or it could be in the form of time, skills, knowledge, or labour. Similarly, the anticipated growth in value could be in monetary terms or towards growth in business, education, research, or even health – both your own and others’. Just like money matters and tax affairs require a wholistic view, so too does health. Which is why when it comes to getting the most out of health investments, it’s crucial to consider physical, mental and financial health. Many, such as those listed below, happen to be tax deductible too: <ol> <li>Safety equipment and education</li> </ol> Workplace safety is perhaps the most crucial of all health investments. What form that takes can differ enormously between professions. Yet if it is important for doing your job safely, then generally it will be tax deductible. This may be protective clothing for tradespeople, medical workers, and industrial machinists, or advanced driving/road safety training courses for taxi drivers and couriers. Sun protection for jobs that take place largely or exclusively outdoors is also generally deductible – but use those sunglasses or sunscreen at home as well, and you’ll only be able to claim the work-related portion of the cost. <ol start="2"> <li>Insurances</li> </ol> Certain insurance premiums are typically tax deductible. Professional indemnity insurance is a legitimate (and often essential) business expense in many jobs, such as for doctors and journalists. Income protection insurance against severe illness or injury may also be deductible. Plus, having private health insurance also delivers a tax benefit when lodging your tax return. <ol start="3"> <li>Professional coaching</li> </ol> Professional coaching can be useful for mental health and clarity, both over existing work situations and career progression or transition planning. Provided this coaching is strictly professional and relates to your ability to earn an income, it may be tax deductible. <ol start="4"> <li>Accounting and financial advice </li> </ol> Good financial health goes hand in hand with good advice about money matters. Most Aussies know that the cost of managing their tax affairs is deductible. Less well known, though, is that financial advice expenses are also generally deductible. Busy accountants can forget to ask if you incurred these costs when going through your expenses at tax time, so be sure to flag it with them. <ol start="5"> <li>Industry-specific deductions</li> </ol> In some instances, health-related expenses may be tax deductible because they are required within a particular job. For instance, models, athletes and fitness instructors may be able to claim gym memberships and nutritionist visits; dieticians and chefs may be able to claim healthy eating books and subscriptions. Check the <a href="https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/occupation-and-industry-specific-guides">ATO’s Occupation and industry-specific guides</a> to see relevant deductions in your line of work. <ol start="6"> <li>Medical checks</li> </ol> If you require compulsory medical assessments and check-ups as part of your job, these may be tax deductible. Examples include health screenings for pilots, miners, and emergency workers. COVID-19 tests to determine whether you can attend your workplace may also be deductible. Vaccinations, however, are deemed by the ATO to be private expenses. <ol start="7"> <li>Donations</li> </ol> Many health organisations are registered charities and not-for-profits, making donations to them deductible. Often, people donate to health charities because of personal experience, either as a patient/survivor themselves or having known someone who was. So not only are you investing in critical research and future patient support as a means of giving back, but you can also claim a tax deduction as a reward for donations over $2. Proof of purchase is key For any expense to be tax deductible, it must be necessary for work purposes and have come out of your own pocket, not been paid for or reimbursed by your employer. Don’t forget to claim depreciation of work-related equipment over subsequent years. These are extra dollars in your pocket to offset the cost of their eventual replacement. And be sure to keep copies of receipts for your purchases to prove your expenses – both now and in the future. Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

10 ways to make those stage 3 tax cuts count

You’re already used to living without these extra dollars. So, you won’t miss them by continuing to do so. Consider the various options available and which best suits your circumstances, then devise a plan of action to put that money to work. <ol> <li>Check tax brackets</li> </ol> Not only are some income tax rates falling, but the thresholds for others are increasing - potentially pushing you into a lower tax bracket. For example, Alice currently earns $130,000 and this tips her into marginal tax rate of 37 per cent. The Stage 3 changes will increase the 37 per cent tax threshold to $135,001. As such, Alice drops to a lower tax bracket. Not only this, her new tax bracket will have its marginal tax rate reduced from 32.5 per cent to 30 per cent. It’s a double win for Alice! This shouldn’t change your money habits but is still good to know. <ol start="2"> <li>Update your plan</li> </ol> Check <a href="https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/individual-income-tax-rates-and-threshold-changes">what your new tax rate will be</a> to calculate your new take-home pay (or simply look at your first full pay cycle in the new financial year). Plot your new income into your household spending and investment plan. Now you know what you have to play with. <ol start="3"> <li>Check your pay</li> </ol> Most employers use digital payroll systems which automatically update tax rates. But not all do. And even then, mistakes can happen. From July, double check that your pay is adjusted correctly. If you notice a mistake, speak up – not only will you and your colleagues benefit, but you could save your employer from costly penalties for an innocent mistake. <ol start="4"> <li>Monitor expenses</li> </ol> Don’t let ballooning expenses wipe out any tax cut gains. Avoid pre-spending those gains too. The additional income is spaced out over each pay; it’s not a lump sum you can blow on a spending spree. <ol start="5"> <li>Automatic redirects</li> </ol> Consider setting up an automated redirect of the difference in your pay as soon as it hits your account. The money could be diverted into a high-interest savings account or used to top up your emergency fund. <ol start="6"> <li>Super contributions</li> </ol> Tax cut cash can be used in combination with super contribution rules to supercharge retirement earnings. Low income earners may be eligible for <a href="https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/government-super-contributions/super-co-contribution">government co-contributions</a> while <a href="https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/spouse-super-contributions">spouse contributions</a> can offer further tax benefits. This may be particularly useful for anyone <a href="https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/concessional-contributions-cap#ato-Carryforwardunusedcontributioncapamounts">trying to catch-up</a> after time out of the workforce (e.g., raising kids or caring for relatives) or repaying <a href="https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/early-release/covid-19-early-release-of-super">early withdrawals during COVID</a>. <ol start="7"> <li>Pay down debt</li> </ol> Every extra dollar spent paying off debt will save on future interest and clear it faster. Prioritise higher interest debts (like credit cards). Consider consolidating multiple debts into one with a lower rate (e.g., your mortgage) to reduce total interest and simplify repayments. <ol start="8"> <li>Invest in yourself</li> </ol> The old saying goes “you’ve got to spend money to make money”. Nowhere are the returns typically better than from self improvement. That could be undertaking new qualifications or additional training, enabling you to secure pay rises or transition to a higher-paying industry. Or it may be investing in your health and wellbeing, to reduce medical expenses, improve job prospects and productivity, and enhance your decision-making abilities (including about money matters). <ol start="9"> <li>Lodge returns promptly</li> </ol> This applies to every tax year: the sooner you lodge your tax return, the sooner you access your tax refund. Even if you’re facing a tax bill, getting it done sooner means less interest accruing and no late payment penalties. <ol start="10"> <li>Revisit strategies</li> </ol> While making changes to incorporate these tax cuts, take the opportunity to re-evaluate your overall finances. Revisit investment strategies to ensure they are delivering optimal returns. Check superannuation thresholds and performance. Scrutinise total tax liabilities (for instance, lower tax rates may mean you won’t qualify for the same level of tax deductions). Make updates where necessary. Keeping on top of your finances will mean better bang for your buck now while streamlining your affairs in future years. Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a> Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754. Image credits: Shutterstock

Money & Banking

"Tax the boomers": Outrage over elderly couple's complaint after $1m Lotto win

A "greedy" elderly couple have been rinsed online after complaining about losing their age pension payments after they won the Lotto. The couple, aged 73 and 67, wrote into <a href="https://www.smh.com.au/money/super-and-retirement/we-won-the-lottery-but-lost-our-pension-could-we-have-prevented-this-20240702-p5jqga.html" target="_blank" rel="noopener">Sydney Morning Herald</a>'s financial advice column with Noel Whittaker to ask how they could've prevented losing the government funds and still kept hold of their million-dollar winnings. The couple's submission read, "We are a couple... both retired and receiving the full aged pension. We recently won $1,000,000 in the lottery and have placed that money in a basic interest-bearing savings account with our bank." "We intend to use that money to buy a new house and sell our existing one but may just renovate. The windfall has stopped our pension completely until we spend the money, which is all good and well. But could we have prevented the pension loss in any way?" Whittaker responded that the couple should consider themselves extremely fortunate and enjoy the money, saying they "could have a far better lifestyle living off capital instead of relying on welfare". He also urged the couple not "spend to get a pension". The boomers' questions quickly drew attention online, with many flocking to Facebook comments to slam the couple for their "greed". One person wrote, "If you won the lotto, why would you want the pension?", while another added, "Ah yes, the call of the boomers everywhere, 'I have millions but where's my pension money?'" Others said the Lotto winners should consider themselves lucky they are now able to provide for themselves, with one person writing, "Pension is a support system to allow you to survive without/reduced work in retirement. If you are a multimillionaire then you don't need it." Another person echoed the sentiment, saying, "Wow, what entitlement. The pension is a safety net, if you don’t qualify for it think yourself lucky." Other social media users simply shared their outrage towards the boomer generation, as one frustrated person wrote, "Won a million and whinging they can't scam the taxpayers, what self-centered arrogance", while another added, "Tax the boomers! No more handouts." Image credits: Shutterstock <div class="x6s0dn4 x3nfvp2" style="font-family: inherit; align-items: center; display: inline-flex; min-width: 604px;"> <ul class="html-ul xe8uvvx xdj266r x4uap5 x18d9i69 xkhd6sd x1n0m28w x78zum5 x1wfe3co xat24cr xsgj6o6 x1o1nzlu xyqdw3p" style="list-style: none; margin: 0px -8px 0px 4px; padding: 3px 0px 0px; display: flex; min-height: 15px; line-height: 12px; caret-color: #1c1e21; color: #1c1e21; font-family: system-ui, -apple-system, BlinkMacSystemFont, '.SFNSText-Regular', sans-serif; font-size: 12.000001px;" aria-hidden="false"> <li class="html-li xe8uvvx xdj266r xat24cr xexx8yu x4uap5 x18d9i69 xkhd6sd x1rg5ohu x1emribx x1i64zmx" style="list-style: none; display: inline-block; padding: 0px; margin: 0px 8px;"> </li> </ul> </div>

Retirement Income

Why you should expect to pay more tourist taxes – even though the evidence for them is unclear

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/rhys-ap-gwilym-1531623">Rhys ap Gwilym</a>, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> and <a href="https://theconversation.com/profiles/linda-osti-1431286">Linda Osti</a>, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> In April 2024, Venice began its controversial experiment to <a href="https://www.timeout.com/news/venice-will-charge-tourists-5-to-enter-the-city-from-next-year-090823">charge day trippers</a> €5 (£4.30) to visit the city on some of the busiest days of the year. But it’s not just the lagoon city, with its <a href="https://www.bbc.co.uk/travel/article/20230928-venices-new-5-entry-fee-explained#:%7E:text=Over%20the%20past%20three%20decades%2C%20Venice%20has%20become,thirds%20of%20visitors%20come%20just%20for%20the%20day.">30 million visitors</a> a year which is interested in trying out new tourism taxes. In the UK, a council in the county of Kent <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Ftheconversationuk.cmail20.com%2Ft%2Fr-l-tiuhhult-iukktlluuk-o%2F&data=05%7C02%7Cr.a.gwilym%40bangor.ac.uk%7C39ac5db833674c1a026508dc63a24fa7%7Cc6474c55a9234d2a9bd4ece37148dbb2%7C0%7C0%7C638494795990617858%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=D6oVizx3pFoiwRaTcKaakQ079%2FIQx86jcbFpj2%2FS0RQ%3D&reserved=0">has recommended</a> introducing a tourism tax on overnight stays in the county. In Scotland, it seems likely that <a href="https://edinburgh.org/planning/local-information/visitor-levy-for-edinburgh/#:%7E:text=The%20Edinburgh%20Visitor%20Levy%2C%20otherwise%20referred%20to%20as,would%20then%20be%20invested%20back%20into%20the%20city.">visitors to Edinburgh</a> will be paying a fee by 2026, and the Welsh government <a href="https://www.walesonline.co.uk/news/wales-news/welsh-government-announces-tourists-pay-26591498">plans to introduce</a> similar legislation later this year. Such taxes may seem new to the UK, but there are more than 60 destinations around the world where this type of tax is already in place. These vary from a nationwide tax in Iceland to various towns across the US. Some have been in place for a long time (France was the <a href="https://www.impots.gouv.fr/taxe-de-sejour">first in 1910</a>), but most were introduced during the last decade or two. Before the pandemic really struck (and tourism was put on hold), 2020 was described by one newspaper as the <a href="https://www.telegraph.co.uk/travel/news/tourist-tax-amsterdam-venice/">“year of the tourist tax”</a>, as Amsterdam joined an ever-growing list of destinations, which includes Paris, Malta and Cancun, to charge visitors for simply visiting. Introducing these tourist taxes has often been controversial, with industry bodies <a href="https://www.bbc.co.uk/news/uk-wales-62707152">voicing concerns</a> about the potential impacts on the tourist trade. And it appears that the link between such levies and visitor numbers is not simple, with several studies reaching different conclusions. For example, some have suggested that tourism levies have hindered <a href="https://www-sciencedirect-com.bangor.idm.oclc.org/science/article/pii/S0261517704000238">international tourism in the Balearics</a> and <a href="https://journals-sagepub-com.bangor.idm.oclc.org/doi/pdf/10.1177/00472875211053658">the Maldives</a>, and that they may dissuade people from participating in <a href="https://eprints.bournemouth.ac.uk/35087/1/ADEDOYIN%2C%20Festus%20Fatai_Ph.D._2020.pdf">domestic tourism</a>. Yet in one of the world’s most popular tourism spots with a levy, Barcelona, visitor numbers have <a href="https://groupnao.com/wp-content/uploads/2020/11/TOURISM-TAXES-BY-DESIGN-NOV12-2020_rettet-compressed-2.pdf">consistently risen</a>, with hotel guests increasing from 7.1 million in 2013 to 9.5 million in 2019. In fact, the relationship between a visitor levy and tourist flow is so complex that there is no unified view, even within the same country. Italy has been one of the most studied, and results <a href="https://crenos.unica.it/crenosterritorio/sites/default/files/allegati-pubblicazioni-tes/Indagine_Villasimius_Quaderno_Crenos_ISBN.pdf">are inconsistent</a> <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/jtr.2123">there too</a>. Another study, looking at three neighbouring Italian seaside spots finds that only in one destination has the visitor levy <a href="https://www.rivisteweb.it/doi/10.1429/77318">reduced tourist flow</a>. And a study on the Italian cities of Rome, Florence and Padua shows that these cities <a href="https://link-springer-com.bangor.idm.oclc.org/chapter/10.1007/978-3-030-61274-0_23">have not experienced any negative effects</a> either in terms of domestic or international demand. So the impact of tourism taxes on visitor numbers is inconclusive. But what about other effects, such as the potential benefits of spending the revenues raised? As part of an ongoing research project, we looked at seven different destinations in which tourist taxes are levied to look at how the money raised is then spent. For most places, tourism tax revenues were being used to fund marketing and branding – so invested directly into promoting more tourism. The income was also commonly used to fund tourism infrastructure, from public toilets and walking or cycling paths to a multi-billion dollar <a href="https://www.occc.net/About-Us-Media-Relations-Press-Releases/ArticleID/569/Orange%20County%20Board%20Votes%20to%20Approve%20Convention%20Center%20Completion%20with%20Tourist%20Development%20Tax%20Revenues">convention centre</a> in Orange County, Florida. In <a href="https://www.caib.es/sites/impostturisme/en/l/projects/?mcont=95762">the Balearics</a>, revenues tend to go to projects that mitigate the negative impacts of tourism on the environment, culture and society of the islands. These include waste management, conserving natural habitats and historical monuments, and social housing. But in general, tourism taxes have been implemented successfully across the destinations we looked at, and there is little evidence of tourists being put off from visiting. Research also suggests that when tourists are told what the levy is used for – and when it relates directly to <a href="https://www.mdpi.com/2227-7099/5/2/21">improving their experience</a> or <a href="https://ejtr.vumk.eu/index.php/about/article/view/2813/605">enhancing sustainable tourism</a> – <a href="https://www-sciencedirect-com.bangor.idm.oclc.org/science/article/pii/S2212571X20301621?casa_token=HcD-yQh65XcAAAAA:GhVRo4vX9JY1E3Lcx5ZPaTr5ZHArMGNrmK_2ASJCtMPjVpdCQLdun25BmFEYquGgz8-1riOWdg">tourists are willing to accept and pay</a> the levy. <h2>Day trippers</h2> For many tourism destinations, the major problem is not overnight tourists, but rather <a href="https://www.mirror.co.uk/news/uk-news/fuming-snowdonia-visitors-demand-self-30203642">day visitors</a> who use local resources while making little in the way of a financial contribution. For these reasons, taxes might also be used to deter day visits and instead encourage longer stays. <a href="https://www.economist.com/why-venice-is-starting-to-charge-tourists-to-enter?utm_medium=cpc.adword.pd&utm_source=google&ppccampaignID=18156330227&ppcadID=&utm_campaign=a.22brand_pmax&utm_content=conversion.direct-response.anonymous&gad_source=1&gclid=Cj0KCQjw_qexBhCoARIsAFgBleshST3IQMYR8hONLSLnA_loj9dukAqxURhdVCn1RmGeD5iOQzw_r2caAsqrEALw_wcB&gclsrc=aw.ds">Venice is at the forefront</a> of this shift. And in April 2024, after long discussions between the local authority, residents and business owners, Venice started a <a href="https://cdamedia.veneziaunica.it/en/video/it-is-difficult-to-book-a-visit-to-venice/">trial</a> of a day visitor tax (a so-called <a href="https://cda.veneziaunica.it/en">“access fee”</a>). Back in Kent, it may take longer for any such radical plans to come to fruition. In contrast to Scotland and Wales, there are currently no national plans to <a href="http://www.parliament.uk/written-questions-answers-statements/written-question/commons/2023-09-13/199425">introduce tourist taxes</a> in England. This might be considered shortsighted, given the dire need of many destinations in England to improve local infrastructure that tourists rely on, including <a href="https://www.reading.ac.uk/news/2024/Research-News/Swimming-in-sewage-Bathing-forecasts-not-keeping-people-safe">clean bathing water</a> and <a href="https://www.lancs.live/news/cumbria-news/lake-district-warning-parking-issues-27173650">public transport</a>. In <a href="https://www.accountingweb.co.uk/business/finance-strategy/manchester-acts-as-trailblazer-for-tourist-tax">Manchester</a> and <a href="https://www.ft.com/content/0e0385e6-29ec-4302-9903-6fbf63d8854a">Liverpool</a>, businesses have implemented voluntary overnight charges on visitors, in the absence of the statutory basis to implement compulsory levies. Many other English towns and cities will probably follow their lead. Tourism taxes are something we might all have to consider budgeting for in our future travel plans, wherever we choose to visit.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/229134/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/rhys-ap-gwilym-1531623">Rhys ap Gwilym</a>, Senior Lecturer in Economics, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> and <a href="https://theconversation.com/profiles/linda-osti-1431286">Linda Osti</a>, Senior Lecturer in Tourism Management, <a href="https://theconversation.com/institutions/bangor-university-1221">Bangor University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-you-should-expect-to-pay-more-tourist-taxes-even-though-the-evidence-for-them-is-unclear-229134">original article</a>. </div>

Travel Trouble

Australia’s tax system is being weaponised against victims of domestic abuse. Here’s how

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/ann-kayis-kumar-466422">Ann Kayis-Kumar</a>, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> When women seeking financial help from the government-funded UNSW <a href="https://www.unsw.edu.au/business/our-schools/accounting-auditing-taxation/about-us/unsw-clinic">Tax and Business Advisory Clinic</a> are asked whether they have ever been affected by family or domestic violence, most say they have. In the past year this number has grown from <a href="https://cdn.theconversation.com/static_files/files/3339/sub009.pdf?1718777706">65%</a> to over 80%. And about <a href="https://ssrn.com/abstract=4746954">14%</a> of the clinic’s clients say their tax debts are a result of intimate partner violence. These debts often arise from business debts, bankruptcy, corporate directorships and director penalty notices. We know that economic abuse is a red flag for other forms of domestic violence. Economic abuse occurs in nearly all Australian domestic and family violence cases, affecting more than <a href="https://www.abs.gov.au/statistics/people/crime-and-justice/personal-safety-australia/latest-release">2.4 million Australians</a> and costing the economy an estimated <a href="https://www.commbank.com.au/content/dam/caas/newsroom/docs/Cost%20of%20financial%20abuse%20in%20Australia.pdf">A$10.9 billion</a> a year. Unfortunately, existing laws fall well short of protecting abuse victim-survivors from financial loss. <h2>How violent partners weaponise tax</h2> The perpetrators of violence can effectively weaponise the tax system by placing tax debts solely in the names of former partners, often because they have made them directors of companies or through family businesses operating through partnerships or trusts. There is a policy assumption that family members benefit from family partnerships. But this does not always hold in practice and can be problematic when there is economic abuse because Australian tax law requires victims report and pay tax on their “share” of the family partnership’s income. The average tax debt at the tax clinic is about $90,000. This can result in debilitating financial burdens, exhausted savings, insecure housing and prolonged economic instability, well after abusive relationships end. <h2>Change is needed</h2> Australia has no specific strategy for relief of tax debts caused by financial abuse. There are “serious hardship” provisions in Australian taxation law, but these are outdated and in need of <a href="https://theconversation.com/sometimes-people-can-do-with-a-break-3-ways-tax-debt-relief-rules-are-too-tough-156948">reform</a>. Usually people do not have the funds up front so the only way the Australian Taxation Office can collect debts from the abused partner is through (generally two-year) payment plans, offsetting future tax refunds, engaging external debt collectors and initiating bankruptcy proceedings. To that end, the decision announced in this year’s budget to give the Tax Commissioner discretion <a href="https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/changes-to-offsetting-debts-on-hold">not to offset</a> against tax returns debts previously placed “on hold” is welcome. It will provide short-term relief by enabling abuse victims to get their refunds instead of having it used by the Tax Office to reduce their debt. Colleagues Christine Speidel, Leslie Book and I want this power extended to all <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4746954">forms of tax debts</a> not just for tax debts that have been placed “on hold” especially where the taxpayer is known to have experienced financial abuse. But this wouldn’t go far enough – the victim-survivors would still have the perpetrator’s tax debt hanging over them. Where this happens, financial instability can <a href="https://www.commbank.com.au/content/dam/commbank-assets/support/2021-01/unsw-report-key-findings.pdf">drive women back</a> into abusive relationships. <h2>The US shows what can be done</h2> Legislative reform to shift tax liability from abuse survivors to perpetrators is the key to helping solve the problem. <figure class="align-right zoomable"></figure> The United States has offered some form of “<a href="https://www.irs.gov/individuals/innocent-spouse-relief">innocent spouse relief</a>” since 1971. In 2011 it widened eligibility and <a href="https://www.irs.gov/pub/irs-news/ir-11-080.pdf">removed a two-year time limit</a> for requesting relief. It is important to understand the US provisions apply because the country offers jointly filed “married” tax returns. In Australia tax returns are filed by individuals. Australia’s laws would need to change to ensure abused women do not find themselves jointly liable. Any changes should also include debts incurred in the name of partnerships and company directors. The US is the first and only country to do this, largely because of the advocacy of US low-income tax clinics over decades. Australia now has such clinics, funded as part of the Tax Office <a href="https://www.ato.gov.au/individuals-and-families/financial-difficulties-and-disasters/support-to-lodge-and-pay/national-tax-clinic-program">National Tax Clinic Program</a>. Australia’s adoption of US-style rules could provide a model for other jurisdictions, increase tax debt collection (as perpetrators are likely to have better capacity to pay than victims) and foster greater confidence in the Tax Office. Most importantly, it would acknowledge that victim-survivors with tax debts should not bear responsibility for debts incurred by perpetrators. <hr /> For information and advice about family and intimate partner violence contact 1800 RESPECT (<a href="https://www.1800respect.org.au/">1800 737 732</a>). If you or someone you know is in immediate danger, contact 000. The Men’s Referral Service (<a href="https://ntv.org.au/get-help/">1300 766 491)</a> offers advice and counselling to men looking to change their behaviour.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/232609/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/ann-kayis-kumar-466422">Ann Kayis-Kumar</a>, Founding Director of UNSW Tax and Business Advisory Clinic, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australias-tax-system-is-being-weaponised-against-victims-of-domestic-abuse-heres-how-232609">original article</a>. </div>

Money & Banking

Beware of ‘tax hacks’ to maximise your return this year. The tax office is taking a close look at incorrect claims

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/ann-kayis-kumar-466422">Ann Kayis-Kumar</a>, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> For many people a tax refund is a much-anticipated lump sum of money. So, it is understandable Australians will be looking for ways to maximise their returns – particularly we are in a cost-of-living crisis. But, whether you do your own return or use a tax agent, taking risks is not advised. <h2>Be wary of tax hacks</h2> But be wary of “tax hacks” you might hear about from online sources (I’m looking at you, <a href="https://www.afr.com/companies/professional-services/tiktok-gst-fraud-hit-on-tax-office-blows-out-to-4-6b-20230813-p5dw2y">TikTok</a>). Two truisms spring to mind: 1. Don’t let the tax tail wag the dog Many tax hacks suggest you spend considerable money on purchases up front to claim tax deductions. But a tax deduction isn’t actually worth the value amount of your spend. For example: let’s say you’re on a taxable income of A$60,000 per year, which puts you roughly in the <a href="https://www.afr.com/politics/how-wealthy-are-you-compared-to-everyone-else-in-eight-charts-20221214-p5c6a8">50th percentile</a> of income earners and means your <a href="https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents#ato-Australianresidenttaxrates2020to2025">marginal tax rate is 32.5 cents</a>. You might spend $1,000 on a purchase in the hope of getting a sweet $1,000 tax deduction. However, you’re going to be $675 out of pocket. This is because that $1,000 deduction is only worth $325 (because tax is calculated on your taxable income, which is assessable income less allowable deductions). It will be worth even less next year because of the introduction of the <a href="https://www.abc.net.au/news/2024-02-27/stage-three-tax-cut-changes-pass-senate/103519338">revised Stage 3 tax cuts</a> and that’s a good thing because you’ll be paying less tax overall. 2. If it’s too good to be true, it probably is Even if you use a registered tax agent (and it’s important to check they are registered by checking <a href="https://www.tpb.gov.au/public-register">the Tax Practitioners’ Board</a>), it’s a common pitfall to think any aggressive deductions they might suggest are their responsibility if the Australian Taxation Office (ATO) comes knocking. That’s not the case. Taxpayers are responsible for errors in returns made by their tax agents, so the ATO will hold you responsible. Indeed, the <a href="https://www.ato.gov.au/media-centre/ato-flags-3-key-focus-areas-for-this-tax-time">ATO has announced</a> it will be taking a close look at three common errors being made by taxpayers: <ul> <li> incorrectly claiming work-related expenses </li> <li> inflating claims for rental properties </li> <li> failing to include all income when lodging. </li> </ul> It might be tempting to think you’ve got away with over claiming deductions or under reporting income but the ATO has sophisticated systems to <a href="https://www.ato.gov.au/About-ATO/Commitments-and-reporting/Information-and-privacy/How-we-use-data-and-analytics">analyse your data</a>) and track your claims. You’ll need to substantiate your claims, so keep records. If the tax office finds mistakes, you could face <a href="https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalties-for-making-false-or-misleading-statements">financial penalties</a>, even jail time. Two months ago, a woman was sentenced to two years and six months jail and ordered to repay $39,600 after she lodged three fraudulent Business Activity Statements and received a GST refund to which she wasn’t entitled. While under investigation, she then sent eight false statements to the ATO and tried to claim more money. This is one on many individuals named on the <a href="https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/our-focus/refund-fraud/gst-refund-fraud-attempts/operation-protego">ATO’s website</a> highlighting the results of regular crackdowns. <h2>So, should I use a tax agent?</h2> There are nearly 20.5 million active tax file numbers registered to individuals in Australia and last tax year the ATO received 13.7 million individual tax return lodgements. This was a 3% increase on the previous year. Of these lodgements more than 5.6 million were lodged by self-preparers and more than 8 million were lodged by tax agents. It <a href="https://theconversation.com/does-paying-for-tax-advice-save-money-only-if-youre-wealthy-184641">makes sense</a> most Australians use agents to prepare and lodge their tax returns. It’s easier, less stressful, gives you confidence the job is being done right and saves time. Having said that, it does come at a price (see above on the value of deductions), and previous research which finds that <a href="https://theconversation.com/does-paying-for-tax-advice-save-money-only-if-youre-wealthy-184641">every extra dollar spent on a tax agent</a> only yields an estimated tax savings of 20 cents), and if you have simple tax affairs then it’s relatively easy and quick to do it yourself. <h2>How do I prepare my tax return?</h2> Generally, everyone should be lodging an income tax return each year (or, if you don’t need to lodge a tax return, lodging a non-lodgement advice). The ATO has a “Do I need to lodge a tax return?” tool <a href="https://www.ato.gov.au/individuals-and-families/your-tax-return/before-you-prepare-your-tax-return/work-out-if-you-need-to-lodge-a-tax-return">if you’re unsure</a>. It also has a useful <a href="https://www.ato.gov.au/individuals-and-families/your-tax-return/how-to-lodge-your-tax-return/lodge-your-tax-return-online-with-mytax">two minute video</a> which steps you through the process for lodging with their online system myTax. For those of us with simple tax affairs, you just need to follow these steps: <ol> <li> gather and prepare all your information regarding income from work, interest, dividends and any other income such as capital gains from crypto assets or sale of shares </li> <li> then gather and prepare all your information on deductions and work expenses to be claimed making sure you have the evidence to back up your claims. This can be in the form receipts, invoices, log books and diary entries </li> <li> if you are a self-preparer you can log onto your myGov or the ATO’s app to prepare and lodge your return. If you wait until late-July you’ll have the benefit of the ATO’s pre-filled data, too. This gives you plenty of time to make the October 31 deadline. </li> </ol> There’s also the option to use the ATO’s free, volunteer-run TaxHelp program (provided you meet the <a href="https://www.ato.gov.au/individuals-and-families/your-tax-return/help-and-support-to-lodge-your-tax-return/tax-help-program">eligibility criteria</a>), your local Tax Clinic (<a href="https://www.ato.gov.au/individuals-and-families/financial-difficulties-and-disasters/support-to-lodge-and-pay/national-tax-clinic-program">details here</a>), or by seeking help from a registered tax agent. Just make sure you engage them before the October 31 deadline. <h2>Where it might get tricky</h2> But for others, for example if you have an ABN, it gets a bit more complicated. If you operate your business as a sole trader, you must lodge a tax return, even if your income is below the tax-free threshold. And if you have registered for GST – which you must do when your business or enterprise has a GST turnover of $75,000 or more, or if you are a taxi driver or Uber driver – then you will also need to submit quarterly BAS. It gets even more complicated for partnerships, trusts and companies, so it is best to seek the guidance and professional expertise of a registered tax agent, if you aren’t already. <h2>What if I can’t afford a tax agent?</h2> This year, many Australians are doing it tough. Indeed, research by the ASIC’s Moneysmart program estimates <a href="https://www.abc.net.au/news/2024-06-04/asic-survey-millions-of-australians-facing-financial-difficulty/103926704">more than five million Australians</a> are in financial strife. Many people will find it hard to prioritise paying a registered tax agent when they cannot afford basic necessities like food. If you’re in this situation, you might find it useful to get in touch with a free financial counsellor via the <a href="https://ndh.org.au/">National Debt Helpline</a> or the <a href="https://sbdh.org.au/">Small Business Debt Helpline</a>. <h2>Don’t procrastinate</h2> Don’t put off doing your tax. If you’re behind, it might seem daunting to get back on track, especially if you think you’ll have to pay extra tax this year instead of getting a refund. But not lodging your returns will backfire. Like avoiding a trip to the doctor to get a skin check, the longer you wait, the more the problem will grow. Reaching out to the ATO is the key because they have tools to support you, including payment plans. It also shows the ATO that you are willing to comply. Ultimately, being up to date will save you fines, interest and penalties. If you are one of the <a href="https://theconversation.com/worried-youll-lodge-a-late-tax-return-at-least-80-000-australians-cant-afford-tax-advice-211267">80,000 Australians in serious hardship</a> who need but can’t afford professional help to complete and lodge overdue returns, the government-funded <a href="https://www.ato.gov.au/General/Gen/National-Tax-Clinic-program/">National Tax Clinics Program</a> can help with free tax advice.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/231693/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/ann-kayis-kumar-466422">Ann Kayis-Kumar</a>, Associate Professor Ann Kayis-Kumar is the Founding Director of UNSW Tax and Business Advisory Clinic, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/beware-of-tax-hacks-to-maximise-your-return-this-year-the-tax-office-is-taking-a-close-look-at-incorrect-claims-231693">original article</a>. </div>

Money & Banking

A tax on sugary drinks can make us healthier. It’s time for Australia to introduce one

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/peter-breadon-1348098">Peter Breadon</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/jessica-geraghty-1530733">Jessica Geraghty</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> Sugary drinks cause weight gain and <a href="https://www.nature.com/articles/s41574-021-00627-6">increase the risk</a> of a range of diseases, including diabetes. The <a href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2792842">evidence shows</a> that well-designed taxes can reduce sugary drink sales, cause people to choose healthier options and get manufacturers to reduce the sugar in their drinks. And although these taxes haven’t been around long, there are already signs that they are making people healthier. It’s time for Australia to catch up to the rest of the world and introduce a tax on sugary drinks. As our new Grattan Institute <a href="https://grattan.edu.au/report/sickly-sweet/">report</a> shows, doing so could mean the average Australian drinks almost 700 grams less sugar each year. <h2>Sugary drinks are making us sick</h2> The share of adults in Australia who are obese has tripled since 1980, from <a href="https://theconversation.com/mapping-australias-collective-weight-gain-7816">10%</a> to more than <a href="https://www.abs.gov.au/statistics/health/health-conditions-and-risks/waist-circumference-and-bmi/latest-release">30%</a>, and diabetes is our <a href="https://www.diabetesaustralia.com.au/about-diabetes/diabetes-in-australia/">fastest-growing</a> chronic condition. The costs for the health system and economy are measured in the billions of dollars each year. But the biggest costs are borne by individuals and their families in the form of illness, suffering and early death. Sugary drinks are a big part of the problem. The more of them we drink, the greater our risk of <a href="https://www.nature.com/articles/s41574-021-00627-6">gaining weight</a>, <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2963518/">developing type 2 diabetes</a>, and suffering <a href="https://academic.oup.com/eurpub/article/31/1/122/5896049?login=false">poor oral health</a>. These drinks have no real nutrients, but they do have a lot of sugar. The average Australian consumes <a href="https://www.abs.gov.au/statistics/health/health-conditions-and-risks/apparent-consumption-selected-foodstuffs-australia/latest-release">1.3</a> times the maximum recommended amount of sugar each day. Sugary drinks are responsible for more than one-quarter of our daily sugar intake, more than any other major type of food. You might be shocked by how much sugar you’re drinking. Many 375ml cans of soft drink contain eight to 12 teaspoons of sugar, nearly the entire daily recommended limit for an adult. Many 600ml bottles blow our entire daily sugar budget, and then some. The picture is even worse for disadvantaged Australians, who are more likely to have <a href="https://www.abs.gov.au/statistics/health/health-conditions-and-risks/diabetes/latest-release">diabetes</a> and <a href="https://www.abs.gov.au/statistics/health/health-conditions-and-risks/waist-circumference-and-bmi/latest-release">obesity</a>, and who also consume the most sugary drinks. <h2>Sugary drink taxes work</h2> Fortunately, there’s a proven way to reduce the damage sugary drinks cause. More than <a href="https://ssbtax.worldbank.org/">100 countries</a> have a sugary drinks tax, covering most of the world’s population. <a href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2792842">Research</a> shows these taxes lead to higher prices and fewer purchases. Some taxes are specifically designed to encourage manufacturers to change their recipes and cut the sugar in their drinks. Under these “tiered taxes”, there is no tax on drinks with a small amount of sugar, but the tax steps up two or three times as the amount of sugar rises. That gives manufacturers a strong incentive to add less sugar, so they reduce their exposure to the tax or avoid paying it altogether. This is the best result from a sugary drinks tax. It means drinks get healthier, while the tax is kept to a minimum. In countries with tiered taxes, manufacturers have slashed the sugar in their drinks. In the United Kingdom, the share of products above the tax threshold <a href="https://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1003025">decreased dramatically</a>. In 2015, more than half (52%) of products in the UK were above the tax threshold of 5 grams of sugar per 100ml. Four years later, when the tax was in place, that share had plunged to 15%. The number of products with the most sugar – more than 8 grams per 100ml – declined the most, falling from 38% to just 7%. The Australian drinks market today looks similar to the UK’s before the tax was introduced. Health benefits take longer to appear, but there are already promising signs that the taxes are working. Obesity among primary school-age girls has fallen in <a href="https://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1004160">the UK</a> and <a href="https://jamanetwork.com/journals/jamapediatrics/fullarticle/2786784">Mexico</a>. Oral health has also improved, with studies reporting fewer children going to hospital to get their teeth removed in <a href="https://nutrition.bmj.com/content/6/2/243">the UK</a>, and reduced dental decay <a href="https://pubmed.ncbi.nlm.nih.gov/33853058/">in Mexico</a> and <a href="https://www.ajpmonline.org/article/S0749-3797(23)00069-7/abstract">Philadelphia</a>. One <a href="https://www.ajpmonline.org/article/S0749-3797(23)00158-7/fulltext">study from the United States</a> found big reductions in gestational diabetes in cities with a sugary drinks tax. <h2>The tax Australia should introduce</h2> Like successful taxes overseas, Australia should introduce a sugary drink tax that targets drinks with the most sugar: <ul> <li>drinks with 8 grams or more of sugar per 100ml should face a $0.60 per litre tax</li> <li>drinks with 5–8 grams should be taxed at $0.40 per litre</li> <li>drinks with less than 5 grams of sugar should be tax-free.</li> </ul> This means a 250ml Coke, which has nearly 11 grams of sugar per 100ml, would cost $0.15 more. But of course consumers could avoid the tax by choosing a sugar-free soft drink, or a bottle of water. Grattan Institute <a href="https://grattan.edu.au/report/sickly-sweet/">modelling</a> shows that under this tiered tax, Australians would drink about 275 million litres fewer sugary drinks each year, or the volume of 110 Olympic swimming pools. The tax is about health, but government budgets also benefit. If it was introduced today, it would raise about half a billion dollars in the first year. Vested interests such as the beverages industry have fiercely resisted sugary drink taxes around the world, issuing disingenuous warnings about the risks to poor people, the sugar industry and drinks manufacturers. But our new report shows sugary drink taxes have been introduced smoothly overseas, and none of these concerns should hold Australia back. We certainly can’t rely on industry pledges to voluntarily reduce sugar. They have been <a href="https://www.cambridge.org/core/journals/public-health-nutrition/article/trends-in-sugar-content-of-nonalcoholic-beverages-in-australia-between-2015-and-2019-during-the-operation-of-a-voluntary-industry-pledge-to-reduce-sugar-content/EE662DE7552670ED532F6650C9D56939">weak</a> and misleading, and <a href="https://www.theguardian.com/australia-news/2024/apr/10/sugar-increase-in-fanta-and-sprite-prompts-calls-for-new-tax-on-australia-food-and-drinks-industry">failed to stick</a>. It will take many policies and interventions to turn back the tide of obesity and chronic disease in Australia, but a sugary drinks tax should be part of the solution. It’s a policy that works, it’s easy to implement, and most Australians <a href="https://bmjopen.bmj.com/content/9/6/e027962">support it</a>. The federal government should show it’s serious about tackling Australia’s biggest health problems and take this small step towards a healthier future.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/228906/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/peter-breadon-1348098">Peter Breadon</a>, Program Director, Health and Aged Care, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/jessica-geraghty-1530733">Jessica Geraghty</a>, Senior Associate, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/a-tax-on-sugary-drinks-can-make-us-healthier-its-time-for-australia-to-introduce-one-228906">original article</a>. </div>

Food & Wine

Australian churches collectively raise billions of dollars a year – why aren’t they taxed?

<div class="theconversation-article-body"> <a href="https://theconversation.com/profiles/dale-boccabella-15706">Dale Boccabella</a>, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> and <a href="https://theconversation.com/profiles/ranjana-gupta-1207482">Ranjana Gupta</a>, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a> There’s a good reason your local volunteer-run netball club doesn’t pay tax. In Australia, various nonprofit organisations are exempt from paying income tax, including those that do charitable work, such as churches. These exemptions or concessions can also extend to other taxes, including fringe benefits tax, state and local government property taxes and payroll taxes. The traditional justification for granting these concessions is that charitable activities benefit society. They contribute to the wellbeing of the community in a variety of non-religious ways. For example, charities offer welfare, health care and education services that the government would generally otherwise provide due to their obvious public benefits. The tax exemption, which allows a charity to retain all the funds it raises, provides the financial support required to relieve the government of this burden. The nonprofit sector is often called the third sector of society, the other two being government and for-profit businesses. But in Australia, this third sector is quite large. Some grassroots organisations have only a tiny footprint, but other nonprofits are very large. And many of these bigger entities – including some “megachurches” – run huge commercial enterprises. These are often indistinguishable from comparable business activities in the for-profit sector. So why doesn’t this revenue get taxed? And should we really give all nonprofits the same tax exemptions? <h2>Why don’t churches pay tax?</h2> The primary aim of a church is to advance or promote its religion. This itself counts as a charitable purpose under the <a href="https://www.legislation.gov.au/C2013A00100/asmade/text">2013 Charities Act</a>. However, section five of that act requires a church to have only charitable purposes – any other purposes must be incidental to or in aid of these. Viewed alone, the conduct of a church with an extensive commercial enterprise – which could include selling merchandise, or holding concerts and conferences – is not a charitable purpose. But Australian case law and <a href="https://www.acnc.gov.au/for-charities/start-charity/role-acnc-deciding-charity-status/legal-meaning-charity#:%7E:text=Taxation%20Ruling%20(TR)%202011%2F,set%20out%20in%20taxation%20rulings.">an ATO ruling</a> both support the idea that carrying on business-like activities can be incidental to or in aid of a charitable purpose. This could be the case, for example, if a large church’s commercial activities were to help give effect to its charitable purposes. Because of this, under Australia’s current income tax law, a church that is running a large commercial enterprise is able to retain its exemption from income tax on the profits from these activities. There are various public policy concerns with this. First, the lost tax revenue is likely to be significant, although the government’s annual tax expenditure statement does not currently provide an estimate of the amount of tax revenue lost. And second, the tax exemption may give rise to unfairness. A for-profit business competing with a church in a relevant industry may be at a competitive disadvantage – despite similar business activities, the for-profit entity pays income tax but the church does not. This competitive disadvantage may be reflected in lower prices for customers of the church business. <h2>What about taxing their employees?</h2> Churches that run extensive enterprises are likely to have many employees. Generally, all the normal Australian tax rules apply to the way these employees are paid – for example, employees pay income tax on these wages. Distributing profits to members would go against the usual rules of the church, and this prohibition is <a href="https://www.legislation.gov.au/C2013A00100/asmade/text">required</a> anyway for an organisation to qualify as a charity. Some churches may be criticised for paying their founders or leaders “excessive” wages, but these are still taxed in the same way as normal salaries. It’s important to consider fringe benefit tax – which employers have to pay on certain benefits they provide to employees. Aside from some qualifications, all the usual <a href="https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/how-fringe-benefits-tax-works">fringe benefit tax rules</a> apply to non-wage benefits provided to employees of a church. Just like their commercial (and taxable) counterparts, the payment for “luxury” travel and accommodation for church leaders and employees when on church business will not generate a fringe benefits taxable amount for the church. One qualification, though, is that a church is likely to be a <a href="https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/fbt-concessions-for-not-for-profit-organisations/fbt-rebatable-employers">rebatable employer</a> under the fringe benefit tax regime. This means it can obtain some tax relief on benefits provided to each employee, up to a cap. <h2>We may need to rethink blanket tax exemptions for charities</h2> Back in an age where nonprofits were mainly small and focused on addressing the needs of people failed by the market, the income tax exemption for such charities appeared appropriate. But in the modern era, some charities – including some churches – operate huge business enterprises and collect rent on extensive property holdings. Many are now questioning whether we should continue offering them an uncapped exemption from income tax, especially where there are questions surrounding how appropriately these profits are used. Debates about solutions to the problem have focused on various arguments. However, more data may be needed on the way charities apply their profits to a charitable purpose, particularly those involved in substantial commercial activities. An all-or-nothing rule exempting the whole charitable sector may no longer be fit for purpose if it fails to take into account the very different circumstances of different nonprofits.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/228901/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/dale-boccabella-15706">Dale Boccabella</a>, Associate Professor of Taxation Law, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a> and <a href="https://theconversation.com/profiles/ranjana-gupta-1207482">Ranjana Gupta</a>, Senior Lecturer Taxation, <a href="https://theconversation.com/institutions/auckland-university-of-technology-1137">Auckland University of Technology</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australian-churches-collectively-raise-billions-of-dollars-a-year-why-arent-they-taxed-228901">original article</a>. </div>

Money & Banking

Stamp duty is holding us back from moving homes – we’ve worked out how much

<div class="theconversation-article-body"><a href="https://theconversation.com/profiles/nick-garvin-1453835">Nick Garvin</a>, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> If just one state of Australia, New South Wales, scrapped its stamp duty on real-estate transactions, about 100,000 more Australians would move homes each year, according to our <a href="https://e61.in/wp-content/uploads/2024/02/Stamp-duty-effects-on-purchases-and-moves.pdf">best estimates</a>. Stamp duty is an unquestioned part of buying a home in Australia – you put your details in an online mortgage calculator, and stamp duty is automatically deducted from the amount you have to contribute. It’s easy to overlook how much more affordable a home would be without it. That means it’s also easy to overlook how much more Australians would buy and move if stamp duty wasn’t there. The 2010 Henry Tax Review found stamp duty was <a href="https://treasury.gov.au/sites/default/files/2019-10/afts_final_report_part_2_vol_1_consolidated.pdf">inequitable</a>. It taxes most the people who most need to or want to move. The review reported: "Ideally, there would be no role for any stamp duties, including conveyancing stamp duties, in a modern Australian tax system. Recognising the revenue needs of the States, the removal of stamp duty should be achieved through a switch to more efficient taxes, such as those levied on broad consumption or land bases." But does stamp duty actually stop anyone moving? It’s a claim more often made than assessed, which is what our team at the <a href="https://e61.in/wp-content/uploads/2024/02/Stamp-duty-effects-on-purchases-and-moves.pdf">e61 Institute</a> set out to do. We used real-estate transaction data and a natural experiment. <h2>What happened when Queensland hiked stamp duty</h2> In 2011, Queensland hiked stamp duty for most buyers by removing some concessions for owner-occupiers at short notice. For owner-occupiers it increased stamp duty by about one percentage point, lifting the average rate from 1.26% of the purchase price to 2.27%. What we found gives us the best estimate to date of what stamp duty does to home purchases. A one percentage point increase in stamp duty causes the number of home purchases to decline by 7.2%. The number of moves (changes of address) falls by about as much. The effect appears to be indiscriminate. Purchases of houses fell about as much as purchases of apartments, and purchases in cities fell about as much as purchases in regions. Moves between suburbs and moves interstate dropped by similar rates. With NSW stamp duty currently averaging about <a href="https://conveyancing.com.au/need-to-know/stamp-duty-nsw">3.5%</a> of the purchase price, our estimates suggest there would be about 25% more purchases and moves by home owners if it were scrapped completely. That’s 100,000 moves. Victoria’s higher rate of stamp duty, about <a href="https://www.sro.vic.gov.au/rates-taxes-duties-and-levies/general-land-transfer-duty-property-current-rates">4.2%</a>, means if it was scrapped there would be about 30% more purchases. That’s another 90,000 moves. <h2>Even low headline rates have big effects</h2> The big effect from small-looking headline rates ought not to be surprising. When someone buys a home, they typically front up much less cash than the purchase price. While stamp duty seems low as a percentage of the purchase price, it is high as a percentage of the cash the buyer needs to find. Here’s an example. If stamp duty is 4% of the purchase price, and a purchaser pays $800,000 for a property with a mortgage deposit of $160,000, the $32,000 stamp duty adds 20%, not 4%, to what’s needed. If the deposit takes five years to save, stamp duty makes it six. A similar thing happens when an owner-occupier changes address. If the buyer sells a fully owned home for $700,000 and buys a new home for $800,000, the upgrade ought to cost them $100,000. A 4% stamp duty lifts that to $132,000. Averaged across all Australian cities, stamp duty costs about <a href="https://e61.in/wp-content/uploads/2024/02/Stepped-on-by-Stamp-Duty.pdf">five months</a> of after-tax earnings. In Sydney and Melbourne, it’s six. <h2>Stamp duty has bracket creep</h2> This cost has steadily climbed from around <a href="https://e61.in/wp-content/uploads/2024/02/Stepped-on-by-Stamp-Duty.pdf">six weeks</a> of total earnings in the 1990s. It has happened because home prices have climbed faster than incomes and because stamp duty has brackets, meaning more buyers have been pushed into higher ones. Replacing the stamp duty revenue that states have come to rely on would not be easy, but a switch would almost certainly help the economy function better. The more that people are able to move, the more they will move to jobs to which they are better suited, boosting productivity. The more that people downsize when they want to, the more housing will be made available for others. Our findings suggest the costs are far from trivial, making a switch away from stamp duty worthwhile, even if it is disruptive and takes time.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/225773/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/nick-garvin-1453835">Nick Garvin</a>, Adjunct Fellow, Department of Economics, <a href="https://theconversation.com/institutions/macquarie-university-1174">Macquarie University</a> Image credits: Getty Images This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/stamp-duty-is-holding-us-back-from-moving-homes-weve-worked-out-how-much-225773">original article</a>. </div>

Money & Banking

"There's no way": Man receives $52 billion tax bill

An American man has been left confused after receiving a letter from the government claiming he owed $52 billion in unpaid taxes. Barry Tangert got two letters in the mail from the state of Pennsylvania, opening the first to find a refund check from the federal government for over $900. His joy was short-lived though as he opened the second letter to find the income billing notice from the Pennsylvania Department of Revenue claiming that he owed a jaw-dropping $52,950,744,735.28 ($34,576,826,561.47 AUD). “I knew it was an obvious blunder. I don’t even make over $100,000 a year, so there’s no way I could owe anywhere near that,” Barry Tangert told local outlet News 8. The total sum was so large it didn’t even fit on a single line on the document. Tangert immediately knew it was a mistake, with the astonishing number being more than triple the $11 billion America’s richest man Elon Musk says he owed the government in 2022. How the error made it all the way to his doorstep is still a mystery to Tangert. “I don’t know if it was a computer glitch in the transmission or if it was an input error from my tax preparer,” Tangert said, noting that his tax preparer filed an amendment after noticing an error on his 2022 return. He reached out to the Pennsylvania Department of Revenue’s customer service line, which also provided little help to the baffled man. “The first thing he said was, ‘You had a good year.’ And I said, ‘I wish,’” Tangert said. Fortunately, the state department has since resolved the issue, which it chalked up to wrong numbers simply being put into the system. Image credits: WGAL News 8

Money & Banking

What to expect from the federal budget

There's just three weeks left until Treasurer Jim Chalmers unveils the federal budget. With the cost of living crisis still a major issue across the country, we can expect to see some policies aimed at alleviating the pressure. Some policies, have already been announced and here are a few others that we can expect to hear from Chalmers on May 14. Stage 3 cuts announced in January, will form a key part of this year's budget, which will direct more benefit towards low- and middle-income earners – although Australians on high salaries will still receive a tax cut. The decision was made to alleviate the cost-of-living pressures and partly address the bracket creep. The cuts lower the threshold for the lowest two brackets (so they pay less tax on that income), and raise the threshold for the highest two brackets (so they need to earn more to be taxed at a higher rate). This means that someone with average income of around $73,000 will get $1504, but how much you actually receive will depend on your income. The new version of the stage 3 cuts will come into effect on July 1. Superannuation will be paid on government-funded parental leave, with the change due to kick in for parents with babies born after July 1, 2025. They will receive a 12 per cent superannuation on top of their government-funded parental leave, with around 180,000 families expected to benefit from it. The figures will be included in the May 14 budget. Although nothing has been officially announced, there will likely be HECS-HELP debt relief for current and former students. "I think there's a range of areas where we need to do much better with the younger generation, and HECS is one of them," Prime Minister Anthony Albanese said on radio on April 18. "We've received a review of that... and what that has said is that the system can be made simpler and be made fairer. "We're examining the recommendations and we'll be making announcements pretty soon on that. We, of course, have a budget coming up." There have also been some hints from the government that energy bill relief will continue in this year's budget. "Our government understands that for small business – as for Australian families – energy bills remain a source of financial pressure," Albanese said, citing the existing policy that gives eligible families up to $500 off their power bills and eligible small businesses up to $650. "Our government understands that for small business – as for Australian families – energy bills remain a source of financial pressure," he said. "That's why the energy bill relief package I negotiated with the states and territories delivered up to $650 in savings for around 1 million small businesses, along with 5 million families. "And as we put together next month's budget, small businesses and families will again be front and centre in our thinking." Energy bills are also set to go down, or remain stable for the most part from July 1. Image: Getty

Money & Banking

Survey unveils Aussies thoughts on tourism tax

Earlier this year, Bali launched a controversial tourism tax, which meant that every traveller entering the island would have to pay a $15 fee, which the Indonesian province have said will be used for environmental and cultural projects. Now, Aussies have shared their thoughts on introducing a similar system here, and survey results have revealed that many are keen for the tourism tax to be introduced here. Travel provider InsureandGo conducted the survey and found that 60 per cent of Australians would support the government introducing a tax to combat the rising environmental toll of tourism. "Tourist taxes are a relatively new concept, but as travel demand swells, we are seeing more countries adopt the levy," InsureandGo Chief Commercial Officer Jonathan Etkind said. "What's heartening is that only a minority of 37 per cent of respondents don't support tourism taxes, demonstrating just how many Australians support the concept of sustainable travel." The response comes amid increased sustainability concerns on our flora and fauna, which are being threatened by over-tourism. The tax is particularly supported by younger Aussies aged between 18 to 30, with 73 per cent of them saying yes to tourism taxes. Etkind said that this may be because younger Aussies are typically more aware of the environmental impacts of travel compared to the older generation, who may be less accustomed to the tax. Along with Bali, other cities and countries have started introducing similar fees to combat overtourism, with Venice set to charge day-trippers a fee of 5 Euros ($8.20) per visit. Amsterdam, Netherlands has the highest tourism tax in Europe, with the former 7 per cent hotel tourist levy rising to 12.5 per cent this year. New Zealand also charges international visitors excluding Aussie citizens and permanent residents $25 levy ($32.64 AUD) to address the challenges created by tourism in its conservation areas. Image: Getty

International Travel

Tax boost announced for 1.2 million people

Low-income earners will receive a tax boost with the Medicare levy threshold set to rise. The income threshold at which taxpayers will have to pay a two per cent Medicare levy will increase by 7.1 per cent, in line with inflation. Currently single people who earn below $24,276 do not have to pay the levy. Under the changes, the two per cent levy only has to be paid by anyone earning over $26,000 The Medicare levy threshold for seniors and pensioners will increase to $41,089, up from the initial benchmark of $38,365. For families, this threshold has increased to $43,486 up from the previous $40,939. Treasurer Jim Chalmers said that the increase was part of the broader measures taken to relieve the increase in cost-of-living. “This will ensure people on lower incomes continue to pay less or are exempt from the Medicare levy,” he said on Tuesday. “It means 1.2 million Australians get to keep a bit more of what they earn.” The boost in the Medicare levy threshold was announced alongside changes to income tax cuts, with those earning under $150,000 set to receive greater benefits. “This is about doing what we responsibly can to ease some of the pressure being felt by Australians right around the country, but especially for people on lower incomes, young people, seniors and women,” Chalmers said. This comes just days after Medicare celebrated it's 40th anniversary, with an exhibition launched at Parliament House. Image: Getty

Money & Banking

Stage 3 stacks up: the rejigged tax cuts help fight bracket creep and boost middle and upper-middle households

<a href="https://theconversation.com/profiles/ben-phillips-98866">Ben Phillips</a>, <a href="https://theconversation.com/institutions/australian-national-university-877">Australian National University</a> The winners and losers from the Albanese government’s <a href="https://treasury.gov.au/sites/default/files/2024-01/tax-cuts-government-fact-sheet.pdf">rejig</a> of this year’s Stage 3 tax cuts have already been well documented. From July 1 every taxpayer will get a tax cut. Most, the 11 million taxpayers earning up to A$146,486, will also pay less tax than they would have under the earlier version of Stage 3, some getting a tax cut <a href="https://theconversation.com/albanese-tax-plan-will-give-average-earner-1500-tax-cut-more-than-double-morrisons-stage-3-221875">twice as big</a>. A much smaller number, 1.8 million, will get a smaller tax cut than they would have under the original scheme, although their cuts will still be big. The highest earners will get cuts of $4,529 instead of $9,075. But many of us live in households where income is shared and many households don’t pay tax because the people in them don’t earn enough or are on benefits. The Australian National University’s <a href="https://csrm.cass.anu.edu.au/research/policymod">PolicyMod</a> model is able to work out the impacts at the household level, including the impact on households in which members are on benefits or don’t earn enough to pay tax. <h2>More winners than losers in every broad income group</h2> We’ve divided Australian households into five equal-size groups ranked by income, from lowest to lower-middle to middle to upper-middle to high. Our modelling finds that, just as is the case for individuals, many more households will be better off with the changes to Stage 3 than would have been better off with Stage 3 as it was, although the difference isn’t as extreme. Overall, 58% of households will be better off with the reworked Stage 3 than they would have under the original and 11% will be worse off. Importantly, there remain 31% who will be neither better off nor worse off, because they don’t pay personal income tax. <hr /> <iframe id="0CWXE" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/0CWXE/4/" width="100%" height="400px" frameborder="0"></iframe> <hr /> But it is different for different types of households. In the lowest-earning fifth of households, far more are better off (13.5%) than worse off (0.2%) with the overwhelming bulk neither better nor worse off (86.3%). <hr /> <iframe id="KC5zy" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/KC5zy/3/" width="100%" height="400px" frameborder="0"></iframe> <hr /> In the highest-earning fifth of households, while more than half are better off (54.4%), a very substantial proportion are worse off (42.3%). Very few (only 3.1%) are neither better nor worse off. <hr /> <iframe id="WSkSL" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/WSkSL/3/" width="100%" height="400px" frameborder="0"></iframe> <hr /> <h2>But high-earning households go backwards on average</h2> In dollar terms, the top-earning fifth of households loses money while every group gains. That’s because although there are more winners than losers among the highest-earning fifth of households, the losers lose more money. The biggest dollar gains go to middle and upper-middle income households with middle-income households ahead, on average, by $988 per year and upper-middle income households by $1,102. The highest-income households are worse off by an average of $837 per year. As a percentage of income, middle-income households gain the most with a 1% increase in disposable income. Lowest income households gain very little, while the highest-income households go backwards by 0.3%. <hr /> <iframe id="kAPmC" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/kAPmC/3/" width="100%" height="400px" frameborder="0"></iframe> <hr /> <h2>The rejig does a better job of fighting bracket creep</h2> And we’ve found something else. The original version of the Stage 3 tax cuts was advertised as a measure to overcome <a href="https://theconversation.com/the-2-main-arguments-against-redesigning-the-stage-3-tax-cuts-are-wrong-heres-why-221975">bracket creep</a>, which is what happens when a greater proportion of taxpayers’ income gets pushed into higher tax brackets as incomes climb. We have found it wouldn’t have done it for most of the income groups, leaving all but the highest-earning group paying more tax after the change in mid-2024 than it used to in 2018. The rejigged version of Stage 3 should compensate for bracket creep better, leaving the top two groups paying less than they did in 2018 and compensating the bottom three better than the original Stage 3. <hr /> <iframe id="YG0cT" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/YG0cT/1/" width="100%" height="400px" frameborder="0"></iframe> <hr /> Not too much should be made of the increase in tax rates in the lowest income group between 2018 ad 2024 because some of it reflects stronger income growth. We find that overall, the redesigned Stage 3 does a better job of offsetting bracket creep than the original. It is also better targeted to middle and upper-middle income households. Having said that, the average benefit in dollar terms isn’t big. At about $1,000 per year for middle and upper-middle income households and costing the budget about what the original Stage 3 tax cuts would have cost, its inflationary impact compared to the original looks modest.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/221851/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/ben-phillips-98866">Ben Phillips</a>, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), <a href="https://theconversation.com/institutions/australian-national-university-877">Australian National University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/stage-3-stacks-up-the-rejigged-tax-cuts-help-fight-bracket-creep-and-boost-middle-and-upper-middle-households-221851">original article</a>.

Money & Banking

"Proud to pay more": The billionaires who want to pay more tax

Over 250 millionaires and billionaires have issued an <a href="https://proudtopaymore.org/" target="_blank" rel="noopener">open letter</a> to global leaders encouraging them to implement wealth taxes to combat the cost-of-living crisis. This comes just as a report by the <a href="https://www.oversixty.com.au/finance/money-banking/shocking-amount-australia-s-richest-people-earn-per-hour" target="_blank" rel="noopener">Oxfam Charity</a> revealed that the global wealth of billionaires have only grown in the last three years despite inflation. The open letter, signed by super-rich individuals from 17 countries, includes signatories like Abigail Disney, the grand-niece of Walt Disney, Succession actor Brian Cox, and American philanthropist and Rockefeller family heir Valerie Rockefeller. They said that they would be "proud to pay more taxes" in order to address the inequality. "Elected leaders must tax us, the super rich," the letter read. "This will not fundamentally alter our standard of living, nor deprive our children, nor harm our nations' economic growth. "But it will turn extreme and unproductive private wealth into an investment for our common democratic future." Austrian heir Marlene Engelhorn is also among the voices demanding that they pay more in taxes. "I've inherited a fortune and therefore power, without having done anything for it. And the state doesn't even want taxes on it," Engelhorn, who inherited millions from her family who founded chemical giant BASF, said. The letter was released just as global leaders gather in Davos, Switzerland for the World Economic Forum. Abigail Disney, whose net-worth is measured at more than $100 million, said that lawmakers need to come together to make a meaningful economic and social change. "There's too much at stake for us all to wait for the ultra rich to grow a conscience and voluntarily change their ways," she said. "For that reason, lawmakers must step in and tax extreme wealth, along with the variety of environmentally destructive habits of the world's richest." A recent <a href="https://static1.squarespace.com/static/63fe48c7e864f3729e4f9287/t/6596bfb943707b56d11f1296/1704378297933/G20+Survey+of+those+with+More+than+%241+million+on+Attitudes+to+Extreme+Wealth+and+Taxing+the+Super+Rich.pdf" target="_blank" rel="noopener">survey</a> of almost 2400 millionaires found that 74 per cent of them supported the introduction of a wealth tax to fund improved public services and deal with the cost-of-living crisis. The open letter also said that one-off donations and philanthropy "cannot redress the current colossal imbalance" of societal wealth. "We need our governments and our leaders to lead," the letter said. "The true measure of a society can be found, not just in how it treats its most vulnerable, but in what it asks of its wealthiest members." Images: Getty

Money & Banking

myTax is fast and free – so why do 2 in 3 Australians still pay to lodge a tax return?

<a href="https://theconversation.com/profiles/jawad-harb-1441668">Jawad Harb</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> and <a href="https://theconversation.com/profiles/elizabeth-morton-1218408">Elizabeth Morton</a>, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> Ten years ago, the Australian Taxation Office (ATO) created the “myTax” portal, an easy way to lodge your tax return online. There was an “e-Tax” filing option before the 2015-16 tax year, but this was quite complicated and barely better than filling out a form online. In comparison, myTax <a href="https://resources.taxinstitute.com.au/tiausttaxforum/acceptance-of-mytax-in-australia">is simpler</a> and more automated. It’s available 24 hours a day, is free to use, and you will typically get your refund within <a href="https://www.ato.gov.au/Individuals/Your-tax-return/How-to-lodge-your-tax-return/Lodge-your-tax-return-online-with-myTax/">two weeks</a>. But the chances are you won’t be using it. In fact, slightly less than <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2020-21/?anchor=IndividualsStatistics#IndividualsStatistics">36%</a> of Australia’s 15 million taxpayers used the myTax portal in 2020-21 – the most recent tax year for which the tax office has published data. About <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Taxation-statistics/Taxation-statistics-2020-21/?anchor=IndividualsStatistics#IndividualsStatistics">64% of tax returns</a> were lodged through tax agents. This is one of the highest rates among 38 <a href="https://www.oecd.org/about/">Organisation for Economic Co-operation and Development</a> nations. Meanwhile, just 0.6% of Australians still used the paper-based form. <hr /> <iframe id="5Kdz0" class="tc-infographic-datawrapper" style="border: none;" src="https://datawrapper.dwcdn.net/5Kdz0/3/" width="100%" height="400px" frameborder="0"></iframe> <hr /> So why have Australians – who have quickly embraced the internet for everything from shopping to dating – been so slow to embrace myTax? For some, particularly older people, it’s about being intimidated by the technology. Others may be concerned with cybersecurity risk. But for most it’s about the perceived complexity of the tax system and the process, regardless of the technology. They see using a tax agent as easier and the way to maximise their tax refund. While in some cases this may be true, in many instances it’s simply a perception – but one the tax office will need to address if it wants to promote use of myTax. <h2>Reasons for the low uptake of myTax</h2> <a href="https://resources.taxinstitute.com.au/tiausttaxforum/acceptance-of-mytax-in-australia">Our research</a> suggests most people who have used the myTax portal think it is easy to use. We surveyed 193 taxpayers who have used the system. About three-quarters agreed the system was clear and understandable, and said they would keep using it. But of course these are people who have chosen to use the system, so their responses don’t shed much light on the reasons people don’t use myTax. Answers to that come from other published research, in particular from the <a href="https://www.igt.gov.au/">Inspector-General of Taxation</a> (the independent office investigating complaints about the tax system) as well as the House of Representatives’ Standing Committee on Tax and Revenue. Evidence submitted to these bodies indicate that Australians prefer tax agents to avoid errors in claiming deductions. The parliamentary committee’s <a href="https://parlinfo.aph.gov.au/parlInfo/download/committees/reportrep/024169/toc_pdf/TaxpayerEngagementwiththeTaxSystem.pdf;fileType=application%2Fpdf">2018 inquiry</a> into the tax system was told the use of tax agents ballooned from about 20% in the 1980s, peaking at about 74% of all taxpayers: "The Tax Commissioner considered that the size of the TaxPack had probably contributed to that rise, driving many people with simple tax affairs to a tax agent because it looked daunting." In short, habits are hard to break. Having come to rely on tax agents, most Australians keep using them, despite the system being vastly improved. For example, the myTax system now simplifies the process by <a href="https://www.ato.gov.au/Individuals/Your-tax-return/How-to-lodge-your-tax-return/Lodge-your-tax-return-online-with-myTax/Pre-fill-availability/?=redirected_myGov_prefill">pre-filling</a> data from government agencies, health funds, financial institutions and your own employer. About 80% of our survey respondents said this was helpful. <h2>Taking care of the digital divide</h2> This suggests the main barrier to increasing use of the myTax system is mostly habit and the perception the tax system is too complicated to navigate without an expert. There is also a small percentage of people who feel uncomfortable with computers. This is reflected in the minority of respondents in our study who said they were unlikely to use myTax again, as well as the tax office’s data showing some people continue to stick with paper lodgement. Those more likely to find the system daunting are the elderly, those with low English skills, people with disabilities and those with low educational attainment. These people’s needs should not be forgotten as the Australian <a href="https://www.dta.gov.au/digital-government-strategy">Digital Government Strategy</a> aims to making Australia a “world-leading” digital government by 2025, delivering “simple, secure and connected public services”. Even with the greatest online system in the world, it’s unlikely there will ever be a complete transition.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/207305/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> <a href="https://theconversation.com/profiles/jawad-harb-1441668">Jawad Harb</a>, PhD Candidate, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> and <a href="https://theconversation.com/profiles/elizabeth-morton-1218408">Elizabeth Morton</a>, Research Fellow of the RMIT Blockchain Innovation Hub, Lecturer Taxation, <a href="https://theconversation.com/institutions/rmit-university-1063">RMIT University</a> Image credits: Shutterstock This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/mytax-is-fast-and-free-so-why-do-2-in-3-australians-still-pay-to-lodge-a-tax-return-207305">original article</a>.

Money & Banking

Can you lend a paw this tax time to help cats in need?

With a proud reputation of caring for cats for more than 60 years, the Cat Protection Society of NSW runs Sydney’s only no-kill shelter just for cats, as well as providing feline welfare programs to help cats and the people who love them. Cat Protection began in 1958 as a small group of people dedicated to reducing the number of street cats and while our organisation has grown over the years, our vision remains the same; that every cat deserves a loving and responsible home. Over the years, Cat Protection has helped literally hundreds of thousands of cats, kittens, and people. We’ve led the way in setting the standards for best-practice feline sheltering, and our health and welfare services extend far beyond our adoption centre. And while technology means we can offer a great range of free cat care resources online, we’ve never lost our human touch and we still help thousands of people every year with advice and tips on cat care by phone or in-person, at no cost. Our subsidised desexing, vaccination and microchipping programs promote cat health and welfare in the community and our newest program, Adopt-a-Stray, offers a complete and affordable package for those who wish to fully welcome a street cat into their heart and home. What sets us apart from many other animal shelters is our holistic approach to each individual cat or human client. Cats are not given a time limit, although most are adopted within days or weeks. Every cat is individually assessed and provided with a care plan to meet their unique needs. If they need complex surgery, allergy trials or behavioural interventions our highly qualified team will work with veterinarians and specialists to ensure the cat gets everything they need to set them on the path to living their best life. A kind person found Snake, a four-week-old sickly orphaned kitten. In addition to cat flu, our vets identified corneal scarring in his right eye, a blocked tear duct, and an adhesion on his eyelid restricting the normal movement of his third eyelid. Treatment resolved the flu and improved his eye, but Snake will live with limited vision in that eye. This has not dampened his playfulness or zest for life. As well as poor physical health, orphaned kittens miss out on the important lessons of being a cat from their mum and siblings, and this can lead to behavioural issues. Where we can, we will make sure such kittens get to join a stepfamily, but in cases such as Snake’s, illness means that isn’t always possible. It is then up to our human team to work with these little ones to help them learn to navigate the world with good manners! In contrast, Banjo had all the behavioural benefits of his brother but alas at seven weeks of age Banjo weighed only 560 grams while his brother Clancy weighed 900 grams! Banjo was diagnosed with a rare form of congenital hypothyroidism. Because his condition was diagnosed early, his prognosis is very good. He was started on a medication called Thyroxine and went back into foster care so that we could monitor his progress and adjust the dose of his medication as necessary with follow-up blood tests. After six weeks in foster care, Banjo graduated to the adoption centre. He will need to be on Thyroxine for the rest of his life, but that didn’t daunt his new family who’ve told us Banjo is now thriving in his loving forever home. From individualised TLC and veterinary care for every cat and kitten, to helping human clients resolve cat challenges (from furniture scratching to strata bans) and strategic research and advocacy on behalf of people and cats, Cat Protection’s impact is so much greater than our budget. As an independent registered charity for cats, we’re dependent on donations and bequests to do our work. We are compliant, open and transparent; on our website you can see our audited annual reports for details of what we do and what it costs. We have a strict “no harassment” fundraising policy which means under no circumstances will your information be sold on, and we do not employ pressure-tactics or door-to-door solicitations. We don’t spend money paying fundraising companies to ring you at dinner time asking for money or send you five-page long letters insisting you give more. And we never will. Donations are invested in helping our feline friends and nurturing the unique bond between cats and people. Your generosity will mean that we can continue to help thousands of cats and people each year. If you can lend a paw, please <a href="https://www.givenow.com.au/catprotectionsocietynsw" target="_blank" rel="noopener">make your tax-deductible donation here</a>! For general advice on cat care and everything feline, call the Cat Protection Society of NSW on 02 9557 4818 or visit <a href="https://catprotection.org.au/" target="_blank" rel="noopener">catprotection.org.au</a> Images: Supplied. This is a sponsored article produced in partnership with the Cat Protection Society of NSW.

Family & Pets

ATO cracks down on landlords submitting dodgy tax returns

The Australian Taxation Office (ATM) has plans to crack down on landlords submitting dodgy tax returns after an interview found nine in 10 made mistakes and wrongfully claimed expenses. Those working at home, including those who run home-based businesses and people who earn via short-term rental sites like Airbnb or Stayz, will also be under the thumb this year to file returns correctly, in a new bid to eliminate tax fraud. The review comes in the wake of a major funding boost to the ATO, announced in the 2023 federal budget, which saw an $89.6 million injection. The ATO claims there was a tax gap of $9 billion in the 2019-2020 financial year. Taxpayers paid 94.4 per cent of the whole amount theoretically owed to the Commonwealth, with deductions for rental expenses, including those incorrectly claiming negative gearing deductions, contributing $1.4 billion to the gap. Australian Tax Commissioner Tim Loh said the ATO will be taking action in 2023. "We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return," Loh reportedly told The Age. "You can only claim interest on a loan used to purchase a rental property to earn rental income – don't forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income.” Loh warned Australians who work from home and advised against the “copy and paste" tax return method. He said, ” We know a lot of people are working back in the office more compared to last year”, and the method the ATO uses to calculate working from home expenses has now changed. Image credit: Shutterstock

Money & Banking

The Long and Winding Road

Road-trip preparedness. If you're planning on taking a road-trip for your next holiday, think beyond your standard checklist. Snacks, music and emergency kits are necessities, but pre-planning and forget-them-not extras will make for smoother trails ahead. <span style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; font-weight: 600; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">Safety Don’t wait until the last minute to have your car tuned up if you’re taking your own. Many a trip has been delayed or cancelled due to maintenance issues. If you haven’t already got roadside assistance, sign up with your insurer. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">The right ride Is your vehicle ideal for your trip? For maximum convenience, find one to match your itinerary. Opt for a fuel-efficient car for longer trips or get an all-wheel drive or four-wheel drive if you’re planning to explore back roads. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">Insurance If you already own a vehicle but are choosing to rent another for the trip, talk to your insurance provider about adding to your plan if you’re not already covered. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff; text-align: center;">PACK SMART <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">A road atlas You’ll probably bring a smartphone or GPS unit, but electronics can get lost or break down, and there are always some spots where you can’t get a signal. Road atlases never fail. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">Stand-up comedy When road trips don’t go as planned, moments of levity are scarce. Funny CDs or podcasts from your favourite comedian will release tension. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">Refreshers Wet wipes, travel-size deodorant and a small spritzer bottle full of water can bridge the gap until your next shower. <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;"> <p style="box-sizing: border-box; border: 0px; font-family: Raleway, sans-serif, Arial; font-size: 16px; margin: 0px 0px 20px; outline: 0px; padding: 0px; vertical-align: baseline; color: #444444; background-color: #ffffff;">Sports equipment A Frisbee, skipping ropes or bocce balls will motivate you to take regular breaks and get your blood flowing. Image credit: Shutterstock This article originally appeared on <a href="https://www.readersdigest.com.au/travel/road-trips/long-winding-road" target="_blank" rel="noopener">Reader's Digest</a>.

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Tax boost announced for 1.2 million people

Stage 3 stacks up: the rejigged tax cuts help fight bracket creep and boost middle and upper-middle households

"Proud to pay more": The billionaires who want to pay more tax

myTax is fast and free – so why do 2 in 3 Australians still pay to lodge a tax return?

Can you lend a paw this tax time to help cats in need?

ATO cracks down on landlords submitting dodgy tax returns

The Long and Winding Road

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