1.Beat butter, caster sugar, dusting sugar and extract in a large bowl with an electric mixer until pale and fluffy. Stir in sifted flours, then press mixture together to form a firm dough. Turn onto a lightly-floured surface and knead gently until smooth. Divide dough in half. Wrap each in plastic wrap; refrigerate 30 minutes.
2.Preheat oven to 150°C. Grease oven trays. Roll one dough half between two sheets of baking paper until 1cm thick. Using a 6cm round fluted cutter, cut out rounds from dough. From each round, cut a hole in the centre with a 1.5cm fluted cutter. Re-roll scraps and repeat until all the dough has been used.
3.Place rounds on oven trays and sprinkle with white sugar. Repeat with remaining half of dough.
4.Bake shortbread 30 minutes or until a pale straw colour. Stand on trays for 5 minutes; transfer to a wire rack to cool.
To give as a gift, thread ribbon through centre of the shortbread and tie into a ring. Or, you can hang shortbread from your Christmas tree.