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Should expense claims be scrapped in favour of a standard tax deduction?

About 75 per cent of Australians lodge their tax return via a tax agent, many unnecessarily, because the tax system is complex and difficult to understand, a parliamentary inquiry has heard.

The Tax Institute says individuals with straightforward affairs don’t need a tax agent but find the system hard to access and cannot sort misinformation from correct information so feel they need to pay for expert help.

The Institute applauds the ATO’s move to electronic communications but says it could be improved by the ATO pre-filling as much information as possible and more transparency in data collected.

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More power for new financial complaints authority

The new Australian Financial Complaints Authority (AFCA) will take over the work of three external dispute resolution schemes and be able to consider claims of higher value when it comes into being on July 1, 2018.

AFCA will replace the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal.

They hear disputes involving banking, credit, insurance, investment and superannuation. Members of these industries pay fees that fund the schemes.

Industry members of FOS and the CIO will have to retain those memberships for 12 minutes after AFCA opens its doors, so existing matters can be processed.

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ACCC calls for a better deal for car buyers and repairers

Australian households spend 5 per cent of their annual income on their cars. That figure includes buying and maintenance, making a car the second most expensive purchase after a house.

Despite the cost, and the fact that many people need a car to work, the consumer legal protections for new car buyers can be difficult to enforce, and for consumers to understand, finds a report from the Australian Competition and Consumer Commission (ACCC).

The consumer watchdog’s draft report into the new car retailing industry calls for regulation to ensure car manufacturers provide technical information to independent repairers.

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Life insurance comparison websites: what they don’t offer

Comparison websites provide the convenience of being able to compare different products online, and many of us would assume what we get is the same as buying a bespoke service. When it comes to life insurance we’d be wrong.

Research by Rice Warner has found the commissions that insurers pay to life insurance websites is the same as that paid to qualified financial advisers who spend time assessing the consumer’s needs to come up with a tailored offer of cover.

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Fewer natural disasters boost insurance profits

Australia’s insurance industry had a better year in 2016 due to fewer bushfires, floods and other natural disasters.

The combined after-tax profit of 99 insurers and 10 reinsurers rose 20 per cent to $2.9 billion.

The insurance industry’s return on assets, in decline between 2012 and 2015, ticked up to 10.5 per cent from 8.7 per cent, according to figures from industry regulator the Australian Prudential Regulation Authority (APRA).

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Cash in decline as payments go online

When did you last write a cheque? Probably not for a long time, and if you are in your twenties you possibly have never owned a chequebook. Cheques now account for only 1.2% of all non-cash transactions in Australia.

Cash use is also falling as more Australians switch to electronic payments, although the folding stuff is still the most popular way to pay.

Withdrawals from ATMs dropped 6.6% in the 2016 financial year, with about $700 million withdrawn, compared with $750 million in 2014.

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Older Australians embrace digital technology

Australians aged 65 and over are embracing digital technology, and since they make up 19% of the population this has implicatiolder couple computerons for business.

People who can remember when their household first got a television (black and white, of course) are more likely than the general adult population to use a tablet device.

About 85% of them go online at least once a day and half login three or more times a day.

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Super inquiry to focus on insurance, retirement

retired couple walkers shutterBaby boomers are moving into retirement and starting to use some substantial superannuation balances, but most of the conversation around super is about building savings.

The financial industry is on notice from the Productivity Commission that it will investigate transition to retirement and pension products in its inquiry into the competitiveness and efficiency of the super system.

“The Commission intends to assess whether the system is meeting the needs of members during these phases, including via product innovation that addresses tax effectiveness, transition and longevity risks,” says the Commission in its draft report released this month.

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HIH court decision strikes blow for shareholder class actions

Image courtesy of JanPietruszka at FreeDigitalPhotos.net

Image courtesy of JanPietruszka at FreeDigitalPhotos.net

The insurer HIH went broke in 2001 but the fall-out from the group collapse continues with a recent court decision in favour of investors.

The NSW Supreme Court has awarded damages to investors who bought shares in HIH when the share price was inflated by misleading information released by the company.

The shareholders were able to prove “indirect causation” or that they had suffered loss even though they did not rely on an overstated profit figure when buying their shares.

An analysis by Damian Clancy and Paul Bannon of legal firm Colin Biggers & Paisley says the decision sets a precedent and is significant for shareholder class actions.

“So long as a shareholder can prove that a corporation’s misleading or deceptive conduct (or material omission) artificially inflated the price of that corporation’s securities, the shareholder may be entitled to recover the loss and damage suffered by reason of that fact, even if the shareholder did not rely upon the relevant conduct,” they say.

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Superannuation starting to replace age pension

retirees bike shutterstockMore Australians plan to live on their superannuation savings rather than the age pension.

When the Australian Bureau of Statistics surveyed 3.8 million workers on their plans for retirement, it found 53% of the group – all people aged over 45 years – expected their main source of retirement income to be super, an annuity or an allocated pension.

Only 19% of those who have actually retired tapped superannuation as their main source of income.

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