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NEWSLETTER JULY 2012

Peregian Accounting Services
Unit 3 12 Grebe Street
Peregian Beach Q 4573
Happy Financial New Year 2012-13!

A lot of new legislation came into operation on 1 July 2012, and it will be interesting to see how it all washes out at the end of the year. If you are a wage earner paid weekly or fortnightly, you might already have noticed a slight change in your take-home pay as a result of the increase of the tax-free threshold to $18,200 and slight changes in some of the tax brackets.

Impact of a Carbon Price on the Australian Economy

The UNE School of Business, Economics and Public Policy released a paper last year, The Impact of a Carbon Tax on the Australian Economy: Results from a CGE Model (Siriwardana, Meng & McNeill), using a model different from the Commonwealth Treasury's to predict the impacts of a carbon pricing scheme on the Australian economy.

What they found by using their model, which includes details of tax policies, energy uses and emissions, was that in the short run:

  • Australia's real GDP may decline by 0.68%
  • Consumer prices may rise by 0.75%
  • Average household prices may rise by $13.18 per week, with electricity comprising $6.64 of this rise (as opposed to Treasury modelling of $9.90 rise, with electricity comprising $3.30 of this rise)
  • The price of electricity may increase by about 26%, but that
  • Energy consumption may decline 2.65%, and
  • Australia may stand to make a substantial cut in its CO2 emissions; perhaps a 12% reduction in its first year of operation
The main macroeconomic effects of a $23/tonne price on carbon in Australia using their model are summarised below:

VariablePercentage change
Consumer Price Index (CPI)0.75
Price of electricity26.10
Nominal wage rate0.75
Real wage rate0.00
Real exchange rate-0.75
Price of exports0.32
Price of imports0.00
Terms of trade0.32
Gross Domestic Product (GDP)-0.68
Real household consumption-0.14
Volume of exports-3.00
Volume of imports0.11
BOT contribution to GDP (real)-0.56
Aggregate employment-0.98


The authors conclude that their calculations show an environmentally valuable reduction of CO2 emissions through a carbon pricing scheme is achievable without major disruptions to the economy. What they call attention to, however, is the impact on low-income households. What remains to be done is to incorporate that effect of compensations to low-income households into their model.

Peregian Beach near our office
Peregian Beach near our office
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Peregian Accounting -
Adaptive Accounting

Web:www.adaptive.net.au
Email: info@adaptive.net.au
Phone: 61 7 5448 1218
Fax: 61 7 5448 1221



Upcoming Due Dates

  • July 21 : June 2012 monthly activity statement lodgement due date (only for those on monthly reporting cycles).
  • July 28 : June 2012 quarterly Superannuation Guarantee payment due date, for claiming a deduction in 2012-13 tax returns.
  • July 28 : June 2012 quarterly activity statement lodgement due date (only for those lodging by paper form).
  • August 21 : July 2012 monthly activity statement lodgement due date (only for those on monthly reporting cycles).
  • August 25 : June 2012 quarterly activity statement lodgement due date (for those lodging electronically).
  • September 21 : August 2012 monthly activity statement lodgement due date (only for those on monthly reporting cycles).

Wills, Advance Health Directives, Power of Attorney, and Binding Death Nominations

What will happen to your assets and the people in your care if you were to die, or become incapable of caring for yourself? Did you know that planning for these circumstances can involve more than writing a will?

The most familiar form of estate planning is creating a will. Wills are legal documents in which you detail how you want your estate (that is, your net worth, or what you have left of your assets after paying your liabilites) to be distributed after your death. They allow you to nominate an Executor to make sure your wishes are complied with. Even if you don't think you have much to your name, wills are still important and everyone over the age of 18 who has the capacity to make a will, should make one. This is because wills provide opportunities not just to determine what will happen to your estate after your death, but also what happens to any children or people with disabilities in your care. It also gives you the capacity to donate parts of your estate to charitable or philanthropic organisations.

Wills can take many forms: they can be drafted by solicitors, they can be made for free with the Public Trustee of Qld (although this establishes them as Executor of your will, and a fee will be deducted from your estate for this service), they can be created using self-service kits available for a small price from newsagents and the post office, and they can even be self-drafted. In order to be a valid will it must simply be in writing (including handwritten, typed or printed), signed by you, and witnessed by at least two witnesses. Each witness must be present when you sign the will, and they must also sign in your presence, but both witnesses do not have to be present at the same time. Once created, it is recommended that your will is stored somewhere it will be easily located upon your death. This could be the solicitor's office, the Public Trustee, a close relative, a safety deposit box, etc. It is not recommended you keep your will at your home.

As your life changes, so should your will. Important stages for updating your will are:

  • Getting married or entering a de facto relationship
  • Separating or divorcing
  • Birth of children or grandchildren
  • Change in your financial situation, such as purchasing or selling a house
  • Death of a beneficiary
  • If you decide to add or remove a beneficiary because of a change in your relationship
  • Retirement
Another option you have in planning your estate is to make special arrangements for the distribution of your superannuation, using a Binding Death Nomination. This is a direction you give the trustee of your superannuation fund to pay your super to one or more individuals, or to the Executor of your estate. The advantage of doing this is that it gives you the flexibility to either include superannuation in your estate to be distributed per your estate planning strategy, or direct superannuation out of your estate to reduce the likelihood of claims against your estate by creditors or aggrieved beneficiaries. The individuals to whom you bequeath your super must fit the legislation's definition of a "superannuation dependent", which includes your spouse (including de facto), children or a person who is financially dependent on you. BDNs must be witnessed by two adults and will automatically lapse after 3 years of not being updated if your super is with a regulated super fund, or if you have a self-managed super fund but have not made provision in the trust deed for binding nominations to be non-lapsing. The consequence of a lapsed or improperly constructed nomination is that it becomes non-binding, and the trustee of the super fund is then not required by law to comply with your nomination, but may instead treat it as a "statement of wishes", which could increase the complexity and confusion in sorting out your estate.

You may also have heard of living wills. Living wills do not cover the distribution of estate (although they can be used to give someone the authority to manage your finances), they are more concerned with your care whilst still alive should you be incapable of caring for yourself. There are two aspects to living wills:
  1. Power of Attorney: this is the legal authorisation you grant someone to act as your agent in your personal and financial affairs. In Queensland there are two types that can be granted: General and Enduring Power of Attorney. Both types require a formal, in-writing agreement to give someone else the power to make decisions on your behalf. General Power of Attorney is limited to a specific period or event and requires that you still have capacity to make your own decisions; for example, it could be used if you have gone overseas and need someone to sell your assets. Enduring Power of Attorney is used only when you are no longer capable of making your own personal or financial decisions. Power of Attorney can be made with solicitors or with the Public Trustee of Qld.
  2. Advance Health Directives: This is a formal way of giving instructions for your future health care if you no longer have the capacity to make such decisions for yourself. With an Advance Health Directive (AHD) you can specify what treatments you wish or do not wish to receive, any special conditions that health-care providers should be aware of, whether you have any religious beliefs that may affect your treatment, consent to organ and tissue donation, and detail what (if any) life-sustaining measures you would like to receive if you have a terminal, incurable or irreversible condition. If you are over 18, AHDs can be made, revoked or changed at any time so long as you are still capable of doing so. You can also use them to appoint a Power of Attorney (for personal/health matters only).
Planning for your health and/or financial affairs when you are no longer able to do so is an incredibly complex undertaking, and not something to be entered into without legal advice or you run the risk of burdening those you are trying to benefit with hefty legal and financial consequences.

More information:
Public Trustee of Queensland
Department of Justice and Attorney-General

If you have any feedback or suggestions for our newsletter please email us at newsletter@adaptive.net.au

Until our next contact
Good Health & Good Luck

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