JobKeeper - thegoodwills.com

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.

jobseeker-unemployment — Contrary to popular opinion, almost half the people in this study relied on NewStart (now JobSeeker) for less than a year. Graphic courtesy of Wes Mountain and The Conversation.

You know how it goes. You’ve finished ferrying 16 items down the checkout conveyor and the assistant says: $142.99 – cash or card?

“How do the poor people get by?” I ask of no-one in particular.

Later, I went to the butcher ($47) and the organic fruit and vegetable shop ($56), all up $245.

She Who Pays the Bills said: “But we only needed a few things”.

Now if we were on unemployment benefit, such profligacy would leave us with just $375 to cover the next 13 days (rent, bills, fuel and more groceries).

It is timely to write about the cost of living, and how the reality appears quite different to the official inflation rate (1.2% in December). The Federal Government’s superficially successful $100 billion wage subsidy programme (JobKeeper), ends on Monday. Businesses that claimed JobKeeper passed on the subsidy to people they employed, regardless of how turnover and profit was tracking through the year that the programme was in place.

The last day of March also signals an end to the scaled-down Covid-19 supplement paid through JobSeeker. In the first few months of its origins, JobSeeker initially doubled the benefits paid to unemployed people.

JobSeeker, which replaced NewStart and associated benefits from March 21, 2020, introduced three levels of supplements paid through the first year of the Corona virus. From April 27 2020 to September 25, recipients were paid $550 extra a fortnight. This was then reduced to $250 extra per fortnight until December 31, 2020. The final supplement of $150 a fortnight was paid from January 1 until it ends next week.

Welfare groups had long lobbied the government to raise the unemployment payment beyond the poverty level.

The government made much of its decision to raise the rate paid to those on JobSeeker by $50 a fortnight ($3.57 per day).

As of next week, welfare recipients will have to learn to live without the additional $150 a fortnight – reverting to $620 a fortnight, excluding other payments like rental assistance*.

Economist Ross Garnaut’s latest book proposes that successive Federal governments, in cahoots with the Reserve Bank, have deliberately kept unemployment high since the mid-1980s. He writes that governments have ‘allowed’’ hundreds of thousands to languish in unemployment as a means of pursuing a policy to suppress wage growth and inflation.

Garnaut says this deliberate policy has ‘immiserated’ people.

He told ABC business reporter Gareth Hutchens that Australia should use its many resources to push the unemployment rate down to 3.5% by 2025. You may not remember, but unemployment was at this level or lower for decades between 1950 and 1975. This was an era when many Australians had permanent jobs in factories that made things.

Garnaut says the government and Reserve Bank have to stop guessing the level of ‘full employment’ (at which point the RBA starts lifting interest rates, as a means of combating inflation).

He says the budget deficits needed to sustain full employment should be funded directly or indirectly by the Reserve Bank. It is complex, but if you are interested, read more here.

The Conversation’s in-depth study of unemployment benefits busts a few myths. Research by a team drawn from the Brotherhood of St Lawrence, RMIT and ANU studied benefit payments between 2001 and 2016.

The premise of the report is that Australians receiving unemployment payments are often portrayed as “a relatively small group of people with personal or behavioural problems that stop them from getting a job.”

The research was conducted to challenge long-held perceptions of ‘us and them’.

One of the most startling conclusions clarifies myths about the long-term unemployed. The research found that nearly half of the Newstart population of 4.4 million (47%) received the payment for less than a year. Over two-thirds (68%), received it for less than two years. The study uncovered a concerning trend in the number of welfare payments suspended for not reporting income correctly or not meeting job-seeking targets.

“Our study found rates of suspension increased dramatically over the study period, from 2% in 2001 to 11% to 2016.

“Successive governments have increasingly sought to enforce this, leading to more uncertainty around the payment”.

So, while the unemployed go forward living on a minimum $44 a day, how will things go with the end of JobKeeper, the flawed business subsidy scheme which kept 3.5 million people off the dole queue?

As business editor Ian Verrender noted in an analysis for the ABC, JobKeeper turned into a profit mill for businesses that boomed during the lockdown. Billions of taxpayers’ dollars were paid to wealthy businesses, without the mutual obligations associated with welfare. The only reason we know about this at all is the corporate regulator’s belated decision to force listed companies to disclose their taxpayer handouts in the December half corporate results.

Verrender, an investigative scribe, laments the lack of a public register of JobKeeper recipients – “despite the scheme being among the most ambitious (of its kind) in the world”.

But it is not just the blue chip public companies that scored a windfall; tens of thousands of private partnerships, sole traders, charities and small to medium-sized businesses also prospered.

Many of the heads of Australia’s biggest businesses feature in the timely release of the Top 250 Rich List by the Weekend Australian. I say timely because it suits my purposes to mock the rich. What else can you do when the 250 individuals named in this list are collectively worth (in monetary terms- Ed.) $470 billion. As former journalist union chief Christopher Warren wrote in Crikey – that is equivalent to 25% of Australia’s GDP. Even the lower echelons on this list have a net worth of $450 million or more – $449 million more than the collective net worth of your average self-funded retiree couple..

Wish, the glossy magazine lift-out supported by full-page ads by Mercedes Benz, Cartier, Giorgio Armani and the like, is a supreme example of what The Australian calls ‘aspirational’ journalism.

For those on JobSeeker who aspire to getting best value from that extra $50 per fortnight, here’s a slow cooker recipe for lamb forequarters (large chops that are too tough for the barbeque). You can probably score a kilo for $15 or so. Buy 1.5 kilos each of onion, carrots, potatoes and the cheapest green vegetable (about $10 all up). Add a can of red kidney beans ($1.67) to flesh it out and cook the lot in a slow cooker while you are out applying for one of the 15 jobs a month needed to justify your welfare payment.

If you chucked in the right combo of herbs and garlic and made a gravy worthy of ‘Sir’ Paul (Kelly), the lamb will just fall off the bone and you’ll be eating this for days.

Buy an $8 bottle of red while you still can (he said, one eye on the coming of the cashless welfare card). Invite someone over (‘a loaf of bread would be great, thanks’).

Enjoy every casserole.

Tag: JobKeeper

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