Colin Brinsden
(Australian Associated Press)

As the Morrison government mulls over possible tax changes to help lift the economy out of its first recession in nearly 30 years, tax experts have called for a change in the way savings are taxed.

In a new report, the Tax and Transfer Policy Institute at the Australian National University urges the government to consider a dual tax system where savings are taxed at a low rate and separate from taxes on labour income.

"As review after review has shown, Australia's current approach to taxing savings is a mess at best and a serious driver of intergenerational inequality at worst," the institute's Professor Robert Breunig says.

He said some savings tax arrangements are progressive, taxing higher incomes more heavily, but some are are regressive, favouring the old while being punitive for the young.

"Our current tax arrangements are inefficient, inequitable and distort the flow of savings across our society and economy," he said.

"The system is complex and encourages Australians to engage in costly tax planning schemes."

The report says most types of savings should be taxed at a low rate and independent of the tax rate on income from other sources.

"The taxation of savings is politically contentious with strong lobby groups defending particular savings arrangements, whether that is the untouchable nature of owner-occupied housing, dividend imputation or superannuation concessions," Prof Breunig said.

The report calls for the replacement of dividend imputation with a flat tax rate on dividends, removing stamp duties, which significantly distort decisions about when to move house, and including owner-occupied housing in means tests for pensions.

"This might seem radical. But in reality the reforms are reasonable and would bring us closer to the optimal tax system Australians deserve and this nation needs," Prof Breuing said.

Matt Coughlan
(Australian Associated Press)

JobKeeper will be extended to a 12-month scheme but reduced in two stages as part of the federal government's overhaul of coronavirus support.

Wage subsidies will be cut from $1500 to $1200 a fortnight for eligible full-time workers after September 27 and halved to $750 for those working less than 20 hours a week.

From January, JobKeeper will be further reduced to $1000 for full-time employees and $650 for part-time workers until March.

At both stages, businesses will have to requalify for the scheme by demonstrating a significant drop in revenue.

Companies with less than $1 billion in turnover will need a 30 per cent fall in revenue, while the threshold is 50 per cent for large companies.

The coronavirus supplement for JobSeeker will also be extended but drop from $550 a week to $250 at the end of September, and remain at that rate until the end of the year.

That will put the base rate of unemployment benefit at about $815 a fortnight, however, but recipients will be able to earn $300 without it affecting their payment.

The future of the permanent dole rate is expected to be revealed in the October 6 budget.

Prime Minister Scott Morrison indicated JobSeeker was unlikely to return to its pre-pandemic level of $565 a fortnight at the start of next year.

"I am leaning heavily into the notion that we would anticipate, based on what we know right now, that there obviously would need to be some continuation of the COVID supplement post-December," he told reporters in Canberra on Tuesday.

Mutual obligation requirements for people on JobSeeker will return from August 4, with the assets test to be reintroduced from the end of September.

Mr Morrison said Australians understood both programs were temporary.

"They know a current scheme that is burning cash, their cash, taxpayers' cash to the tune of some $11 billion a month cannot go on forever," the prime minister said.

Treasury estimates the number of JobKeeper recipients will fall to 1.4 million in the December quarter and one million in the March 2021 quarter.

Around 3.5 million workers have received wage subsidies designed to keep employees linked to employers during the pandemic.

Labor leader Anthony Albanese said JobKeeper excluded some casual workers and migrants, while also paying 875,000 people more than they were earning before the crisis.

• "Labor remains concerned that too many people are being left behind," he told reporters on the NSW south coast.

He said the government should have taken the opportunity to announce a permanent increase in unemployment benefits.

Australians are being urged to watch out for government impersonation scams with over $1.26 million lost from more than 7100 reports made to Scamwatch so far this year and in reality, losses are likely to be far greater.

There has been an increase in scams reported during tax time such as text messages claiming to be from myGov or from agencies claiming to help victims gain early access to their superannuation.

"Scammers are increasingly taking advantage of the financial difficulties and uncertainty generated from the COVID-19 pandemic to trick unsuspecting Australians," ACCC Deputy Chair Delia Rickard said.

"We are seeing two main types of scams impersonating government departments; fake government threats and phishing scams."

"Both of these scams can be quite convincing and can lead to significant financial losses or even identity theft."

In a fake government threat scam, victims receive a robocall pretending to be from a government department, such as the ATO or Department of Home Affairs.

The scammer will claim something illegal, such as tax fraud or money laundering, has been committed in the victim's name and they should dial 1 to speak to an operator.

The scammer then tries to scare people into handing over money and may threaten that they would be arrested if they refuse.

"Don't be pressured by a threatening caller and take your time to consider who you might be dealing with," Ms Rickard said.

"Government departments will never threaten you with immediate arrest or ask for payment by unusual methods such as gift cards, iTunes vouches or bank transfers."

In a phishing scam, victims will receive an email or text message claiming to be from a government department, such as Services Australia, requesting personal details to confirm their eligibility for a government payment or because the person may have been exposed to COVID-19.

The emails and texts will include a link and request personal details such as a tax file number, superannuation details or copies of identity documents.

"Don't click on any hyperlinks in texts or emails to reach a government website, always type the address into the browser yourself," Ms Rickard said.

"Do not respond to texts or emails as the scammer will escalate their attempts to get your money."

"If you're not sure whether a call is legitimate, hang up and call the relevant organisation directly by finding the details though an independent search," Ms Rickard said.

More information on scams is available on the Scamwatch website, including how to make a report and where to get help.

The ACCC also recommends that you report the scam to the government department that was impersonated.

Background

So far in 2020 (1 January-5 July) Scamwatch has received:

• 67 reports of scams involving impersonation of the Department of Health, or state Department of Health and Human Services, with losses over $8700
• 443 reports of scams involving Australian Federal Police impersonations with losses over $176,000
• 1,070 reports of scams involving Services Australia impersonations with losses over $94,000
• 1,638 reports of scams involving myGov impersonations with losses over $105,000
• 2,016 reports of scams involving Department of Home Affairs impersonations with losses over $99,000
• 2,389 reports of scams involving ATO impersonations with losses over $905,000.

Money and Life
(Financial Planning Association of Australia)

Superannuation is a handy way of saving for retirement, so that you'll have an income to live on once you're no longer working.

With Aussies living longer than ever before, you could be looking forward-to many happy years of retirement. Having a financial nest-egg to support you into old age is essential.

Australia's superannuation system is a highly regulated and efficient way of saving for your retirement. Your employer must pay a portion of your earnings into your superannuation fund, which invests them on your behalf.

Find out how to get the most out of your superannuation, the types of super funds and how much super you'll need to retire comfortably.

How much superannuation will I be paid?

In Australia, your employer is required by law to pay your super contributions once a quarter.

The current superannuation guarantee (SG) rate is 9.5%. So, your employer must pay a minimum of 9.5% of your ordinary time earnings (OTE) to a complying superannuation fund or retirement savings account.

The SG rate is due to rise to 10% on 1 July 2021, and continue to increase by 0.5% each year until it reaches 12% in July 2025.

Can I add to my super? 

Yes, you can! Making personal contributions to your superannuation is a great way to reach your retirement goals sooner.

One way to do this is through a salary sacrifice arrangement with your employer. This simply means that you pay an agreed amount from your pre-tax salary into your chosen superannuation fund with each pay.

It's a very tax-effective way to add to your super, as these contributions only attract tax at 15% (up to a certain level), which is generally less than your marginal tax rate.

Read more: Salary sacrifice: A lot less painful than it sounds

How much to contribute depends on several factors, including how long until you want to retire and your retirement goals. Speaking to a financial planner can help you evaluate the best options for you.

Superannuation co-contribution

You may also be eligible for contributions from the government to help you save for retirement. The super co-contribution and the low-income superannuation tax offset are both ways the government can add to your super. Find out more about government contributions on the ATO website.

How much super do I need to retire comfortably?

Research shows that many of us underestimate how much we'll need to live comfortably in retirement.

According to the MoneySmart website, how much you'll need depends on your big costs in retirement and the type of lifestyle you want to have. "If you own your own home, a rule of thumb is that you'll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living."

The Association of Superannuation Funds of Australia (ASFA) estimates that single people will need just over $44,000 a year to be comfortable, while a couple will need just over $62,000 (excluding housing costs).

A 'comfortable' lifestyle is defined as one where you're able to take part in a range of leisure and recreational activities, while maintaining a good standard of living i.e. you can afford to purchase household goods, private health insurance, a reasonable car, clothes and domestic or occasional international travel.

Again, we recommend getting professional financial advice to help plan for your retirement and ensure you have enough super to retire comfortably. 

What are the different types of superannuation funds?

These days most people are able to choose their superannuation fund. You can also use the super fund nominated by your employer if you want to.

The majority of superannuation funds can be classified into one of these categories:

1. Industry super funds

Originally developed for employees of certain industries, many of the larger industry funds are now open to anyone to join. They often have lower fees and usually offer MySuper accounts.

2. Retail super funds

Usually run by financial institutions, e.g. a bank, or an investment company, and are open for anyone to join. They often have a wide range of investment options. However, fees can be on the mid-to-high side and can vary a lot between funds, as can returns.

3. Corporate super funds

These are organised by companies on behalf of their employees. They may be operated under a board of trustees, or managed by an appointed retail or industry fund. Generally speaking, the costs will be lower in a large employer fund than for small businesses.

4. Public sector super funds

These are for government employees only. They generally offer lower fees and return profits to the fund.

5. Self-managed super funds (SMSFs)

An SMSF is a private superannuation fund that you manage yourself. It's a growing sector which appeals to many people because it offers greater flexibility and choice in the type of assets you can invest in.

As the trustee of your own superannuation fund you're responsible for setting the investment strategy and complying with all of the tax, insurance and regulatory obligations. So it is more work and requires more financial and legal knowledge than a regular super fund.

Find out more about the pros and cons of having an SMSF.

If you're interested in setting up an SMSF, make sure you seek qualified financial advice on whether this is the right approach for you.

Related: Self-managed super funds: The importance of getting the right advice

What type of investments are available to me?

Within each super fund, you'll have a choice of super products, which are basically different ways to invest your superannuation.

These may include a different mix of asset classes, e.g. shares, property, cash and/or exposure to different markets. Each product carries a different level of risk and potential reward. Which approach is right for you will depend on several things, especially your age and stage of life, time to retirement and your retirement goals.

You should always seek financial advice before making any changes to your superannuation settings. A qualified financial planner can help you understand which superannuation product is right for you.

Related:What are the best investments for your retirement?

When can I access my superannuation?

You've spent years building up your nest-egg, so when can you make use of it? You can access your super once you meet one of the following conditions:

• when you turn 65 (even if you haven't retired)
• when you reach the preservation age and retire; or
• under the transition to retirement rules, while continuing to work.

There are also some special circumstances where you may be able to access your super early, such as severe financial hardship, including COVID-19.

Read more:COVID-19 Withdrawing super: What to consider

Matt Coughlan
(Australian Associated Press)

Farmers' financial skills and drought research will receive a boost through a $3.9 billion fund designed to prepare Australia for future crippling dry spells.

Almost $90 million from the first annual $100 million Future Drought Fund payout has been allocated across a range of drought-proofing programs.

A $20 million program will help farmers develop and improve detailed business plans.

Agriculture David Littleproud says the scheme was designed to do more than put together a budget.

"This is about risk management tools, about understanding how you can hedge your products in international markets," he told ABC television on Wednesday.

Farmers will get improved climate data to guide decision-making through a $10 million boost for digital information services.

National Farmers' Federation president Fiona Simson welcomed the focus on managing financial and climatic risks.

"As a nation, we have not yet got drought preparation, management and recovery right but today represents a landmark step towards significant improvement," she said on Wednesday.

More than $20 million will be spent on drought research while $15 million will be funnelled towards natural resource management.

Alliances of local councils will be able to share in $10 million to develop regional drought plans.

"These programs will give farmers and communities the tools they need to prepare for, manage and sustain their livelihoods during droughts," Mr Littleproud said.

Labor has previously criticised the fund for spending just $100 million a year from 2020 despite being first announced at the height of the drought in 2018.

The Future Drought Fund is expected to rise from an initial $3.9 billion to $5 billion in 2028/29.