While the study found the majority of Australians were honest about their current financial status, 823,000 people had understated their total expenses and 342,000 had overstated their income.

The study highlights around 15 per cent of Australian are looking to take on more credit in the next six months and 12 per cent of Australians have missed a minimum bill repayment in the past three months.

Chris Gration, head of external relations at Veda Advantage, says responsible lending is a huge step forward for consumer protection but without positive reporting, lenders face challenges in gaining an independent understanding of a person’s financial commitments.

“Under Australia’s current negative credit reporting system, banks do not have all the information available to help them make the most informed assessment of a person’s ability to repay their debts. They cannot see whether a consumer is overcommitted, leaving many vulnerable to falling into a debt trap,” he says.

Gration welcomes the Government’s plan to introduce positive reporting legislation by 2012.

“Implementing Government credit reporting reforms will assist lenders to more easily identify when a borrower is overcommitted.”

The Australian Privacy Foundation has strong reservations about this development.

The longstanding approach in the credit reporting industry is based on the central recording of applications for credit, and of defaults. The credit industry has fought a sustained battle to extend into something that the industry’s spin-doctors call ‘positive reporting’, but that from the perspective of consumers is simply consumer surveillance.

In 2005, Consumer Affairs Victoria released a “Consumer Credit Review Issues Paper”. This mainly concerned other issues but also asked a few short questions about a potential move to positive credit reporting. Submissions were divided on traditional lines. See the Review web-site. No change resulted from the consultation. The Victorian Government response noted there was insufficient evidence of the benefits of positive credit reporting and concluded that the issue was more suitable for Commonwealth consideration.
In addition to the APF, the Consumer Action Law Centre has been very active on these matters.

The Australian Law Reform Commission (ALRC) conducted a wide-ranging inquiry into the Privacy Act in 2006-08. The ALRC Report in August 2008 recommended “More comprehensive credit reporting: in addition to the limited types of ‘negative’ information currently permitted, it is recommended that some additional categories of ‘positive’ information should be allowed to be added to an individual’s credit file, in order to facilitate better risk management practices by credit suppliers and lenders” (ALRC 2008. See also Part G of the Report, paras. 52-59).

The Consumers’ Federation of Australia (CFA) (the national peak body for consumer groups in Australia) is concerned that the expanding the range of information collected on credit applicants will only exacerbate the current problem of inaccurate and incorrect data on customer files.

The draft legislation is expected later this year.

Some push-back is to be expected given account balances struggled to fight the pull of gravity over the last two years, falling lower and lower for what seemed like an eternity to most members.

But what’s really interesting is what’s driving the distrust and scepticism of super. It’s not so much the performance of funds during the financial crisis but instead a fear that the Government will change the rules.

This message came through loud and clear in a recent Focus Group held by CoreData with pre and post-retirees aged 50 to 70.

Brad, a 55-year-old male, says he’s never trusted super because he doesn’t trust the government. He says successive governments keep “changing the laws arbitrarily” and we’re in for another wave of that this year with the election looming.

Brad is not alone in his line of thinking. Indeed there was wide consensus around the table that super is not the safe haven that the industry would have you believe, and while there are tax incentives to saving through super, this is irrelevant if the goal posts keep shifting.

Bruce, a 52-year-old male, thinks relying on super could cause him big problems in retirement. He’s developing his assets outside of super as well because he’s convinced that the Government has dug itself “such a deep debt hole” that they’ll use the superannuation system to recoup that.

The building scepticism is reflected in a recent study by CoreData which found superannuation is the number one financial concern for the average Australian.

Super, including fund rollover, Government super policy, planning for retirement, retirement income options and pensions, ranked ahead of tax, family financial matters, paying off loans, investing and saving.

Industry bodies such as the AIST, ASFA and IFSA have recently repeated calls for a hike of Superannuation Guarantee (SG) to 12% to avoid a $695 billion retirement savings gap.
If the dissent among consumers continues to grow, a legislated increase might just be the only way to boost contributions to the system.

From Burning Pants

However, I do think that a lot of what The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP released for discussion are very worthwhile reforms. I how they can successfully pull it off.

“The reforms will reduce unnecessary reporting obligations on companies and implement a number of other important refinements to our corporate regulatory framework.” Mr Bowen said

The key measures to reduce red-tape include:

• significantly reducing the regulatory burden on companies limited by guarantee (which typically have a not-for-profit purpose), by introducing a three tiered differential reporting framework;
• streamlining parent-entity reporting;
• providing greater flexibility for companies to pay dividends, by replacing the profits test with a solvency-type test; and
• allowing companies to more easily change their year-end date to minimise the burden on companies and their auditors during peak reporting periods.

The reforms will also implement refinements to the regulatory framework, including:

• improving disclosure of non-financial information in the directors’ report;
• protecting solicitors’ representation letters from disclosure to enable auditors to properly verify a company’s contingent liabilities;
• refining the statement of compliance with International Financial Reporting Standards contained in the directors’ declaration; and
• clarifying the circumstances in which a company can cancel its share capital.

Copies of draft amendments, the explanatory material and the regulation impact statement can be obtained from the Treasury website: www.treasury.gov.au.

The closing date for submissions is 3 February 2010.

Is not convinced that those aspects of the Henry proposal that have been leaked will simplify the tax system for the benefit of Australian taxpayers.
Softening up taxpayers
He says that the NTAA is concerned that, rather than having an open and robust public discussion, the Henry
Review of the taxation system seems to have entered the phase of softening up the Australian
taxpayer.
It’s an old tactic. Leak a part of the story, wait for a response then pounce. Dr Henry
has already started flexing his muscles by saying that he is fully prepared for “scare campaigns”.
So, presumably, any unfavourable response will be labeled a scare campaign. A little harsh given the
fact that he has chosen to only release a tidbit and not release the whole document.
That said, the Henry proposal, to be released in December, is expected to recommend that taxpayers
will receive a one-page summary “income tax return” which will include a “standard” deduction for work
related expenses. Taxpayers will be able to ‘tick’ a 1 page document issued by the ATO and sit back
and wait for their refund.
The refund will be based on a ‘standard’ deduction for work related expenses and a figure of $500 has
been floated. (
Now taxpayers have a right to be scared!

Nick Connell, spokesperson for the NTAA said that “Treasury has for years been concerned at the
blow-out in work-related deductions and we believe that the concept of a ‘standard’ deduction may
well be the first step in controlling deductions for work-related expenditure.”
“We are concerned, and we believe justifiably concerned, that if taxpayers allow their claims for
work-related expenses to be “standardised” in any form at all, that they may end up losing them.”
“Millions of taxpayers are entitled to legitimately claim hundreds or thousands of dollars in
deductions that they incur in earning their income. This right is written into the law.”
“Most of us make claims for car expenses, travel and accommodation, home office, uniform,
protective clothing, laundry, telephone, computer, power, etc. The list goes on.”
“How long will these claims last,” he asked, “once we allow them to be standardised?”

Is the end-game the abolition of tax refunds?
“Australians love their income tax refunds. They rely on them as a, sort of, forced way of saving.
They are an institution and it is our right to be able to claim work-related deductions and receive
income tax refunds.
We urge taxpayers to not allow the government to standardise deductions that they are legally
entitled to. Make no mistake about it. Let them get their foot in the door and the refunds we love
to get will one day be wiped out.”
Leaking a tidbit from the proposals raises more questions than answers and the NTAA calls on Dr Henry
to have an open dialogue with the Australian people and not seemingly engage in a surreptitious
campaign to gauge public reaction.

From NTAA

To put the $500 standard deduction in perspective , most union members pay more than this in annual fees. The average amount of work related deductions claimed is $1,920. -SH

NAB’s banking rivals attracted somewhere in the range of $11 billion and $22 billion more of cheaper funding during the recent crisis, leaving NAB now scrambling for market share.It is easly to conclude that NAB’s latest round of fee cuts appear more like a desperate attempt to claw back some of the ground it has lost recently.

The move by NAB is set to cost the bank over $100 million a year.

But if it succeeds in boosting deposit levels, it will prove a cunning move.

If NAB can increase deposits quickly, it will provide a funding source for a potential spike in residential lending, as the newly acquired mortgage broker army from Challenger begins writing the bank’s loans.

The strategy at NAB seems to be a case of giving with one hand and while taking back with the other.

Thanks to www.burning-pants.com/ for the bringing this to our attention

However he admitted that he regretted introducing, nearly a decade ago, the now defunct super surcharge. The surcharge (which he always denied was a tax) was levied on the super funds of high income earners and sought to introduce equality into the super system but imposed too much regulation.

”I regretted it ever after – the complexity of the system was just awful,” Mr Costello told a Super Ratings conference in Melbourne.

Mr Costello was speaking at the Super Ratings conference in Melbourne

Only a minority of people (22.5%) are annoyed with themselves when they incur charges on their credit cards, transaction accounts and home loans.

Most people complain to the relevant organisation when stung with fees outside normal bank fees with 70% giving their financial institution an earful.

Almost one in four complain to friends or family (23.3%) while nearly half demanded a refund (46.6%).

The findings stem from a CoreData survey of 1,366 people on behalf of News.com.au.

Nine out of ten respondents have an average of two credit cards. Half of them usually pay the full amount of their bill.

33.5% of card holders are unsure of fees and charges they might incur due to late payment, yet, 78.7% of them know how many interest free days they have on their card.

Most respondents felt ripped off by their credit card provider, home loan supplier or transaction account institution when they failed to make payments and incurred fees and charges.

43.5% of transaction account holders have been charged overdraft and/or dishonour fees in the last twelve months.

The majority of transaction account holders who have been charged fees and interest feel they were ripped off (86.7%) and many want to close the account.

A further 65.1% wanted to close their account.

More than half of the respondents (54.7%) currently had a home loan.

For those who had been late making a payment the majority felt the fees incurred were unreasonable.

Only with credit cards, were users more likely to see themselves as partially responsible.

While middle income earners will get a tax saving of around $33 a week over three years from next July, it is only a fraction of what the rich will get.

Professor Apps’ analysis of the tax cuts announced on Monday shows wealthy people earning $180,000 are getting tax cuts fives times higher than those on average earnings of $60,000.

“This ultimately means the middle is being given an increasing tax burden,” she said.

“The Government is using bracket creep to get this revenue off the middle and giving it disproportionately to those at the top.”

Her analysis shows that the way the Government has structured the tax cuts is deceptive.

The Government’s tax scales show people earning between $30,000 to $60,000 will face top marginal rates of 15c or 30c.

She says in reality their marginal tax rates will be 4c in the dollar higher.

This is because of the withdrawal of a tax subsidy to low income earners, the low income tax offset, once a person earns more than $30,000.

This problem arises because the Government has refused to raise the tax-free threshold, set at $6000 for all taxpayers.

Instead, it has effectively raised the tax-free threshold of low income earners by raising the low income tax offset, allowing them to earn $16,000 before they pay tax by 2010.

The Government starts withdrawing the low income tax threshold once someone earns over $30,000 at the rate of 4c in the dollar.

Professor Apps says this has the effect of raising their marginal tax rate by 4c.

The low income tax threshold withdrawal applies to everyone earning between $30,000 and $60,000 in 2008-09, and by 2010 will extend to people earning up to $67,500.

“The only reason for using the tax offset is to take it away from the middle and shift the relative tax burden to average working families,” she said.

Our hosting service’s database server was out of action for a while yesterday. When it came back up, it was if a backup from May 2007 has been restored.

All posts and site changed made from June to Sept were gone.

We had a backup as at the end of September and have successfully restored that except that post-May entries do not have a category attached.

I will endeavour to get things back in order over the weekend.

Under the previous rules, the threshold (currently $6,000) was pro rated in the year in which the student ceased full time study. Exemptions for income earned whilst studying served to make the tax calculation for your taxpayers unreasonably complex.

For example:

Fergus ceases full-time education for the first time in November 2006 and starts a job on 2 March 2007. Fergus does not earn any income whilst studying.

Under the current law Fergus would have a reduced tax-free threshold. This would be calculated by multiplying the number of months Fergus was not studying (eight) by the $500 monthly equivalent. Hence Fergus’s tax-free threshold would have been $4,000.

Under the new law Fergus has a tax-free threshold of $6,000.

The explanatory memorandum accompanying the amending legislation stated:

The removal of the part-year tax-free threshold reduces compliance costs for taxpayers who have finished full-time education for the first time. The part-year tax-free threshold is complex and has limited application since many students undertake part-time work while studying and are therefore often entitled to the full tax-free threshold.

I have always felt that this was an unfair measure squeezing a few extra dollars of tax out a young worker’s first tax refund. This reform is well overdue.