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Country Rankings - Australia

  • Jul 06, 2018   Australia: dramatic

    Finally– and we all like a good piece of drama now and again– the Australian Government's efforts to cut incomes taxes have provided several unexpected plot twists and turns recently. The fight over personal income tax looks to have been won by the administration, but, in the mode of a cliff-hanger, the fate of the corporate tax cuts have been left dangling until after the upcoming by-elections. Watch this space. Indeed, this is almost like theatre. And no doubt the Government would consider itself the hero. It's on the side of the people and hard-pressed small businesses and it just wants to put more of their hard-earned money back in their pockets. In the eyes of the Government, the villainous Labor Party pretends to be the party for the people, but would rather have this money for itself, to fritter away on bread and circuses, because it thinks it knows best how to spend people's money. What's more, like any good villain, Labor's motivations aren't always clear-cut, blocking individual tax cuts one minute, waving them through the next; totally opposing any sort of corporate tax one minute, partially reversing that position the next. But if it is a hero, the Government is a flawed one. It just wants to be loved, hence it's cutting taxes. But it also likes power, hence it's cutting people's taxes, and there are elections to be fought soon. It's all positively Shakespearian.
    Source: https://www.tax-news.com/news/Australian_Govt_Delays_Company_Tax_Vote____86851.html

  • May 15, 2018   Australia: tries

    Isn't it strange how governments seek to cut tax just before elections? It's not by happenstance, and something that has happened for eons. However, it used to be rare that anyone under the age of 40 would be considered for the highest national office. Now, millennials are winning elections left, right, and center, politically as well as figuratively. Earlier this month the International Monetary Fund warned the Israeli Government to maintain fiscal discipline as elections approach, with cuts to individual and corporate income tax being considered. And last week the Australian Government showered personal income taxpayers with tax gifts in what could be the last federal Budget before elections to the House of Representatives, where the Government is formed.
    Source: https://www.tax-news.com/news/Australia_Budget_Cuts_Personal_Income_Tax____76775.html

  • Apr 26, 2018   Australia: out of luck

    The Australia Institute recently urged the Government to resist partaking in the "race to the bottom" on corporate tax rates. Instead, it recommended that Australia tackle tax loopholes and avoidance schemes, arguing that the priority is to ensure enough revenue is raised to fund public services and infrastructure. But if you look around the world, you'll find that parliaments are voting through tax reforms that do both – cut corporate tax while shoring up the corporate tax base. It's no coincidence that in recent times a succession of governments have announced, are legislating for, or have completed, tax reforms which reduce the rate of corporate tax while restricting interest deductions and strengthening controlled foreign company regimes, among other anti-avoidance measures. These moves are largely a response to base erosion and profit shifting (BEPS), but they also show that tax competition is far from dead. Nevertheless, it is wrong to assert that most governments are doing nothing, or very little, to tackle tax avoidance. On balance, anti-avoidance and other revenue-raising measures have considerably outnumbered tax cuts over the course of time. And the gap has likely widened since the BEPS project came about. Perhaps it is the case that on the relatively rare occasions that corporate tax cuts are made, they can be quite spectacular in magnitude, as in the UK (30 to 19 percent and falling), and the United States (35 to 21 percent), so perceptions are being skewed. Where Australia is concerned, it is arguable that the Government is doing more than most in attempting to reduce tax avoidance, particularly by multinational companies. The Government expects the Multinational Anti-Avoidance Law (MAAL), in place since January 2016, to raise an additional AUD7bn (USD5.4bn) in tax each year, and in March, it introduced legislation to increase the MAAL's scope. Indeed, the Turnbull administration seems to me to be quite tough on tax avoidance, having established a tax avoidance task force with four-year funding of AUD679m and 1,300 ATO staff. For Australian businesses though, it is the other side of the bargain that the Government isn't fulfilling –the corporate tax rate cut bit. To be fair, this isn't a bargain that it is unwilling to fulfil. Because tax cuts on the scale seen all over the developed world recently are simply not possible in Australia for largely fiscal and political reasons, at least for the foreseeable future. The problem is, this legislative stasis is making Australia look more and more like a corporate tax outlier.
    Source: https://www.tax-news.com/news/Australia_Urged_To_Resist_Tax_Race_To_Bottom____76729.html

  • Sep 19, 2017   Australia: innovates

    Bitcoin appears to be gaining increasing regulatory acceptance in some parts of the world. In Australia, for example, the Government recently introduced legislation to ensure that virtual currencies operate on an even tax playing field with "physical" money. Treasurer Scott Morrison hopes that the legislation will make it easier for new innovative digital currency businesses to operate in Australia, and some offshore financial centers are already vying to become leading jurisdictions in FinTech expertise. On the other hand, regulators and tax authorities in other parts of the world seem deeply suspicious of virtual currencies, given the anonymity they provide to users. A notable example is the United States, where the Internal Revenue Service obtained a court order in December 2016 compelling bitcoin exchange Coinbase to produce records identifying US taxpayers who have used its services. Indeed, there are some who believe that sooner or later, the whole Bitcoin architecture will come crashing down (virtually speaking of course), leaving owners of bitcoins with little more than worthless pieces of computer code. One of them is JP Morgan CEO Jamie Dimon, who was widely reported recently to have predicted the eventual demise of the virtual currency, likening it to the Dutch tulip bubble of the 17th century. But the banks, whose business very much remains currency of the "real" – as opposed to the virtual – variety, would say they wouldn't they.
    Source: https://www.tax-news.com/news/Australia_To_Change_Tax_Rules_For_Digital_Currency____75241.html

  • Jul 11, 2017   Australia: inclement

    While complexity is less of an issue now for business taxpayers, it was nevertheless interesting to see that Australia ranks highly for tax complexity, beside Japan, Indonesia, and South Korea. Not only this, the Australian tax authority is particularly vigorous in the pursuit of possible back taxes, with one respondent describing an audit by the Australian Tax Office as the most aggressive the company had ever experienced. These findings certainly jar against other surveys, which generally rank Australia highly for economic openness and dynamism, and could provide further evidence for those arguing that the country's business climate has deteriorated recently, amid tax policy reversals and against the backdrop of a moderate fiscal crisis.  It does seem to be the case that the Government has stepped up its enforcement of the tax laws where multinational businesses are concerned, and it is of course perfectly entitled to ensure that they are paying the correct amount of tax, and not aggressively trying to avoid it. The much-criticized diverted profits tax, which entered into force on July 1, is one example of this. However, the Government should be mindful that there is a balance to be struck here. Deloitte's survey shows that companies are prepared to put up with complexity, and not push the avoidance envelope, as long as they are reasonably able to predict the tax outcome of operating in a given jurisdiction. Those jurisdiction in which they can't may well be given a wide berth in future.
    Source: http://www.tax-news.com/news/Australia_Introduces_Diverted_Profits_Tax____74642.html

  • May 16, 2017   Australia: hasty

    In the current political climate, with the financial crisis still fresh in the memory (even though the height of the crisis was almost a decade ago), political parties can almost certainly expect to gain some votes with proposals to impose higher taxes on banks. At the very least, it's hard to imagine such a policy being a vote loser. But what is politically popular doesn't necessarily equate to effective tax policy. Some would say that the banking sector got off very lightly for its role in creating the financial mess that still hasn't been fully cleared up. But governments have to be very careful in how they structure additional taxes on banks, because as the Australian Bankers' Association warned in response to the recent announcement of a new levy on Australia's five largest banks, such measures can have "unintended consequences." Poland is a good example of a bank tax went wrong. While the 0.0366 percent levy appears miniscule on the surface, it applies to banks' assets, which economists have warned could reduce credit supply and suppress economic growth. Indeed, such vaunted institutions as the International Monetary Fund and the European Central Bank have lined up to criticize Poland's bank tax, with the latter warning that it could have a negative impact on financial stability. Australia's bank tax is structured differently, with the levy based on liabilities rather than assets. But problems are still foreseen. Despite the fact that the levy targets Australia's largest banks, the nature of the banking business means that it is likely to affect the whole banking system, and it is expected that the tax will simply be passed on to borrowers and depositors. Compounding the issue, the Australian Government appears to be in an urgent rush to push the bank tax legislation through. According to the Australian Bankers' Association, industry representatives heard about the Government's plans at a meeting with Treasury officials only on May 10, and they were given until midday on May 15 to make submissions on the proposals, two days before the Treasury had planned to release draft legislation. No doubt some midnight oil was burnt as civil servants worked to draft the bill in such a short time frame. And this is hardly ideal preparation for an important piece of legislation. A case perhaps of legislate in haste, repent at leisure.
    Source: http://www.tax-news.com/asp/newsAUS.asp

  • Apr 04, 2017   Australia: diverted

    Now, most Australians would probably tell you that they have little in common with their British cousins – or "whingeing poms" as they affectionately refer to the Brits – beyond a shared language. However, in the area of tax, Australia has seemed only too willing to jump onto a bandwagon that originated in the UK by approving a diverted profits tax – albeit, a very short bandwagon. While there are laudable intentions behind the UK and Australian DPTs – to prevent mainly technology companies from "artificially" shifting profits to low-tax jurisdictions – it doesn't necessarily mean that they represent sound tax policy. Nowhere in the OECD's final BEPS recommendations are the words "diverted profit tax" mentioned, or even alluded to. Indeed, multinational businesses and tax experts have said that this is a glaring example of unilateralism, of countries interpreting the BEPS proposals in their own peculiar ways. And this is the very thing that the OECD is trying to avoid to ensure that the integrity of its BEPS work is maintained. Indeed, when the UK DPT was first announced, even the OECD itself was heard to question it, and it's not every day you hear senior OECD staff question decisions made by member governments. Furthermore, if a DPT is such a great idea, why haven't we seen the bandwagon growing? At the moment it is hosting only two countries. That suggests to me that it's not a very good idea after all.
    Source: http://www.tax-news.com/news/Australian_DPT_Legislation_Passes_Senate____73818.html

  • Mar 14, 2017   Australia: fiddling

    When are changes in taxation a tax "reform," and not merely a tax "change"? Why, when the Government says so of course! But I've noticed recently that there is a discrepancy in what some governments think is a tax reform, and what most of the rest of us would consider qualifies as such. Australia provided a good example of how flexible the term tax reform has become. When it was put to Prime Minister Malcolm Turnbull last week that the Government had failed to take on "big tax reform," he baulked at the suggestion, pointing to recent changes in the state pension scheme and the middle-income tax threshold. Really? That's what you call "reform," Malcolm? To be fair to the Prime Minister, he said this while making a very good case against increasing GST. But this is a country which seems to be crying out for meaningful tax reform. Indeed, barely a week seems to go by without one organization or another calling for it, including the OECD earlier this month. Taxpayers have been promised root and branch-type tax reform for the last 25 years by one government another. Patience is wearing thin, and just fiddling about with tax thresholds won't cut it anymore. Fiddling while Rome burns, you might say.
    Source: http://www.tax-news.com/news/Australian_PM_Reiterates_Opposition_To_GST_Hike____73676.html

  • Dec 23, 2016   Australia: stubborn

    It was always going to be unrealistic to expect Australia to reconsider its stance on carbon taxation so soon after its bad experience the first time around. Once bitten, twice shy, you might say. It therefore comes as little surprise that restoring a carbon tax or an emissions trading scheme is not part of the federal Government's policy, at least for as long as Malcolm Turnbull is Prime Minister – although, in the often Machiavellian world of Australian politics, the premiership has been something of a revolving door in recent years. With the role of the United States in global efforts to reduce greenhouse gas (GHG) emissions now subject to some uncertainty, it could be argued that Turnbull is taking a sensible, pragmatic course. The major argument against Australia's former carbon tax was that it was a self-inflicted blow to the country's economy when carbon taxation was very much the exception rather than the norm. Pragmatists might say that increasing the tax burden while the world's largest economy sits on the sidelines, and with little actual proof that carbon taxes are effective, would be foolhardy. The global carbon tax picture has changed markedly over the last couple of years. China, by far the world's largest producer of GHGs, is fully committed to an emissions trading scheme, and seems to be taking its commitment to the environment seriously. And a consensus emerged in the build-up to last year's Paris climate conference that carbon pricing is the way to go to combat climate change. It is notable for example that Canada is forging ahead with a national carbon tax (minus Saskatchewan) even though its southern neighbor is unlikely to do likewise for the foreseeable future, potentially driving up the cost of doing business and putting it at a competitive disadvantage with the US.
    Source: http://www.tax-news.com/news/Turnbull_Shoots_Down_Australian_Carbon_Tax_Suggestion____72975.html

  • Dec 05, 2016   Australia: guilty

    Once again, this column concludes Down Under. And as you can probably guess, I'm not going to finish on a very amicable note. Indeed, Australia's rap sheet of tax tax-related misdemeanors grew yet longer in the past few days. First, we had further backpeddling on the backpacker tax, followed by the news that Australia is forging ahead with a UK-style diverted profits tax, a BEPS-inspired measure that has made even the OECD a little uneasy. Then the OECD itself was on the Government's case for repeated failures to follow through on tax reform pledges. There was one bright spot though, and it came in the form of an announcement by the Australian Tax Office that it would issue "tax certainty" letters to taxpayers, guaranteeing them that, as far as the tax man is concerned, they are fully tax compliant and that they need not fear checks or audits. However, given the upending of the tax ruling systems in other parts of the world, namely the EU, taxpayers might be forgiven for treating such promises with a pinch of salt.
    Source: http://www.tax-news.com/news/Australia_To_Legislate_For_Diverted_Profits_Tax____72839.html

  • Dec 01, 2016   Australia: digging

    To the other side of the world now, and in Australia we see the Government determined to push through its unpopular "backpacker tax." This is despite warnings about the negative impact it may have on the country's important tourism industry, not to mention agriculture, with farmers warning that they will struggle to fill vacancies caused by a fall in transient foreign workers. You do have to wonder why, after all these years of Australia being a major stop-off on the backpacker trail, the Government is doing this now, and is digging its heels in, too. Well, the answer to that probably has something to do with the Government's plan to close the budget deficit, currently three percent of GDP, almost completely by 2020. However, as has been demonstrated by the UK, the best-laid plans of treasury ministers can easily go awry, especially if the economic assumptions upon which fiscal plans are laid turn out to be overly optimistic. And, according to a recent report by Deloitte, Australia risks undershooting its tax targets for this very reason. To be fair to the current administration, the fiscal problems it is attempting to fix aren't of its own making. However, it would be well advised not to dig a deeper hole for itself.
    Source: http://www.tax-news.com/news/Deloitte_Warns_Of_Widening_Australian_Budget_Gap____72800.html

  • Oct 04, 2016   Australia: silly

    What happens is you get situations like the one in Australia, which put most of its eggs in the commodities basket shortly before watching commodity prices go rapidly south along with economic growth and tax revenue. Now the Government is resorting to desperate measures, and is, quite frankly, beginning to make itself look a bit silly having backtracked on the so-called backpacker tax. The Government may be justified in pointing out that it was the economic and fiscal policies of the previous Labor Government that landed it in its current mess. But that's by the by now, and seems to be the stock excuse when a Government falls short on its promises i.e "it's the last guy's fault!" I'm sure the Government could find an equivalent amount of revenue quite easily from less visible sources. But backpackers do seem like an easy target, especially as most of them are not entitled to vote, and will probably be gone by the time the election comes around anyway.
    Source: http://www.tax-news.com/news/Morrison_Defends_Australias_New_Backpacker_Tax____72350.html

  • Sep 28, 2016   Australia: backfires

    However, governments have a tendency to shoot themself in the foot by enforcing taxes that are expensive to collect, and that may have unintended economic consequences, especially when they are under pressure to increase tax revenue. You could say that Australia's "backpacker tax" – another tax on mobile workers – is a good example. Australia is a major stopping-off point on the global backpacking trail, and many travelers find temporary work in the Lucky Country in order to fund their peripatetic existence. There is a case to say that these temporary workers should pay tax on income earned within Australia. The flip side of this coin is that many backpackers may in future avoid Australia altogether. And as the tourist industry has predictably warned, this could have a detrimental effect on tourism in Australia, not to mention the wider economy. Farmers have also warned that they face a recruitment crisis if backpackers stop coming to Australia to work, and the National Farmers' Federation recently cautioned that "without the labor provided by backpackers, agriculture would face acute shortages." Indeed, the Government of Northern Territory has already suggested that just the idea of the backpacker tax has been enough to prompt a plunge in applications for seasonal jobs from foreign travelers, while Queensland has reported a 10 percent fall in working holiday visitor numbers. And who can blame those for wanting to stay away. After all, backpacking is supposed to be a fun, life-enhancing experience for those about to make their way in the world, and filling in tax returns is about as far from that as you can get.
    Source: http://www.tax-news.com/news/Aus_Backpacker_Tax_Deterring_Tourists_Queensland_Warns____72263.html

  • Aug 23, 2016   Australia: unbalanced

    In Australia, some states are just as disillusioned with the country's fiscal "horizontal equalization regime," (HER) under which GST revenues are collected by the Federal Government, and apportioned to the states using a set formula. Particularly vexed is Western Australia, which only receives back 30 percent of the GST revenue collected from consumption in the state. Yet, mention by Prime Minister Malcolm Turnbull of possible reforms to this system prompted a hostile response from other states, who are doing very well out of the status quo, thank you very much. If WA is determined to get a better deal under the HER system, perhaps it could do worse than enlist the combined lobbying powers of two of the world's largest mining companies – Rio Tinto and BHP Billiton. If the National Party gets its way, both firms are on the hook for paying higher mining levies in the state, and are very unhappy about the prospect of doing so. But persuading the Government to tweak that formula in WA's favor may well get them off it.
    Source: http://www.tax-news.com/news/Turnbull_Seeking_Australian_GST_Overhaul____71976.html

  • May 09, 2016   Australia: scary

    Finally, we go Down Under for the Australian Budget. And I'm pleased to report that Treasurer Scott Morrison ignored the advice of 50 economists and announced cuts in corporate tax. However, I must say the Government has chosen to go about this in a very complicated way, with various changes to the revenue thresholds, discounts rates, and discount caps used to calculate the small business rate of corporate tax. Can't the Government simply apply a lower rate for small businesses, like many other countries do? Doubtless many small business owners in Australia are wondering the same thing. Unfortunately, despite defying the economists, I can't award Australia an encomium. Not only is it making things unnecessarily complicated for taxpayers, it has also created more uncertainty with its decision to impose a UK-style diverted profits tax at a rate of 40 percent. Of course, this will be a popular measure given the level of animosity being shown by the tax-paying public to multinational corporations and their tax-planning strategies. But popular decisions aren't always the most well-judged ones. As has been pointed out, while the UK corporate tax system has the stick of the 25 percent DPT, it now has an element of carrot, with a corporate tax rate due to fall from 20 percent to 17 percent by 2020. Australia still has a corporate tax of 30 percent, and under the Government's two-phase tax cut plan, it is going to take a decade to cut this by just five percent. What's more, as Michael Croker, head of tax at the Chartered Accountants Australia and New Zealand said in response to the DPT proposal, the taxation of multinationals in Australia is becoming based less on the framework of tax legislation and regulations, and more on what the Tax Office thinks they should pay after a little "chat." So, next to its impressive set of dangerous fauna, for companies it looks like the tax system of Australia is becoming a bit scary too.
    Source: http://www.tax-news.com/news/Morrison_Delivers_TaxHeavy_Australian_Budget____71132.html

  • Apr 18, 2016   Australia: diversifies

    So, to lighten the mood a little, 50 economists walk into a bar – what happens next? Honestly, I don't know, but it sounds like there's a good joke in there somewhere. Maybe they start putting the law of diminishing marginal returns to the test on the proprietor's finest single malt. Ceteris paribus, of course. Anyway, there was in fact a bit of a joke involving economists in the news recently. The one involving a letter signed by 50 of them imploring the Australian Government not to cut corporate tax. This in a country which now has an unfashionably high rate of corporate tax, at 30 percent, and is beginning to trail the pack of leading industrial and developing economies by some margin, the OECD average now being about 24 percent. Not that Australia should cut corporate tax just because it's the trendy thing to do. It should do so in order to keep apace. Of course it's also easy to make the case for the opposite, as the aforementioned economists have, that this is a matter of fairness, and that the Government should put the vulnerable in society first, and not, as the letter argues, give tax cuts to big business. All of which sounds wholesome and worthy, but Australia is in a bit of an economic and fiscal hole at the moment, having suffered particularly badly at the hands of the commodity price collapse. It needs investors – investors who will pay taxes and employ people who will pay taxes – but they are unlikely to come if taxes are too high to begin with, and that is just an unpalatable fact of the modern, globalized world we live in. It has actually been the Liberal/National coalition Government's intention to cut corporate tax, but they have been hamstrung for most of their current mandate by very limited fiscal space and the lack of a majority in the Senate. However, I get the feeling that Prime Minister Malcolm Turnbull won't be the slightest bit moved by the economists' pleas given what he has been saying recently about promoting investment and creating a more diversified Australian economy.
    Source: http://www.tax-news.com/news/Australian_Economists_Against_Corporate_Tax_Cut____70941.html

  • Jan 25, 2016   Australia: dreamer

    Here's a novel idea: what if, instead of rewriting the entire world's corporate tax rules in an effort to stop base erosion and profit shifting, governments instead slashed their corporate tax rates, to reduce multinationals' incentives to engage in profit shifting in the first place? Perhaps if most corporate tax rates were roughly at the same low-ish level, let's say 10 to 20 percent, countries wouldn't feel compelled to compete with one another so aggressively for multinational dollars, introducing the sort of schemes so loathed by the European Union. And maybe, just maybe, if corporations were less inclined to exploit such schemes, instead preferring to pay a simple, low income tax, governments' corporate tax revenues might actually go up, rather than diminish, as they have tended to do in recent years. What's more, if less resources were expended on tax planning, companies might have more in reserve to invest, create jobs, and contribute to national economies. As John Lennon famously sang, you may say I'm a dreamer – but I'm not the only one. A similar idea was floated in Australia last week, although not by any politician. No, this proposal to slash Australian corporate tax came from a somewhat unusual source, the Financial Services Commission. It's not often we hear financial regulators comment on tax policy. But that's probably because many politicians feel they can't deviate from the OECD line.
    Source: http://www.tax-news.com/news/Australias_FSC_Calls_For_GSTFunded_Corporate_Tax_Cut____70223.html

  • Dec 22, 2015   Australia: verbose

    Question: When is a tax reform not a tax reform? Answer: When it’s in Australia, of course! Appropriately, given the time of year, it sounds like the sort of weak Christmas cracker joke that needs the post-lunch Rémy Martin to kick in before it becomes vaguely amusing. However, it is kind of true, isn’t it? Certainly, many a government is fond of a tax reform committee or two, especially right after they’ve been elected. And rarely do so-called “root and branch” tax reviews result in change anywhere near that level of ambition. However, if failing to follow through on independent tax reform reports was a crime, they’d be shoving Australia into the international penitentiary and throwing away the key. Does anyone remember the grandly titled Future Tax System Review? Don’t worry if you don’t. This exercise was supposed to lay the path for a tax reform process lasting ten years, but by the time the former Labour Government that launched the Future Tax Review in 2008 was booted out at the 2013 election, I think it had become largely forgotten anyway. Familiarly billed as a “root and branch” look at Australia’s federal and state-level taxes, this was supposed to meet the “demographic, social, economic, and environmental challenges” that lie ahead. Unless I’m missing something though, a new mining tax that was eventually repealed constitutes more of a twig than a root and branch. And now Australia is stuck with a AUD40bn (USD30bn) budget deficit, an uncompetitive corporate tax (30 percent versus a worldwide average of 23 percent), and personal income tax for some pushing 50 percent. Yet the Government still feels the need for yet another consultation as part of its own “White Paper” on the tax system. And politicians all over the country seem to talk about tax reform ad-infinitum (or should that be ad-nauseum?). After a succession of such consultations, what can possibly be left to talk about?
    Source: http://www.tax-news.com/news/Australian_Governments_Discuss_Tax_Reform_Options____69939.html

  • Sep 15, 2015   Australia: Machiavellian

    Which links conveniently to my next subject. I was going to discuss (i.e. execrate) proposals to allow Australia's tax authority access to intercepted telecommunications information to enable it to tackle tax fraud more effectively (so the taxman can now add "spy" to the growing list of functions he now performs in many countries). However, the political machinations of the governing Liberal/National coalition are a far tastier topic! If Machiavelli had been alive today, perhaps he would base his infamous tome on the intrigues of Australian politics, an arena which would put Renaissance Italy to shame. They tend to breed them tough in Australia, and you need to be if you have aspirations to lead – outgoing Prime Minister Tony Abbott was a pugilist in more ways than one, having boxed in his student days before going on to be a political bruiser who pulled no punches. However, despite his flagging popularity ratings, it was still something of a shock when incoming PM Malcolm Turnbull, who won a party leadership contest on Monday and who, by some accounts, is no stranger to Machiavellian political maneuvers himself, landed the sucker punch that ended Abbott's briefing stint in power. Shocking maybe, but not that surprising when you look at recent Australian political history. Such back stabbings aren't restricted to the coalition. Remember, the internecine struggle for power in the former Labor administration, which saw Julia Gillard oust Kevin Rudd, before Rudd got his revenge on Gillard in the dying days of the malfunctioning government. The saying "keep your friends close, and your enemies closer" is sometimes attributed to Machiavelli. But perhaps it needs tweaking for Australian politics. Maybe "keep your enemies close, and your friends as far away as possible" would be more apt. Joking aside, the antics of Australia's leaders can't be doing its reputation the world of good with investors and multinationals businesses, especially at a time when strong leadership is required to sail Australia through some turbulent fiscal and economic waters.
    Source: www.tax-news.com/news/Telecoms_Interception_Powers_Proposed_For_ATO____69121.html

  • Sep 01, 2015   Australia: same ol' tune!

    So Aussie Finance Minister Joe Hockey wants to cut Australia's income tax. Well, excuse me if I don't fall off my chair with excitement. The Australian Government has talked almost incessantly about the need for lower, simpler taxes and the need for a comprehensive shake-up of the Australian tax system, and frankly it's beginning to sound like a broken record (for anyone under the age of 30, that's the equivalent of a crashed iPod). Well get on and do it then! How many expert panels and White Papers do you need to tell you that the tax system needs fixing when you already know the answer! But perhaps I'm being a little harsh on Messrs Abbott and Hockey. It's going to be very difficult for this government to bring about meaningful changes to the tax system for a number of reasons. First, it's broke. Second, it relies on the whims of Clive Palmer to get legislation passed in the Senate. And, third, its mandate is fast running out. Indeed, perhaps it is the peculiarities and eccentricities of Australia's brand of constitutional democracy that has caused previous governments to fail to reform taxation. The way that elections to the lower and upper chambers are scheduled means that, typically, there is about a three-year gap between general elections, so it's little wonder that a long-winded and controversial measure like tax reform never gets a chance to pass. Still, I'm not sure that continually banging on about tax reform is really helping the Government's cause either. At some point taxpayers would like to know whether taxes are going to change or not, and tax reform seems to have been a topic of conversation in Australian politics for what feels like millennia. What's more, ministers are going to have rather eggy faces at the next election if they build up people's hopes, only to later dash them. We voters can be an unforgiving lot.
    Source: http://www.tax-news.com/news/Hockey_Discusses_Income_Tax_Cuts____68946.html

  • Jun 29, 2015   Australia: a start

    There are numerous annual studies attempting to rank nations in terms of how attractive they are to do business in, and Australia fares well in several of them. For example, the World Bank’s most recent Doing Business Index, which, as its name suggests, ranks economies on the ease of doing business, puts Australia in 10th place out of 189 countries. The Heritage Foundation/Wall Street Journal Index of Economic Freedom, which measures the strength of a number of economic and other rights in 178 nations, places Australia a very creditable fourth. However, when it comes to comparing Australia’s taxes with the rest of the world, the Lucky Country fares less well. According to PwC’s Paying Tax Index 2015, Australia languishes in 39th place out of 189, with a total tax rate on an average business pushing 50 percent. To be fair to Australia, it isn’t much worse than several other advanced nations in this respect. In fact, it performs better considerably better than some – the United States for instance is 47th, Germany is 68th, France is 95th, and Japan is 122nd. Still, a corporate tax rate of 30 percent is high these days, and must be acting as an impediment to investment to a certain extent. Even the IMF urged Australia in its recently published review of the country’s economy to reduce and simplify taxes in order to help boost economic growth. And despite numerous root-and-branch reviews of the tax system by successive governments, including by the incumbent one, little has changed recently to improve matters. To a large extent, the current Government can’t be blamed for the slow pace of improvements to the tax system. It was bequeathed a legacy of plummeting tax revenues, rising expenditure, and a huge hole in the budget by the previous government. The recent cancellation of a modest 2 percent cut in the headline corporate tax rate did not win the Abbott Government many fans in the business community. But at least it has gone ahead with tax cuts for small businesses. It isn’t much, but hopefully it’s the start of a longer journey of tax improvements.
    Source: http://www.tax-news.com/news/Australia_Legislates_For_SME_Tax_Cuts____68452.html

  • May 18, 2015   Australia: knee-jerk

    For a government so constrained by the fiscal straightjacket of a massive budget black hole inherited from the previous administration, the 2015/16 Australian Budget, announced by Treasurer Joe Hockey last week, was actually pretty generous, at least as far as small businesses are concerned. There was the promised tax cut for small companies, a so-called tax "discount" for unincorporated firms and a substantial increase in the tax deduction available to small businesses investing in new assets. All things you'd expect from a conservative Government. Ordinarily, this might be enough to earn Australia an encomium. But then Hockey goes and drops a bombshell. Anyone following international tax developments over the last few months may have noticed Australia chomping at the bit to unleash new tax weapons against BEPS. That horse has now well and truly left the stable with the unveiling by the Treasurer of the ominous-sounding Multinational Anti-Avoidance Law, which has been inspired by the UK's much-criticized (by tax experts) diverted profits tax. Few would deny that attitudes to tax planning are changing, and that tax mitigation at the more aggressive end of the spectrum is increasingly unacceptable, irrespective of whether it is right or wrong. The problem is, policy makers aren't taking the time needed to obtain a thorough understanding of the way in which the world of international taxation works, a fact demonstrated by the OECD's impossibly short timetable for the completion of its BEPS work, which this new law pre-empts in a massive way. In much the same way as the diverted profits tax, the Multinational Anti-Avoidance Law seems to me a knee-jerk reaction designed to curry favor with the public. As a number of commentators and business groups have observed, it could well backfire on the Government.
    Source: http://www.tax-news.com/news/Hockey_Delivers_Australias_2015_Budget____68062.html

  • Apr 21, 2015   Australia: good intentions

    When measured against its competitors, the Australian tax system isn't actually that bad. PwC ranks Australia 39th out of 189 countries in terms of how easy it is for a medium-sized company to discharge its tax obligations, which isn't a brilliant score, but it's by no means the worst. Yet the Government is determined to make improvements. It can't help that the Tax White Paper, the pithily titled "Re:think," has come so soon after the last government's failed attempt at comprehensive tax reform. Indeed, the Labor administration's "Future Tax" review was just one of a long line of tax system assessments that must be putting taxpayers in Australia, especially corporate investors with long planning horizons, on a near-constant state of alert about the risks of legislative change. The Government must also be mindful of promising, or appearing to promise, things it can't deliver. Governments all over the world are guilty of pledging radical, growth-boosting changes to tax legislation and administration, envisioning such fantasies as tax returns that can be completed in minutes as opposed to hours, but falling drastically short of initial objectives when it comes to the crunch. And Australia, straitjacketed as it is by a huge fiscal hole, is hardly in a position to begin slashing taxes. The Government's inability to deliver even the most modest of corporate tax cuts – a planned 1.5 percent reduction was canceled last week – is evidence of that. The Government's heart is in the right place, but I wouldn't be getting my hopes up if I were an Australian taxpayer.
    Source: http://www.tax-news.com/news/Frydenberg_Comments_On_Oz_Tax_White_Paper____67821.html

  • Feb 12, 2015   Australia: spent

    If things are looking up for India, Australia seems to be getting itself into a right old mess. I'm reminded of the time I read in the British press that when the new Coalition took over from the departing Labour Government in 2010, Treasury Minister Liam Byrne left a succinct note to his successor David Laws which summarized the UK's predicament in a very simple, but brutally honest, way: "Dear Chief Secretary, I'm afraid there is no money." I think it was meant humorously, a characteristically dry piece of British gallows humor if you like. But it didn't go down too well with the new Government. As far as I know, Australia's outgoing Labor administration left no such notes for Australia's incoming conservative coalition. That's probably because they didn't need to. Former Treasurer Wayne Swan had already laid bare the dire state of the public finances a few months before the 2013 election. And Prime Minister Tony Abbott isn't finding it funny either. Australia is known as the "lucky country." But Abbott must be one of the unluckiest Prime Ministers in recent history. Labor had long since squandered the proceeds of what it was pleased to call "mining boom mark II," and now that China no longer buys Australia's abundant minerals in such vast quantities, Abbott and his Treasurer Joe Hockey find themselves fighting fires all around without the aid of a hose, or indeed any water to go in it. It seems as if tax revenue forecasts are being revised down on an almost monthly basis – the recent mid-year fiscal outlook predicted that tax receipts would fall by UAD32bn over four years. And on February 3, Hockey admitted that the Government still spends AUD100m more per day than it receives in tax. While the Coalition wants to get spending down, it is forced into compromises with tiny parties like Palmer United, which, with its three members, holds the balance of power in the Senate. Publicly, Hockey is clinging to the belief that he won't have to raise taxes and can still afford to cut them. That is admirable, but he must know that the numbers don't add up. A 1.5 percent corporate tax cut for small business is scheduled for July. But I wouldn't be surprised if that gets quietly shelved. Not that I think tax hikes are a good thing, just that Australia might not be able to avoid more of them, after imposing the so-called Budget Repair Levy on high incomes last year. Meanwhile, Abbott himself is clinging on, as Liberal Party dissenters unhappy at his handling of things prepare a leadership challenge. Abbott hasn't been a complete hostage to fortune: politicians don't become unpopular by accident. Still, he needs his luck to change somehow if he's going to survive.
    Source: www.tax-news.com/news/Australian_Deficit_Climbing_Without_Fiscal_Reform____67173.html

  • Dec 18, 2014   Australia: reformist

    Continuing the theme of politicians losing their common sense, I could condemn Australia this week for proposing to copy the UK's daft diverted profits tax. But as usual I've spent most of my invective on the EU. So instead the Australian Government gets a bouquet for attempting to tackle distortions in the country's financial services system caused by taxation. It's not the time to get too carried away by this though – it's only a report, and perhaps the Government may lack the appetite to get its teeth into a particularly complex tax reform when there are probably much higher political priorities. But Prime Minister Tony Abbott is at heart a tax cutter – he has swept aside the carbon and mining taxes, despite being forced into raising income tax as a result of the fiscal mess left behind by the previous Labor Government. Recently, Abbott described the Australian tax system as a "dog's breakfast" and the Government is currently working on a Tax White Paper, which, according to Treasurer Joe Hockey, is about "rethinking how and where we raise revenue." Yet, all this does have a familiar ring to it, not just in Australia, but around the world. Governments often think big but act small when it comes to tax reform, and Australia is certainly no exception. Indeed, in recent years, the Australian tax system has been in a near constant state of review. The previous reform drive began in 2008, when Labor commissioned the Future Tax System Review. This led to a 2010 report by former Secretary to the Treasury Dr Ken Henry, which identified 138 areas for reform. It was, however, quietly shunted into a siding where the weeds continue to grow between the tracks. Perhaps the Liberal/National Government will do better with its White Paper, but I'm not holding my breath.
    Source: www.tax-news.com/news/Report_Published_On_Australian_Financial_System____66642.html

  • Nov 25, 2014   Australia: perseverance

    Neither Modi and Abe has enjoyed the easiest of starts in office. And the same can be said of Tony Abbott, Australia's Prime Minister, who really has experienced a baptism of fire after fighting almost to the death to get his cherished policies, namely repealing the carbon and mining taxes, through a Labor/Green Party roadblock in the Senate, with the help of a rag bag of bizarrely-named splinter parties. The parliamentary deadlock almost triggered the "double dissolution," which would have meant fresh elections, potentially snuffing out Abbott's administration almost before it had properly begun. He has also put tax up, but he can't really be blamed for that. Labor says that if Abbott hadn't repealed the two aforementioned taxes, he wouldn't need to raise taxes at all. The reality is though, that the Liberal/National coalition inherited a fiscal train wreck from Labor, and the decision was largely forced upon him. I can see that Abbott, as a conservative, is a tax cutter at heart, but beyond commissioning yet more examinations of Australian taxation (surely one of the most reviewed tax systems in history) and cutting red tape for small businesses, his fiscal hands are largely tied. He is, however, committing to tax cuts of sorts by ramping up Australia's free trade agenda. It was encouraging to note that a discussion of trade with Francois Hollande recently didn't put him off seeking an immediate launch of FTA talks with the EU. And having inked free trade deals with major Asia-Pac economies (China, Japan and South Korea) Australia's next trade priority is India. None of these countries can be said to be the easiest of negotiating partners, so perhaps some of the luck of the Lucky Country has transferred itself to Abbott's Government. But, as many people say, one tends to make one's own luck, and the Prime Minister certainly loves a challenge!
    Source: http://www.tax-news.com/news/EUAustralia_Trade_Deal_In_The_Offing____66453.html

  • Oct 30, 2014   Australia: simplifies

    So this week's sole encomium is awarded to Australia, for its apparent efforts in hacking back tax and regulatory red tape on small businesses. I say "apparent," because again, it comes with a qualification. Australia is already highly rated on the various measures of how easy it is to do business and pay taxes in various jurisdictions around the world. In this year's Doing Business report by the World Bank, Australia is ranked 11th out of 189 nations in its Ease of Doing Business league table, and it is 4th overall in terms of how simple (or nightmarish) it is to start a business. So the Australian Government deserves some praise for going the extra mile to make the country better still as a place to run a company. But it would be interesting to hear the views of business owners on the ground to see whether they agree with the Government's claim that a veritable forest's worth of legislation and regulation has been felled and has made a difference to their everyday lives. Many Governments like to claim they are on the side of the SME, and they tend to elevate the hard-working self-employed tradeswoman or aspirational entrepreneur to near-hero status (remember Joe the Plumber?). But rarely do these platitudes translate into real action. Some British taxpayers for example might recall the much-vaunted Office of Tax Simplification (OTS), created by the Coalition Government in 2010. Others might have only a rather hazy memory of it because the OTS seemed to float gently out of consciousness sometime in the past couple of years. In the main, it is Governments' instinct to legislate, rather than to de-legislate, so it wasn't surprising to learn earlier this year that, according to the Association of Chartered Certified Accountants, the UK's tax system has become more complex since the OTS was launched, rather than less. The huge volume of anti-avoidance legislation passed in the last four years must have something to with this, as the UK scrambles to bring its budget deficit under control. And Australia is similarly on its fiscal uppers at the moment, so it will be interesting to see whether Tony Abbott's Government is still as committed to its simplification and anti-red tape agenda when the end of its current term approaches.
    Source: www.tax-news.com/news/Australia_Reports_Progress_On_Easing_Tax_Compliance_Burden____66195.html

  • Sep 11, 2014   Australia: resource rationalism

    Now we return to the issue of mineral wealth. For some countries, the random distribution of the resources that keep the wheels of the global economy turning is just plain unfair. Japan for example, is entirely reliant on oil and gas imports, while an ex-Soviet backwater like Azerbaijan is practically swimming in the stuff. As we have already suggested, however, abundant natural resources are as likely to be dangerous for an economy as they are to be a blessing; there are few doubts (if you live beyond the Kremlin walls that is) that Russia's economic development has been stunted to some degree by an over-reliance on petro dollars. A recent report suggests that Australia, the original lucky country, could go down the same road if it is not careful. This study concluded that the mining industry in Australia paid AUD40.3bn (USD37.7bn) in company tax and royalties in the two years to the end of June 2014. In fact, mining accounts for a quarter of all Australia's company tax revenues, up from just 8 percent a decade ago. And these figures don't even take into account the 22.5 percent Mineral Resources Rent Tax (MRRT) on iron ore and coal miners. The fact that these figures come from the Minerals Council of Australia mean that they are probably open to dispute. Even so, they are indicative of a global trend towards more aggressive taxation of mineral extraction projects. It is understandable why governments lean so heavily on the resources sector – if someone struck oil in your back yard you'd surely want a substantial piece of the action. But there must come a point when it is plain uneconomical to get the stuff out of the ground, no matter how much it may be in demand. In actual fact, the MRRT revenues thus far have grossly undershot the estimates of the previous Labor Government, which introduced the tax. And this is further bad news for Australia because Labor had earmarked these revenues for all sorts of goodies, and the failure of this gusher of new tax receipts to materialize has contributed to a dramatic downturn in the Government's financial position. Prime Minister Tony Abbott therefore deserves praise for sticking to his guns and repealing the MRRT while facing the prospect of a "double dissolution" that would have triggered a re-run of last year's election. His success has come at a price though. Former mining magnate Clive Palmer and his merry band of Senators (all three of them) hold the balance of power in the Senate under the guise of the Palmer United Party. You'd think the ostensibly libertarian PUP, which is probably further to the right than the conservative Liberal/National coalition, would welcome the demise of the MRRT and relish the chance to reduce the Government's bloated spending bill. But they've learned fast. Latching onto popular discontent about the package of spending cuts bundled with the repeal bill, they forced many concessions out of the Government in a bid to appear more soft and cuddly. That's politics!
    Source: www.tax-news.com/news/Australia_To_Repeal_Mining_Tax____65726.html

  • Jul 31, 2014   Australia: defusing the time bomb

    Prime Minister Tony Abbott won a decisive victory in last year's Australian general election. But it is Clive Palmer, leader of Palmer United, who, along with his three Senators (four if you count the alliance with the Australian Motoring Enthusiasts Party's senator), who seems to hold the keys to power there at the moment. Yes, they sound more like an Australian Rules football team than a political party, but without the PUP's Senate votes, Abbot wouldn't have repealed the carbon tax, his main objective for this parliament. This whole affair has not really shown the Australian political system in the most favorable light. But I think Abbott deserves something of a break, so his government gets the thumbs up for its proposal to expand tax breaks for pensions, which can only be a good thing given the demographic time bomb waiting to explode in many advanced countries. I read some worrying statistics from the UK a couple of days ago, which showed how live-for-today Brits are going to suffer tomorrow for their lack of prudence today. If attitudes don't change rapidly, a substantial proportion of the population in the future will be relying on state support, and it is a pattern repeated around the world. So anything that governments do to encourage saving for retirement is positive. Let's hope Clive Palmer agrees!
    Source: www.tax-news.com/news/Australia_Seeks_To_Expand_Tax_Breaks_For_Pensions____65333.html

  • Jul 03, 2014   Australia: carbonized

    By the time you read this, the farcical saga of Australia's carbon legislation may have reached the end of its beginning, to use Winston Churchill's words, but it probably won't have reached the beginning of its end. The new Senate will have been installed on July 1st, and after no doubt a considerable amount of ritual grandstanding (all legislatures do it) may have gotten to vote on the repeal of the carbon tax installed by the outgoing Labour government. But if it does so, the minority parties will have extracted a high price by forcing the Government to retain its Renewable Energy Target, and the Clean Energy Finance Corporation which has supported renewable energy projects. They are also going to try to compel the Government to enshrine a carbon pricing scheme in law, although the price would be set at zero until the country's "main trading partners introduce similar systems." Taking into account the effective collapse of the European Union's emissions trading scheme, the US Republicans' outright refusal to contemplate any such scheme, and the deferral for two years of South Africa's carbon tax, the Abbott Government may feel that carbon pricing legislation is a risk it can afford to take, and that the law may sit on the shelf at least until the next election. If on the other hand the Government refuses to pay the price demanded by the Opposition parties, and the Senate rejects the repeal legislation for a second time, there will be a "double dissolution" and Abbott will have taken a massive political gamble. Playing poker for such high stakes is no way to run a country – but that's not Abbott's fault, it's just how the constitution works, or rather doesn't.
    Source: www.tax-news.com/news/Oz_Carbon_Tax_Repeal_Gets_Opposition_Backing____65099.html

  • May 22, 2014   Australia: in a corner

    There is a tale of two countries Down Under this week, with both New Zealand and Australia launching their annual budgets. Both have right-wing governments, but whereas New Zealand is reaping the harvest of four years of sensible, low-key, pro-business taxation policies, turning in annual surpluses as far as the eye can see, Australia's equally pro-business government is left with the bitter stubble of seven years of left-wing Labor rule, and is forced into a tax-raising budget to try to repair some of the damage done to the economy by Labor's spendthrift policies. The Australian Labor Party did occasionally make gestures in the direction of business, but that's all they were – virtually every substantive measure taken by the last government was either populist or overtly negative for the economy. One other important difference between the twin countries, one much bigger than the other, obviously, is that whereas New Zealand has a unicameral Parliament, with no upper house and no competing provincial legislatures (there used to be both, but they were abolished, in the 20th and 19th centuries, respectively), Australia has a real dog's dinner of a legislative constitution, with an upper house (the Senate), elected on a different timescale to the lower house, and with extensive possibilities to change or impede a government's legislative program if it doesn't have a majority in both houses. In addition, the states of the Commonwealth of Australia have significant legislative powers of their own, including over some aspects of taxation. Given the lengths that the framers of the Constitution went to in order to deal with potential stand-offs between the chambers, it's obvious that they were aware of the dangers, so you have to ask yourself why they persisted. Yet they did, and the result is a situation in which an elected majority in the lower house can be completely hamstrung by an antipathetic Senate (does this remind you at all of another large, English-speaking republic?) The constitutional solution prescribed, after the upper house has twice defied the will of the elected parliament, is a "double dissolution," in which both houses are dissolved and new elections take place, and that's what we seem to be heading for now, given that the Senate has dug itself into a position of entrenched enmity to some of the Government's tax proposals. "Checks and balances" are all very well, but this just doesn't seem to be a sensible way to run a country; Australia's current experience seems to bear out the evidence coming from the United States that in modern, over-politicized countries, 19th century legislative contraptions are past their sell-by date, and need root and branch reform. Blame the media, I suppose. One problem (or advantage, depending on your perspective) that Australia doesn't have is a President, since, like New Zealand, it has a (totally powerless) Queen. Canada's constitution, for the record, is closest to that of Australia in legislative terms, but with the crucial difference that the Senate is appointed rather than elected, constructive rather than destructive, you might say
    Source: www.tax-news.com/news/Australian_Budgets_High_Earner_Levy_To_Prop_Up_Finances____64678.html

  • Mar 27, 2014   Australia: on the road to ruin?

    If one name has been prominent through the vicissitudes of Australian fiscal policy during the last ten years it has to be that of Dr Ken Henry. He was charged with redesigning the Lucky Country's tax system, and has done his best, in the face of despite a large degree of inaction on the part of government in response to his recommendations. Now, he says that crisis is imminent, and indeed some scary numbers were thrown around by the outgoing Labour administration, while the new Abbott team has been tight-lipped about the Government's fiscal situation. Last August (springtime in Australia), a joint statement issued by Treasurer Chris Bowen and Finance Minister Penny Wong noted "significant downgrades to tax revenue due to lower terms of trade, falling commodity prices and other factors." They revised down projected tax receipts by AUD7.8bn (USD6.98) in 2013-14, and AUD33.3bn over the period to 2018. Then in November the Grattan Institute said that "Australia needs leaders prepared to make brave decisions to raise taxes and cut expenditure." The Institute said that Government spending had been rising, while tax receipts were falling. The Government would need to prepare people for pain. The underlying problem is presumably that the long-running mineral commodity boom has accustomed Australians to built-in growth, and there has been little need to control expenditure. Astonishingly, Australia has seen average growth of 6.5 percent for the last 20 years. But falling commodity prices sapped growth in the year to last September (when the election took place) to below three percent. In December, the government forecast a AUD47 billion budget shortfall this fiscal year, in its first economic update since winning the elections, equivalent to three per cent of national output, and 50 percent higher than the outgoing administration had predicted. New Treasurer Joe Hockey aims to reduce that deficit to zero within a decade, but the Government has not been specific about how it will close the gap. The Institute's report said that it was unable "to identify expenditure cuts large enough to fix Australia's long run budget challenges," and that any program of changes must therefore include tax hikes, for without them, "budget repair will be hard for Australia, given that its government is relatively small, and major revenue sources like the G[oods] and S[ervices] T[ax] are in structural decline." Compared with many other G20 members, however, Australia is in good shape, and it's possible to overdo the gloom. With debt at barely more than 20 percent of GDP and solid AAA ratings from all the major agencies, even larger deficits can be financed with ease, and this is presumably Joe Hockey's comfort blanket. In the country's longer term interests, let's hope that he doesn't hang onto it too tightly come budget time in May.
    Source: www.tax-news.com/news/Australian_Tax_Crisis_Looming_Says_Henry____64071.html

  • Oct 24, 2013   Australia: decarbonated

    Congratulations, I think, to Tony Abbott's new Australian Goverment which has gone ahead with publishing its bills to abolish the country's carbon tax, which was introduced only last year by the outgoing left-wing administration, and not because I am in favor of global warming, although it will improve the climate in Northen Europe, but because taxing large polluters is not an effective way of tackling the problem, as the European Union is finding out with its Emissions Trading Scheme, which is on life support and will likely collapse altogether. Like "ticket" taxes, most carbon taxes are convenient ways for governments to extract money from large companies under the hypocritical pretence of doing good. In Australia's case, the money was used as a pre-electoral bribe (it didn't work). So how should we control emissions? It doesn't seem to be a very hard problem: most countries have introduced or gone along with requirements to reduce particulate and greenhouse gas emissions in vehicle exhausts. No taxes are required for that, or similar schemes which have been or could be introduced for aircraft, power station and chemical plant emissions. If you break the law you go to prison!
    Source: www.lowtax.net/asp/story/front/Australia_Releases_Carbon_Repeal_Legislation____62364.html

  • Oct 03, 2013   Australia: turns a corner

    Good to see that the new, pro-business Australian Government is off to a promising start, announcing that it will attack the tendency of the tax authority to put all kind of roadblocks in the way of entrepreneurs who want to start up in business. Australia's Treasury department is not alone in detesting small businesses; most Finance Ministries regard entrepreneurs and the self-employed as little more than thinly disguised conspiracies to rob the State, and most Finance Ministers won't be happy until they have criminalized all tax-payers, either because they're too poor to pay the imposts demanded of them and therefore cheat, or because they are in business, with the Government as the enemy at every turn, or because they have moved "offshore." The situation is especially taxing for entrepreneurs when there is a left-wing Government in cahoots with the tax collectors, which has been the case in Australia for the last four years, since the Government eggs on the tax department to be as spiky and difficult as possible. All sane economists know that it's small businesses that create the jobs, and even Finance Ministries can sometimes be pressurized into creating schemes to encourage SMEs; but the tax authority is always there, oppressive and grasping, ready to negate such efforts.
    Source: www.lowtax.net/asp/story/front/Australian_Minister_To_Help_SelfEmployed____62175.html

  • Aug 08, 2013   Australia: spendthrift

    The Australian Government has admitted that lower than expected economic growth has had a "major impact" on tax receipts. The Treasury is expecting a shortfall of AUD33bn in receipts over the next five years. But instead of cutting back dramatically on bloated costs, which would be the normal reaction of a prudent housekeeper, this left-wing government thinks that "seeking to offset the drop in revenue by introducing budget cuts would risk both jobs and growth." Instead, they will protect "growth, employment and essential services," i.e. they will continue to spend money like there is no tomorrow. Significantly, there is an election tomorrow, though, which probably explains their stance. They are expected to lose, but they can still try to minimize the political damage, while gifting their successors a barren Treasury. Whoever wins will have to wield the chopper with a vengeance. By and large, the existing government has been anti-business, and the Australian Business Council has said that the country's tax system must be made more effective and competitive. President Tony Shepherd says that Australia now stands "at a crossroad." What is needed is "a comprehensive road map for the actions and changes required to seize our opportunities and avoid our nation slipping back." The Council's Economic Action Plan for Enduring Prosperity warns that if the current approach to government spending is maintained, it will result in budget shortfall at both federal and state levels of 5 percent of gross domestic product (GDP) by 2050. In current currency terms, this would equate to around AUD75bn (USD67.6bn).
    Source: www.lowtax.net/asp/story/front/Australian_Tax_Revenue_Down____61604.html

  • Aug 01, 2013   Australia: gets something right

    Meanwhile China has responded in what seems to be a highly practical way to weakness in its growth path, if a 0.2 percent reduction in growth from 7.7 to 7.5 percent can be called weakness. Broadly the measures are aimed at removing barriers to the flow of trade, but they also include some actual tariff cuts. An exemption from VAT and business tax for SMEs with annual turnover below about USD35,000 seems particularly helpful. The new Chinese leadership, whatever their political credentials, certainly seems to be off to a good start in economic terms. They also made progress this week on a trade deal with Australia, which has just been revivified after eight years of stop/go talks. China said that Australia had made constructive proposals, while Australia said it was "committed to reinvigorating FTA negotiations with China and delivering an agreement which offers greater prosperity for both countries."
    Source: www.lowtax.net/asp/story/front/China_Australia_Accelerate_FTA_Talks____61532.html

  • Jul 04, 2013   Australia: dumps privacy

    Assistant Treasurer David Bradbury says that the Australian Taxation Office will release more of its tax return data into the public domain, but claims that taxpayers should not be unduly worried about their privacy. The releases will be made within the boundaries of existing taxpayer confidentiality rules, he says. "Of course, I realise that, from time to time, releasing more tax data may generate some short-term political noise," he admitted. This is on a par with "stuff happens." Just recently Bradbury said that the tax affairs of multinational corporations are to be made public in order to "discourage aggressive tax minimization practices by large corporate entities." We have had cause to notice Minister Bradbury unfavorably in this column before, and he is now definitely joining our rogues' gallery. Still, given the ousting of his political boss Julia Gillard last week and the oncoming general election, his time in the sun may be limited (winter down under at present, of course).
    Source: http://www.lowtax.net/asp/story/front/ATO_Set_For_Release_Of_Taxpayer_Data____61230.html

  • Jun 06, 2013   Australia: the stripper

    Australia had a very successful week in its campaign to drive multinational businesses out of the country. Assistant Treasurer David Bradbury said that reforms to increase fiscal transparency form "part of the Government's broader agenda to crack down on multinationals." No, OK, he didn't say that, although he just as well might have said it. What he actually said was " . . . . to crack down on multinational profit shifting and tax avoidance." Yawn. Earlier in the week he had delivered a stinging diatribe against the habits of multinationals, calling them "massive money shuffles." He screeches that companies obtain "a competitive advantage" – how awful! Isn't that exactly what they're supposed to do? And naturally he complains that "families" are left to foot the bill. Well, Mr Bradbury, what about the jobs those families live from, and the income taxes and GST etc etc your Government receives courtesy of those jobs? He's only 37, by the way, and was a tax lawyer with a major commercial law firm for some years before being elected to parliament in 2007. He was twice mayor of Penrith. Impressive.
    Source: www.lowtax.net/asp/story/front/Australia_Publishes_Tax_Transparency_Legislation____60931.html

  • May 23, 2013   Australia: with a hole in its pocket

    It's budget time in the Antipodes, and the Australian Government has excelled itself, capping a disastrous few years with a budget which has been condemned in all directions. Not only have the treasury's financial predictions turned out to be wildly over-optimistic, but the budget does nothing to help business, which even now the socialists in power seem unable to understand is the source of all wealth. Well, they have understood that's where the money is, because ever since they came into power they have done everything they can to take as much as possible of it, to spread around like Marmite on the voters' toast, or should that be Vegemite in Australia? The Government seems to have learnt nothing from the damage it has inflicted on the country: even as the budget was being readied for delivery, and when they must already have known about the fiscal fiasco, the only thing they know how to do is to raise yet more taxes. There is to be a one third increase in the Medicare levy, the contribution individuals make towards health care costs. That's an enormous hike and it's intended to finance a major expansion of disability care; that's no doubt a worthy goal, but the country can't afford it. In their wisdom, the electors have given Julia Gillard's left-wing party two terms in office; elections are due in the fall (spring for Australia) and it will be interesting to see if the electors can look past the bribes the Government has been handing out so liberally and so ruinously. The Australian budget contains an assurance that the country will generate a fiscal surplus in 2015/2016 (something that had been promised for the current year) but no-one seems to believe it; across the water in New Zealand a government of a different stripe is confidently predicting a surplus next year, and is cutting taxes. Enough said!
    Source: www.lowtax.net/asp/story/front/Experts_Critical_Of_Australian_Budget_____60789.html

  • May 09, 2013   Australia: in a bind

    The party has come to a juddering end for Australia's socialist government after four years of spendthrift populism and anti-business tax rises, with a USD15bn hole in its budget. Last year's 3 percent deficit was to have been turned into a budget surplus this year, but there is now no chance of that. The Government says it won't increase taxes, and it's true that debt is fairly comfortably within the Maastricht guideline of 60%, so a deficit is not the end of the world, but you have to wonder just how much damage has been done to the all-important resource sector by the successive waves of taxation. The problem is not the dented performance of existing mining giants, it's the investments that are being made in Brazil, Indonesia or South Africa instead of in Australia because of the inimical economic climate, and there is no way of measuring those. And, by the way, it's not true that taxes are being held down: in the very same week as it announced the fall in revenues, the Government hiked social insurance contributions by a whopping AUD20bn over the next five years in yet another redistributive measure. This is money you haven't got, Mrs Gillard, and you shouldn't be spending it!
    Source: www.lowtax.net/asp/story/front/Australia_Lowers_Tax_Revenue_Forecast____60600.html

  • Mar 28, 2013   Australia: on the band-waggon

    Here's another tax authority boss showing where his priorities lie, and demonstrating his belief that all businesspeople are criminals: " . . . does not regard it as legitimate for international businesses to be left alone to adopt very aggressive structures." It could have been in any one of a number of English-speaking countries, not that they have any monopoly of anti-business sentiment, but in this case it was in Australia. The tax authority is presumably a-political, but the country's socialist government will no doubt be very happy to hear this gentleman's remarks. For a tax collector "aggressive" simply means "tending to reduce the tax payable in my bailiwick." One after another, these people miss the point, which is that any company has a duty towards its shareholders to minimize costs, and tax is a cost. If the person in question doesn't think that the MNCs are breaking the law, and indeed he does not claim that they are, then he should concentrate on trying to create a business-friendly tax system and stop peddling such inimical tripe.
    Source: www.lowtax.net/asp/story/front/New_Australian_Tax_Commissioner_Outlines_Stance____60141.html

  • Mar 14, 2013   Australia: against FDI

    It's not exactly fresh news, having been announced a year ago, but Australia is going ahead with scrapping the 50% discount it offers non-residents on their Australian capital gains. The Government thinks it won't deter investment, but surely they must be wrong? I can see that the measure could be part of an attempt to cool the real estate market, but what about business investment? Certainly no-one could describe the Gillard government as being pro-business: its time in office has seen a slew of measures making business operations more difficult and expensive, including the Mineral Resource Rent Tax, the Petroleum Resource Rent Tax and the Carbon Pricing Mechanism among others. Meanwhile the corporate tax rate at 30% is increasingly out of line with international competitors; instead of reducing the rate as it had promised, to compensate for the MMRT, the government changed tack and spent billions on giving douceurs to its electors. No-one's luck lasts for ever, and Australia's is going to run out if it keeps going like this.
    Source: www.lowtax.net/asp/story/front/Australia_To_Scrap_NonResident_CGT_Discount____60052.html

  • Feb 21, 2013   Australia: not being fair

    Across the Tasman Sea, where there is a left-wing government, another copy of the BEPS hymn-sheet is in use, as the government tries to ensure "fair play" by corporate tax-payers. The words "'fair play" have great resonance in Australia, for historical reasons, so you would expect them to be trundled out by politicians at every opportunity. But this is a misuse of the word "fair", as for example in "fair trade", which cannot be as good as "free trade". Another of my hobby-horses: when I see a product labelled "fair" I move straight on to the next shelf. The particular burden of the Australian minister's speech was aimed at reducing secrecy on the part of MNCs, but that seems peculiar to me. What is secret about companies' tax planning? It may be complicated, but there is very little hidden from shareholders, and if the company is listed, its tax planning is probably explained in grinding detail. Transfer pricing legislation is designed to ensure arm's length pricing, and to elicit details of pricing mechanisms. Where is the secrecy? To conflate transparency with fairness is no more than a populist gimmick aimed at shaming businesses into paying more tax, as happened in the UK with Starbucks.
    Source: http://www.lowtax.net/asp/story/front/Australian_Reforms_To_Tackle_Tax_Base_Erosion____59720.html

  • Jan 10, 2013   Australia: more tax for businesses

    It has taken the Australian government years to reformulate its superannuation system, through endless rounds of exposure drafts, consultations and you name it, but finally the new MySuper system will come into operation this year. It hasn't been a particularly political process: it began under a center-right administration, and it's ending under a center-left regime. And on the whole the new system is better than the old one. But still and all, this is a socialist government, and it is behaving as you would expect, bashing business and throwing money at poorer people. In the particular context of MySuper this simply means an increase in the headline rate of contribution from 9% to 12%, as from July. Sorry, Julia, but wrong! You can dress it up all you want as necessary social improvement. It's just a tax, plain and simple, and more of it is a Bad Thing.
    Source: http://www.lowtax.net/asp/story/front/Australia_Marks_Milestone_In_Superannuation_Reforms____59044.html

  • Nov 22, 2012   Australia: luck runs out

    Now we are for the dark, and nowhere darker at this time of day (as write it's a drizzly morning in Italy) than Australia, where they have taken to retrospective legislation, always a sign of a recidivist government. But it's a new twist to say that legislation will be retrospective when you haven't even written it yet, and for that Australia gets the order of the boot. In fact the law won't be put to Parliament until the fall of 2013, another bad sign because it means the government is legislating too much. In fact this is an extremely sour piece of legislation in itself, and amounts to a further tightening of the GAAR, although the minister responsible was careful not to mention that horrid beast in his press release and kept a smile on his face as he talked - inevitably - about the integrity of the tax system. I expect he also talked about "fairness" and "sharing" but I had already switched off.
    Source: http://www.lowtax.net/asp/story/front/Australia_Consults_On_AntiAvoidance_Reforms____58339.html

  • Nov 01, 2012   Australia: bashing business

    Nobody seems to be able to work out what the results are of the Australian government's carbon tax, imposed since July on a select number of larger companies, although it's at least clear that the government feels it's necessary to compensate 4m households for extra costs they are incurring, mostly perhaps through electricity bills; and felt it had to abandon the decrease in corporation tax it had promised to finance from its minerals resource rent tax. Publicly, the government denies that the carbon tax is responsible for price rises. Whatever the truth of the matter, it's indisputable that businesses are paying more, and consumers are having to be supported. This is called redistribution in my book and is business-unfriendly; so, an execration for the Gillard government!
    Source: http://www.lowtax.net/asp/story/front/Australian_Parties_At_Odds_Over_Carbon_Tax_Impact____57962.html

  • Oct 25, 2012   Australia: puts one foot in the water . . .

    To the Tasman Sea. Or rather its fiscal abolition, through the creation of a common economic space between Australia and New Zealand. I haven't been there, but the differences between the two countries probably seem as pointed, if you are there, as they seem pointless, if you are not. Before anyone gets upset, I speak purely economically. Let national diversity flourish, of course, is my watchword. But it is hard to see why these two countries, of all possible economic pairings across the globe, should have such different fiscal systems. So moves towards economic parity are welcome, and should progress smoothly, although the moves so far seem very tentative
    Source: http://www.lowtax.net/asp/story/front/Australia_NZ_Progress_Toward_Single_Market____57821.html

  • Jul 26, 2012   Australia: being friendly to Italy

    Why do the nations so furiously rage together? (Acts 4:25-26; and of course the Messiah). Indeed. So we must welcome examples of international co-operation, which heaven knows are few and far between. There is the Barenboim's East-Western Divan Orchestra playing Beethoven's symphonies this week at the Proms in London (although that is not the nations working together; it's their citizens. And no, they don't play while reclining on sofas; 'divan' means collection of poetry). But my encomium is for Australia, which is giving tax relief to Italian earthquake donations. That's heart-warming, but why, though? There have been earthquakes in plenty of other countries lately. And, correct me if I'm wrong, but I don't think I noticed the Italian government giving tax relief for donations to Australian flood victims last year. Perhaps there are a lot of Italians in the Australian parliament.
    Source: http://www.lowtax.net/asp/story/front/Australia_Declares_Italy_Earthquakes_Disasters_For_Tax_Purposes____56510.html

  • Jul 05, 2012   Australia: goes ahead with MRRT

    Australia got its first execration for abandoning the corporate tax abatement it had promised as part compensation for its Minerals Resource Rent Tax; now it's going to get another one for the tax itself, which has finally entered into force this week. It's a straightforward socialist attack on business, nothing whatsoever to do with greenery, and the proceeds are mostly being spread around socialist voters, many of them already on benefits. I've never heard such a self-delusive farrago of flatulent and fraudulent justification as has been pouring from the mouths this week of assorted government spokespersons. It simply a piece of theft from shareholders, done for entirely political reasons, and will have entirely negative consequences for the Australian economy. What an unlucky country, to have such a government!
    Source: http://www.lowtax.net/asp/story/front/Australian_Mining_Tax_Kicks_In____56183.html

  • Jun 28, 2012   Australia: doesn't want you to go there

    The pompously named Passenger Movement Charge is not, as you might suppose, what it costs to go to the loo on an Australian train, it's just another boring old illiberal, self-destructive, anti-personnel tax on air transport; and the Australians are putting it up. It's going to raise them another half billion dollars and they're going to waste 20% of that on creating a couple of tourism quangos. 'Nuff said!
    Source: http://www.lowtax.net/asp/story/front/Australian_Passenger_Movement_Charge_To_Rise____55998.html

  • May 24, 2012   Australia: supports saving

    Australia wouldn't have been winning many Brownie points from me lately, but I have to say that the government has been making an effort to help people to save responsibly, and that includes making saving tax-efficient. In fact, quite remarkably, there has been a degree of continuity across governments of differing persuasions, through the Stronger, Fairer, Super Duper Whatever which has gradually been put in place over the last few years.
    Source: http://www.lowtax.net/asp/story/front/Australia_Releases_Details_Of_Superfund_Tax_Relief_Plans____55524.html

  • May 10, 2012   Australia: breaking yet another electoral promise and refusing to reduce corporate tax

    Source: http://www.lowtax.net/asp/story/front/Australian_Budget_Scraps_Planned_Business_Tax_Cuts____55366.html


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