Tag: Barnaby Joyce

A Special Day For Accountants – And Mike Tyson

accountant-beancounter-June 30
Beancounter is a term used to describe accountants and economists chiefly concerned with fiscal matters and budgets

I might not have thought about this tax topic had not a reader emailed to gently remind me that Barnaby Joyce is not a farmer, as I said last week, but an accountant.

I could be forgiven for being lured in to that way of thinking by the way Barnaby portrays himself to the electorate. He loves a photo opportunity down on the farm, wearing the big hat and looking suitably weather-beaten. Barnaby does come from a large family of sheep and cattle farmers, but he did indeed go to university and study to become a Certified Practising Accountant (CPA). He founded his own firm in St George and ran it from 1991 to 2005.

So he might even now have some muscle memory of the tension that bean counters suffer as June 30 approaches. As we all should know, that is the lucky last day to finalise business books for the year and start afresh on the morrow.

It’s called a fiscal year, this aberration which ignores the orthodox calender and creates a ‘financial year’. In Australia and a dozen other countries, the fiscal year runs from July 1 to June 30. We are in a minority, however. Fiscal years in other parts of the world run from October to September (US), April 6 to April 5 (UK), January to December (much of Europe), April to March or variations on the theme. Some countries (New Zealand and Singapore for example), use different dates for government and other taxpayers.

Fiscal years are set by Federal governments and most State and local governments and companies follow suit.

It’s not mandatory, though. Some Australian companies stick to a January-December fiscal regime, in the main to line up with overseas partners or subsidiaries.

June 30 is the big stick held over trustees of Australia’s 595,000 self managed super funds, the carrot being the opportunity to draw a pension on July 1. The stick is meant to encourage trustees to do the right thing, less they be audited, fined or penalised for operating outside the terms of the trust deed.

But perhaps your super is in one of the 220 large super funds regulated by APRA and you can leave the detail to someone else. Lucky you.

More comebacks than Mike Tyson

Accounting standards aside, we could mark June 30 for a variety of different reasons, such as birthdays. Retired boxer Mike Tyson, former AFL player Ben Cousins and decorated US swimmer Michael Phelps shared a birthday on Wednesday.

On June 30, 1937, the world’s first emergency phone number (999) was launched in London. In 1990, June 30 saw the merging of East and West Berlin’s economies. In 1997, the UK transferred sovereignty of Hong Kong to China, ushering in an era of political instability and domestic anxiety. In 2019, Donald Trump became the first US president to visit North Korea: to what end was never fully explained.

The end of the fiscal year also ushers in a few predictable campaigns by charities, urging their benefactors to give generously (so you can claim a tax deduction). Likewise, the retail sector gears up for EOFY sales. This time round, the Delta strain of Covid-10 is playing havoc with the sales campaigns of Sydney and Brisbane retailers.

As June 30 approached, you may have noticed a rise in the level of 7pm nuisance calls from numbers started with 02 something. Scammers were out and about in June, pretending to be the ATO, pretending to be from the national broadband network (yep, she’s still out there), or just being prats.

Wikipedia has a voluminous entry (5,000 words or so) dedicated to the fiscal year as it is interpreted in different countries.

Just why Australia chose July 1-June 30 is a mystery, although one could hazard a guess. Australians tend to slack off after the running of the Melbourne Cup (on the first Tuesday in November). So I just can’t see Australians poring over their household or business accounts on Christmas Eve, can you?

The song and dance about the June 30 tax deadline is ever-so misleading. Taxpayers have until October 31 to lodge their personal returns. Individuals, businesses and SMSFs using a tax agent can postpone it as late as May the following year.

A government investigation in 2009 estimated that between 1.2 million and 1.5 million taxpayers (9% of individual taxpayers), were up to three years behind in lodging tax returns. Independent researchers Colmar Brunton found there were three basic misunderstandings which accounted for much of this non-compliance:

  • People thought they were below the income threshold;
  • They were unemployed and not working and therefore believed there was no need to lodge;
  • They were on a pension or receiving Centrelink payments and therefore believed there was no need to lodge (Some pensioners and Centrelink recipients do need to lodge a return and some don’t, hence the confusion.Ed).

Although the research is 12 years old, it’s a fair bet those three   key misunderstandings are very much in play today.

The impact of Australia’s bush fires (2019-2020) and the onset of a global pandemic certainly shows up in the ATO’s 2019-2020 annual report. Commissioner Chris Jordan said net tax collections of $405 billion was down $21 billion (5%) over the previous year.

Natural disasters and pandemics not withstanding, the ATO is a money generating machine. In 2019-2020 the organisation collected gross tax of around $537 billion, and provided refunds of around $132 billion. The ATO employs 910,000 people to deal with a formidable workload. At June 30, 2020 its client base included 11.5 million individual taxpayers (not in business), 205,000 not-for-profit organisations, 36,000 public and multinational businesses, 4.2 million small businesses (including sole traders), 595,000 superannuation funds and 178,500 privately owned and wealthy groups (linked to 856,000 entities).

Not only that, 36,000 registered tax and BAS agents interacted with the ATO on behalf of their clients. And in 2020, the ATO took on responsibility for overseeing the JobKeeper scheme, early super fund redemptions and the Covid stimulus payments scheduled by Parliament. So, if you were having a hard time getting through to the ATO hotline, bear that in mind.

The ATO says 3.01 million calls were answered in the tax period (July 1 – October 31), almost double the calls received in the previous year. Of these calls, 207,741 were abandoned (6% of calls) and 485,348 calls were blocked. The average time for a call to be answered was (yes) five minutes.The ATO exceeded its phone service benchmark of 80% (87%).

Australians spend about $1 billion a year employing accountants to manage their tax affairs. The ATO has arguably made it easier to do it yourself, with much of the information (like bank interest, pensions, benefits etc), already pre-entered through data-matching. Every year at this time, law-abiding taxpayers fret about making mistakes or being late lodging their returns; or whether they will be one of the 175,000 ABNs cancelled for lack of activity.

But clearly the organisation has its sights set on much bigger targets.  In 2019-2020, more than $2.4 billion was collected in cash and another $3.7 billion in tax liabilities as various task forces investigated tax avoidance, fraud, ‘Phoenix’ companies and the black (cash) economy.

So now you can see why we (Mum and Dad taxpayers), were first asked (in 1986-1987), to ‘self-assess’ when lodging individual tax returns. It’s like hiring 11.8 million staff for a one-off (unpaid) job.

And then we get to worry about it.

FOMM Back Pages (interesting to see how the ATO workforce has grown over six years.

 

 

Heatwaves and the Winter Solstice

heatwaves-increasing-australia-
Graph by The Conversation/BOM refers to the situation in Australia)

As the Winter Solstice came and went and our wood heater consumed the last of 2020’s firewood, the US mid-west was  sweltering through an early summer heatwave.

Australia is, hopefully, at least five months away from its first hot spell. But in the US mid-west states, which have been in the grip of the worst drought in 20 years, the mercury is rising. Cue Martha and the Vandellas..

Canadian relatives had already been posting photos on social media implying a very early summer, but across the border, things are grim.

The New York Times took the opportunity to conjure up an appropriate headline  “Climate change batters the west before summer even begins”.

In Arizona and Nevada, temperatures soared to 115F (46 Celcius), which would raise eyebrows even in Birdsville. Four writers contributed to a New York Times special report last weekend as Lake Mead, which supplies water to three south-western states and Mexico, fell to its lowest level since 1930. Early wildfires are burning in Utah, Montana and Arizona, while in California communities are debating water rationing.

In Texas, power utilities are pleading with customers to go easy on air conditioning in case excess demand causes blackouts.

Moreover, the June trend appears to have surfaced in some European countries, notably France. After a freak late-winter heatwave, above-average temperatures are assailing Europe.

Those with relatives living in the Northern Hemisphere will be hoping this does not signal a return to the disastrous heatwave conditions that killed 72,000 Europeans in 2003.

Not that we are immune in Australia, where it could be easy to argue that many of us live in heatwave-like conditions for at least three months of the year. At which point I should mention it seems to matter not if it is heat wave or heatwave.

It is difficult in winter to recall how it is to live through consecutive days with temperatures in the 40s. We should take our cue from the dog, who slinks off to the bathroom and splays himself on the cool tile floor.

Scientists agree (apart from those who don’t), that climate change is accelerating the severity and duration of heatwaves. Certainly in this country extreme hot spells increased markedly between 2000 and 2020.

Australia’s weather authorities have decreed a heatwave to exist when temperatures are seven degrees higher than average in any 30-day period. A report in November last year by Ralph Trancoso and others in Science Direct summarises highlights for Australia:

  • Future heatwaves could last up to a month should global temperatures increase by 1.5% to 3% in coming years.
  • There has been major increases in the 2000’s in comparison to previous decades;.
  • heatwaves have intensified in the recent past and are projected to increase faster in future;
  • heatwaves may be 85% more frequent if global warming increases from 1.5 to 2.0 °C.

In hindsight, perhaps we should have paid more attention during Australia’s ‘angry summer’ (December 2012-January 2013). The severity of the heatwave conditions then prompted a flurry of research reports on climate change.

Climate Council chief executive Amanda McKenzie chose the ABC’s Q&A forum in 2017 to claim that Australia’s heatwaves were worsening, with hot days doubling over the last 50 years.

The Conversation put this assertion to the test, asking the Climate Council, which had recently commissioned a report, for more detail.

“Climate change is making hot days and heat waves more frequent and more severe,” a spokesperson said.  “Since 1950 the annual number of record hot days across Australia has more than doubled and the mean temperature has increased by about 1°C from 1910.

“”On average, that there are almost 12 more days per year over 35°C.” 

Andrew King, Climate Extremes Research Fellow at the University of Melbourne, said there was not a large body of research against which to test these claims.

“But the research we do have suggests there has been an observable increase in the frequency and intensity of heatwaves in Australia. A review paper published in 2016 assessed evidence from multiple studies and found that heatwaves are becoming more intense and more frequent for the majority of Australia.”

In Australia, the general population is well versed in the art of remaining hydrated in hot weather. Regardless, heat-related deaths happen here, even though it is not often stated as such on death certificates.

UK academic Professor William Keatinge says few deaths are directly caused by heat-stress, although extreme heat exacerbates medical conditions including diabetes, kidney and heart disease.  Heat stress causes loss of salt and water in sweat, causing haemoconcentration, which in turn causes increases in coronary and cerebral thrombosis.

“Other deaths in heatwaves are probably due to overload of already failing hearts, unable to meet the need for increased cutaneous blood flow in the heat.”

Writing in the British Medical Journal, Prof Keatinge said people at risk in heatwave conditions include those unable to sweat (because of diabetic peripheral neuropathy), or those taking anticholinergic drugs, barbiturates or phenothiazines, which depress reflex regulation of body temperature. Alcohol can also be dangerous in the heat, he added.

Meanwhile back in the relatively chilly southern hemisphere, Macca is due to deliver a load of ironbark firewood on Saturday morning. Even though nights have been cold here, apart from a few bleak days, it warms up to 19 or so by midday. Perfect weather to strip down to a t-shirt and jeans and shift the firewood to the shed around the back. The truth about cold snaps is you can always add another layer, crank up the wood fire or turn on electric heaters. The only real damage is to the power bill.

We do not have the same choices when weather phenomena like a heat dome pushes ‘normal’ summer temperatures to the levels usually experienced in arid places like Marble Bar or Coober Pedy (for America, read Death Valley).

The reappearance of heatwaves this summer will see a renewed focus by climate change activists on the Australian government’s inaction on climate policy.

And it’s official: Australia’s Prime Minister Scott Morrison has been formally rebuffed by the UK government, which is hosting a climate summit in Glasgow. Britain’s foreign secretary said Australia’s PM did not meet the required terms for attendance in November. The UK urged Australia to do more to reduce its carbon emissions.

It is illuminating, then, to revisit January 2020, when we were in the midst of catastrophic bushfires and a heatwave.

Mr Morrison told the media his policies on reducing emissions would ensure a “vibrant and viable economy, as well as a vibrant and sustainable environment”.

At the time, the United Nations had rebuked Australia, saying there had been no change in its climate policy since 2017. Emission levels for 2030, it said, were projected to be well above the target. The Climate Change Performance Index ranked Australia last out of 57 countries responsible for more than 90% of greenhouse gas emissions on climate policy.

Complicating matters now is the re-emergence of controversial politician Barnaby Joyce as Deputy Prime Minister. The conservative politician can fairly be described as a climate change denier. In 2012 he opposed the Labor government’s attempts to bring in a carbon pricing regime. Joyce was quoted in the SMH as claiming it would push the cost of a Sunday roast to $100. Infamously responding to public criticism of the Coalition’s environmental policies, he accepted the climate was changing, but insisted the solution was to respect God.

Heatwave? What heatwave?

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