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Our latest TaxWise Business newsletter is now available. Topics COVID-19 measures: How you might be affected, Keeper, JobMaker, Use of trading stock for private purposes, working from home or running a business from home? Knowing what you can deduct, ATO updates, small business tax offset, insolvency reforms & key tax dates.
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AFR – Thursday, 1 Apr 2021 – Page 23
Population Growing numbers of the under-40 s are joining the grey nomads and young families seeking a better life out bush; they are reversing a century-long trend of Australians moving the other way – from sleepy country towns to buzzing coastal cities, writes Fiona Carruthers.
Moving to a non glamorous inland town located a gruelling seven hour drive northwest of Sydney (which doesn’t even boast a pretentious local coffee culture yet) hardly sounds like the rite of passage for a talented young professional fresh out of a leading university.
But 23-year-old civil engineer Richard Doering was happy to buck the traditional career trajectory in rejecting a capital city job on which to cut his graduate teeth.
Rather, he voted for an Akubra over a tie; turning down a major Sydney employer to head out bush to the vast alluvial plains of NSW’s North West Slopes.
“Sydney can really suck sometimes,” he says from his motel room in Moree, where Doering moved in early March to take up a graduate engineer role on the $14.5 billion Inland Rail Project, which involves building a 1700-kilometre freight line between Melbourne and Brisbane.
“I spent the past 11 years in Sydney at school and then at UNSW – and yes it’s great, I love the city – but it’s also a limiting bubble that’s crowded and expensive. You get trapped into thinking it’s the only place to be. When this job came up in Moree, I didn’t think about it for long.”
Doering is part of a new dawn of internal migration as increasing numbers of Gen Zers and Millennials join the grey nomads and young families seeking a better life out bush; finally reversing a century-long trend of Australians moving the other way – from sleepy country towns to buzzing coastal cities .
One in five Australians is now actively considering moving to a region, with half the respondents hoping to do so in the next 12 months, a February survey of 1000 city dwellers by the Regional Australia Institute (RAI) shows.
The main cohort keen to shift is aged 25 to 40. And one-third of those are considering a small inland town – not a Byron Bay, a Mornington Peninsula, or a Margaret River.
“That was the real surprise,” says Kim Houghton, RAI’s chief economist. “With younger people, you expect their regional destination of choice to be one of the flash regional coastal towns with strong retail, entertainment and tourism elements, and of course great beaches.
“The fact young people are willing to go to the lesser-known inland towns gives me hope for all the regions,” says Houghton, who grew up in Hobart and retains a passion for outlying areas. “Young people bring colour and life: if the regions are to thrive, that’s what they need.”
Independent economist Saul Eslake has tracked the rise of the regions over the past 20 years. A perfect storm has put regional Australia in its strongest position in decades, he says: “The combination of the safety and space of the regions during the pandemic plus drought breaking (for now at least), and increasing prices for export food crops, led by meat and grains, has really changed the way Australians view the bush.”
Still, Houghton says he’s not too excited just yet; there’s a long way to go. Over twothirds (69 per cent) of Australians still live in major cities. One in five (20 per cent) live in inner regional areas; one in 10 in outer regional areas, and about one in 40 live in remote or very remote areas, the Australian Institute of Family Studies says.
The population spread reflects Australia’s 20th-century urbanisation drive, when the number of people living in rural areas shrank to 14 per cent from 41.3 per cent. The proportion of citizens employed as “workers in agriculture” fell to 4.3 per cent in 1996 from 30.2 per cent in 1911, the Australian Bureau of Statistics (ABS) says.
Until recently, one of the biggest problems would-be treechangers faced was the fact that many, if not most, country towns were solely focused on the agricultural and mining industries, leaving little scope for people outside those areas.
Over the past 30 years that’s changed as rural economies have begun to diversify, often driven by state government departments relocating to towns such as Albury-Wodonga , Bathurst and Dubbo.
More joint federal and state-funded regional infrastructure projects, such as Queensland’s $8.5 billion Brisbane-Cairns Bruce Highway upgrade, have also created new opportunities, as has the green revolution , with a $13 billion renewable energy project under way in NSW’s New England region.
Then there’s the ballooning of regional tourism; supercharged by the closure of international borders, which has left rural areas in hot demand. And the break in the drought, which has greatly improved the outlook for farmers.
Established regional universities in areas like Wollongong, Newcastle and Armidale in NSW, as well as in South East Queensland , Geelong (Victoria), and Bunbury (WA) are also doing their bit to hero the rural lifestyle , with the added benefit of a cheaper cost of living for students.
“Regional Strength. National Success” is the catchy logo of the Regional Universities Network. Demand for regional university spots in 2020 rose 3.3 per cent from 2019, compared with a 0.8 per cent decline for the group of eight universities, a federal government report shows.
Suffice to say, a far more modern face of regional Australia is quietly emerging. All it needed was a global pandemic to showcase the gradual transformation.
That regional Australia now has about 56,000 vacant jobs, due in part to the absence of international migration, is yet more grist to the mill. As citysiders move out to take up the opportunities and also to nab weekenders, regional housing prices nationwide are soaring by as much as 40 per cent, creating a new dilemma about whether the bush is now as affordable as a cheaper city suburb. Real estate agents from Queensland’s Gladstone to Renmark on the Murray in South Australia are scratching their heads. Even premiers are telling people “Go bush!” to follow the jobs.
But as a population shift finally occurs in favour of regional Australia, taking the pressure off overcrowded cities (as many governments have long advocated), there’s a catch: whether it will stick.
The more even distribution of people across this vast land – not all clinging to the coastline – will only work as a long-term solution if serious resources and infrastructure are diverted from cities to match the rhetoric. It’s a cash-flow diversion that most governments have ultimately deemed a bridge too far given the greater voter clout in densely populated areas.
“This is a watershed moment for the regions,” says Houghton. “For all the talk for years now, there’s one question left on the table unanswered: Do governments have the guts to fund this?”
COVID-19 has basically turbocharged a population trend visible to demographers since 2011, when, for the first time in about a century, more people moved from city centres to regions than vice versa, census data shows.
Between 2011-2016 , regional Australia had a net inflow of 65,204 people, meaning outlying areas finally attracted more people than they lost to the capital cities. RAI’s recent report, Big Movers: Understanding population mobility in regional Australia, tracks this shift.
Even though COVID-19 killed overseas migration in the past year – the traditional driver of regional population increases – the trend has accelerated.
From June to December 2020, more than 22,000 people shifted to a regional area, provisional ABS data shows. In the last September quarter, a net 7782 people left the Greater Sydney region, three in five of them moving to a regional part of NSW. The pattern was repeated in Victoria, where Melbourne lost a net 7445 residents. This represents the biggest quarterly movement out of metropolitan Australia on record.
The number of 15 to 24-year-olds leaving Sydney in the September 2020 quarter soared almost tenfold year-on-year .
The RAI’s Big Movers report, drawing on Census data, also zeroes in on the Millennials as part of the great shift. Separating out those aged 20 to 34 years, more of them were still moving from regions to cities. But the gap is fast closing; as of 2016, the net outflow from the regions was just 31,999.
“Even for young people, the tide is turning , and that’s not just ‘returners’ – those who grew up in the country, only leaving briefly for education,” says Houghton.
Over that same 2011-2016 period, 207,510 Millennials moved between regional towns, supporting the theory they will stay regional if they can find work and services.
Call it the rise of the second- and third-tier regional towns.
“You’re seeing well-developed towns, such as those around the central west of NSW, virtually at capacity, meaning the next country towns can now come through,” says Houghton.
“The same thing is happening in Victoria, where the typical ‘seachange’ towns like Daylesford and Apollo Bay are really reaching capacity, pushing Melburnians to look at the new emerging districts.”
In Western Australia, attention has shifted from Margaret River to the likes of Denmark and Albany, he says, while in South Australia he tips Burra and Clare Valley as positioned for more growth given how big Mt Gambier has become.
“Things are so tight in a lot of regions in SA, I get calls along the lines of: ‘Please don’t talk about us as a good destination to move to; housing is at capacity, we can’t take any more people.’”
It’s not quite so in Moree, an old-style Aussie time-warp of a town, where the most expensive hotel room on the main street will set you back about $150 a night, and the local pubs still do a roaring trade in “surf & turf” meals, with a side of cold beer.
Unlike the boutique NSW country towns of Mudgee and Orange – awash with elegant vineyards, alpaca farms and art galleries – Moree is more down to earth, with a current median house price of $210,000, well below the NSW average of $735 000. But lack of regional posh didn’t deter Richard Doering.
He might not have lived in the region since he was 11, but the desire to get out bush was strong. Besides, the inland rail job he took with the Australian Rail Track Corporation (ARTC) was paying the same base wage as the Sydney-based grad role he’d also been offered with Johnstaff, the management and delivery service company.
“A few of my mates were surprised by my decision,” says Doering. “Everyone expects you to stick to the ‘Sydney’ plan. But I grew up out bush –and I missed it.”
Another bonus is he has the option to travel to Sydney once a month given he works 14-day straight shifts, earning him each third week off. “I’m not sure how much I’ll end up utilising that option,” Doering says, adding “there’s so much to do out here, I’ve been pleasantly surprised, and the town has lots of people aged under 25.”
There’s even some decent coffee if you know where to go.
Doering’s experience is borne out by the recent population history of the Moree Plains area, which recorded 13,350 residents on June 30, 2018. Given that represented growth of 1.5 per cent after the steady 2001-2016 population decline, it was a case of stop the local presses.
How did Moree achieve this? In one of many local newspaper interviews she did at the time, Moree Mayor Katrina Humphries pointed out it wasn’t rocket science.
The town has “good transport links to Sydney and the highways are being upgraded” she said, plus there is enough drinking water in Moree to support 20,000 people. The housing market is affordable, there are more “professional companies” moving into town, and 30-somethings who grew up in the area and appreciate the “delightful lifestyle” were moving back to raise their kids, resulting in a record number of preschool enrolments.
Adam Marshall, the member of state parliament for Northern Tablelands, which takes in Moree, said his entire region was growing, pushing the population past the 80,000 mark (in 2018) for the first time.
“In the past, growth has been inconsistent across our region, but now every single community firmly is on the move,” Marshall says.
Sitting in Canberra looking at the data and sifting through the anecdotal stories, Houghton points out while the pandemic has kicked along this migration back bush, how long it will last remains uncertain.
“It’s a good news story at the moment, but the point is many regions are still crying out for services and infrastructure. Will governments finally get real and fund regions to not only survive, but to thrive? Without young people, there’s no future, and without jobs and services, there’s no young people.”
Another Gen Z case study, 23-year-old nurse Ellen Vincent, who moved to Orange last year, exhausted by working for two years in Sydney’s St Vincent’s Emergency Department – is learning in real time what Houghton means.
“My move was motivated by the pandemic and sleep deprivation,” Vincent says. “I moved here not having ever lived in a region, nor did I know a soul. If COVID-19 has taught me anything, it’s to stop waiting around for ‘the perfect time’ to do something .”
Not even six months since her move, Vincent says she can see herself living in regional Australia for good: “I love how short my commute to work is. I love how there’s no traffic , or tolls, or road rage. I love how the cost of living is cheaper. I love how easily I can make plans with friends. And as cliched as it sounds, I love the wide, green spaces and being able to see so much sky.”
But like so many youngsters heading bush to establish their working lives, she’s alarmed by the lack of resources, from education to medical to business.
The federal government appears to be serious about closing the gap.
Of the $110 billion allocated in last year’s budget to infrastructure investment over the next 10 years, more than $36 billion will be spent in the regions.
Infrastructure Australia welcomed the budget, pointing out that more than 50 per cent of the investment opportunities on its 2021 Priority List benefit regional communities , versus 25 per cent in 2016.
Romilly Madew, CEO of Infrastructure Australia, points out priority lists need cash on the table to get up.
“All Australians should have access to affordable, high-quality infrastructure services .
“COVID-19 has seen a 200 per cent increase in regional migration. We desperately need to direct more funds to provide infrastructure to both the regions that are experiencing the growth, and to those that are primed to grow. We need to be targeted.”
A recently released report, Infrastructure beyond COVID-19 : A national study on the impacts of the pandemic on Australia says it ‘‘ has exposed deficiencies in the network for suburban and regional areas as more people work remotely.”
The looming population data is challenging , with Sydney, Melbourne, Brisbane and Perth all set to double their populations by 2050.
“Sydney at 10 million will be a very different city to Sydney at 5 million,” Houghton points out. “Will you want to live there once that happens? I know I won’t .”
Doering agrees: Sydney and Melbourne are crowded enough. After making the shift out west, it’s hard to imagine now reversing it. “You just notice every day how much more relaxed you are,” he muses. “I’m intrigued by country towns. Sure we might not get as much funding and infrastructure as a big city, but when the community pulls together on something, we do more than alright.”
Copyright © 2021 The Australian Financial Review
As part of the Federal Budget 2020-21, the government announced a loss carry back measure to encourage new investment and work with the temporary asset expensing measures also announced at the budget.
The new law started on 1 January 2021.
Eligible corporate entities that previously had an income tax liability in a relevant year, and have subsequent losses, can claim a refundable tax offset up to the amount of their previous liability.
The measure allows significant tax losses, which may then be carried back to generate cash refunds for eligible businesses.
Who is Eligible?
There are specific guidelines about eligibility, integrity, and tax offset calculation. We can talk to you about whether you can use the loss carry back measure to benefit your business.
You can only claim the tax loss once, in either the 2021 or 2022 financial year, so it’s important to get advice about how and when to apply this measure for your business. To claim the tax offset, the ATO must be notified before lodging the company tax return that year.
Article taken from AFR March 4 2021
Depending on your age and how much you’ve already got in retirement savings, after July 1 the new pre-tax cap will be $27,500 and the after-tax cap $110,000.
From July 1 this year, you may be able to boost your superannuation savings and have more for retirement because the contribution caps are going up.
A month ago, we learnt that the general transfer balance cap (TBC) – the limit on the amount you can transfer into the tax-free retirement phase in super – is increasing from $1.6 million to $1.7 million on July 1.
Now, following the release of the Average Weekly Ordinary Times Earnings figure on February 25, the limit on the amount you may get into super will also increase – the first time this has happened since the new superannuation regime started on July 1, 2017.
From July 1, 2021 the concessional contributions cap is being indexed from $25,000 to $27,500.
These are pre-tax super contributions and include an employer’s compulsory award and Superannuation Guarantee (SG) and additional voluntary contributions – including salary-sacrifice – and personal contributions you may make for which you claim a tax deduction.
For people making voluntary pre-tax contributions, the increase in the cap for the 2021-22 financial year onwards will mean a bigger deduction and tax saving.
Be mindful that if you are a wage earner and your employer pays the super fund’s administration fees and/or insurance premiums on your behalf, these amounts also count towards your cap.
The SG rate is legislated to increase from 9.5 per cent to 10 per cent from July 1, but there is considerable lobbying within the Morrison government in the wake of the COVID-19 crisis to delay this increase yet again.
So if you’re a wage earner, the opportunity to make increased voluntary concessional contributions from July 1 will be partly absorbed by the increase in your employer’s SG contributions, provided the government doesn’t delay it.
If you want to use the carry-forward rule this financial year – that is, you intend making additional contributions by utilising unused cap amounts from previous years – then you can only do it where you didn’t utilise the full $25,000 cap in 2018-19 and/or 2019-20, and your total superannuation balance – the total of everything you have in the super system – at June 30, 2020, was less than $500,000. The opportunity arises from unused cap amounts from previous years and until July 1 this year, the concessional contribution cap is $25,000 a year.
The higher $27,500 cap does not come into play until the 2021-22 financial year.
If you wish to use the “contribution reserving strategy” in June this year to claim a larger tax deduction in 2020-21, then be mindful that the maximum deduction may be $52,500 (up from $50,000) with the second contribution now being up to $27,500 because it’s being tested against the cap in 2021-22 – and don’t forget to allocate this contribution by July 28.
From July 1, you may be able to get more into super by way of making personal after-tax contributions as these are going up too.
The non-concessional contributions cap – currently $100,000 – is four times the concessional contribution cap. Accordingly, with the concessional cap increasing to $27,500, the non-concessional cap will increase to $110,000.
With the TBC increasing to $1.7 million from July 1, it means that if your TSB on June 30, 2021 is less than $1.7 million you may be able to make after-tax contributions of at least $110,000 next financial year (ie, in 2021-22). Without indexation of the TBC, you would have been unable to contribute if you had between $1.6 million and $1.7 million in super.
Your TSB also determines your entitlement to use the non-concessional bring-forward rule to get more into super. So, combining both the higher non-concessional cap and TSB amount, it means that if you did not trigger a bring-forward arrangement in either 2019-20 or 2020-21 and your TSB is less than $1.48 million at June 30, 2021, then you may be able to contribute up to $330,000.
If you have $1.48 million to less than $1.59 million, then you may be able to contribute up to $220,000. Otherwise the maximum you can put in is $110,000. Of course, if your TSB is $1.7 million or more, you cannot contribute at all.
Your eligibility to contribute to super is dependent on your age. Anyone under 67 may contribute, but if you’re 67-74, you must meet the work test (40 hours of gainful employment in 30 days) or work test exemption to contribute.
The work test exemption may be used to contribute to super – provided you haven’t used it before – where you had no more than $300,000 in super at the previous June 30 and you met the work test in the last financial year.
You cannot contribute after 28 days after the end of the month in which you turn 75. Only employer-mandated award and SG contributions can be made.
While the age to make super contributions without meeting the work test or work test exemption has been extended to people aged 65 and 66, the extension of the non-concessional contribution bring-forward rule for people in this age group hasn’t – yet. Unfortunately, the legislation allowing those aged 65 and 66 to use the bring-forward arrangements is still sitting in Parliament.
Until it becomes law, only those under 65 at July 1 can avail themselves of the bring-forward rule. So those aged 65 and 66 may be stuck with making non-concessional contributions of only $100,000 in the current financial year and $110,000 in 2021-22 if it’s still not law.
In all likelihood it will go through Parliament – it’s only a matter of time – so keep an eye out if this applies to you.
Note that the age restriction, work test and TSB test don’t apply to downsizer contributions.
The long-awaited indexation of the contribution caps and the transfer balance cap is a breath of fresh air for the superannuation system. It was hoped that it would have occurred last year – but didn’t. So it is great news it’s finally happening this year.
Update your ABN details to ensure notifications in an emergency
Did you know that government agencies use Australian Business Number (ABN) details to identify individuals and businesses in communities affected by emergencies or natural disasters?
This can happen any time and any season, so we encourage you to keep your Australian Business Register (ABR) details up-to-date. This enables immediate emergency services assistance and ensures affected businesses are contacted in the event of crisis.
Details to Update
Check that your recorded names are correct – If you have legally changed your name, you should update that with the ATO so that the correct legal name is linked to your ABN.
Email address – This should be one that you can easily access from your phone or other means during an emergency.
ANZSIC code – It’s a good idea to check that this is correct for your business type, in case your business services have changed since you registered your ABN.
Business address – This is essential to update, so that if an emergency or natural disaster affects your area you are contacted.
Additional business locations – You can add multiple locations if your business operates from more than one premises.
Authorised contacts for the business – Consider adding more than one contact for the business.
Business, Individual and Company Names
Name changes can’t be updated on the Australian Business Register. If you need to update a business name, a legal individual name or a legal company name, talk to us about liaising with the ATO or ASIC on your behalf to update your details.
Update Your ABN Details Now
Changes made to the ABR reflect immediately. It is always important to keep ABN details up to date, but for businesses in disaster prone areas, it is especially crucial as this can make all the difference with getting help quickly. Emergency services can access contact details from the ABR, which means affected businesses can get important updates and assistance from emergency services without delay.
Visit the ABR to update your ABN Details or contact us if you would like us to review, update and submit these details on your behalf.
The JobMaker Hiring Credit scheme is designed to encourage businesses to employ additional young jobseekers aged 16-35 years. The hiring credit subsidises an increase in employee headcount.
Eligible employers can receive the hiring credit for up to 12 months for each eligible employee engaged between 7 October 2020 and 6 October 2021.
Registration for the scheme has been open since December 2020. Employers can still register for the scheme now, even if you have already put on eligible workers since 7 October last year.
Is Your Business an Eligible Employer?
Various factors must be satisfied for an employer to receive the hiring credit payment, including:
The business must also satisfy payroll and headcount increase conditions by proving new employment positions have been created.
JobMaker Claim Periods
There are eight JobMaker claim periods available for the scheme from 7 October 2020 to 6 October 2022. Single Touch Payroll reports must be submitted three days before the end of each claim period. Employers must also complete claims electronically through ATO online services.
The ATO JobMaker Hiring Credit scheme webpage has more detail about the scheme, including a calculator spreadsheet to estimate payments you could receive.
Want to Check if You can Receive the Credits?
The headcount rules are important to understand before registering for the scheme. If you are unsure of your eligibility contact us to discuss whether your business can access the hiring credits, and we’ll make sure your business can verify the payroll increase. We can also take care of the ATO reporting and claiming process for each JobMaker period on your behalf.
Our latest TaxWise Business newsletter is now available. Topics covered include; JobMaker hiring credit, JobKeeper, What the ATO has been up to, including trading stock taken for private use, online sales and vehicle registrations – data-matching, ATO prosecutions, insolvency reforms, $10,000 + cash transactions and key tax dates.
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We are seeking a self-directed, authentic, and focused senior accountant to join our Dubbo team. You will have a strong knowledge of tax compliance, accounting skills and problem-solving abilities. We offer;
Reporting directly to a Partner, your role will be to:
You will be an integral part of a high performing and professional team, in a people focused business. We believe and are motivated by support for each other, service to clients, and “making a difference”.
An attractive remuneration package is on offer for the right candidate.
To apply, please submit your resume and a cover letter outlining what you will bring to the position. For further information contact Pete Debus or Elizabeth Mitchell on 02 6885 5788 for a confidential initial discussion.
The NSW budget champions a business-led recovery, supporting businesses to grow, invest and create jobs in their local communities.
Highlights for Business
Payroll tax thresholds and cuts:
The payroll tax threshold will be increased to $1.2 million with the rate of payroll tax lowered from 5.45 to 4.85 per cent for the next two years. The threshold increase alone will deliver an annual saving of $10,900 (for businesses above the new threshold), with further savings over the next two years due to the lower rate. Recent Business NSW advocacy has resulted in a $450,000 increase to the threshold, saving the typical business close to $25,000 and exempting thousands of businesses from payroll tax.
Dining and entertainment vouchers:
$500 million will be allocated to deliver four $25 vouchers to every NSW adult to spend at entertainment and hospitality venues. This measure will provide a much-needed temporary boost to customer demand in some key parts of the economy that are struggling.
Fee relief for SMEs:
SMEs that do not pay payroll tax will receive a $1,500 digital voucher to use against the cost of NSW Government fees and charges. These vouchers will be accessible online through the MyService NSW portal and work as a rebate, meaning a claim for the voucher is made after the fee has been paid. The vouchers will be available for use from April 2021 to June 30, 2022.
Under the $250 million Jobs Plus program, businesses that create more than 30 jobs will be exempt from paying payroll tax on any additional jobs beyond this threshold for four years. This policy is aimed at attracting new investment in NSW, including businesses looking to expand or relocate to NSW.
In addition to existing drought and bushfire relief, regional NSW will benefit from $8.7 billion in regional road and transport infrastructure spending. The Regional Growth Fund which provides funding for community upgrades and projects, has been expanded by $300 million. More than 90 new and accelerated regional projects totalling $1.8 billion have been supported by the Jobs and Infrastructure Acceleration Fund.
Skills and education:
$80 million will be allocated to support the creation of new apprentices, trainees and cadets on social housing projects delivered by the NSW Land and Housing Corporation. Women will be supported by $5,000 grants for training and support to return to the workforce while $17 million will be spent for upskilling, mentoring and job matching for people working in the care economy.
Property tax reform:
Business NSW has long advocated for the need for state-based tax reform. In a significant advocacy result, the Treasurer announced a proposal for property tax reform with a plan to replace stamp duty with an annual tax on land value. Under the proposal, homebuyers would be able to choose whether to pay stamp duty or the new land tax. The Government is seeking stakeholder feedback on the proposal.