January 11, 2018
Australian consumer confidence has risen 4.7% in the New Year from mid-December, the highest level since November 2013, according to a new report from ANZ-Roy Morgan.
The study notes that whilst consumer confidence generally rises in January, having done so at an average of 3.6% over the past nine years, the 4.7% rise is notably larger than usual.
ANZ-Roy Morgan weekly Consumer Confidence has jumped to 122.0 – up 5.5pts since mid-December and at its highest for over four years since November 16/17, 2013 (122.9),” said Michele Levine, CEO, Roy Morgan. “The jump is in line with normal trends which show consumer confidence consistently increases in January as Australians enjoy their summer holidays.”
The report cites that general optimism was expressed towards both the current and future financial conditions within the country, in addition to Australia’s economic prospects.
However, the boosted confidence could be short lived, largely due to a number of existing financial burdens within the country, in addition to the general drop experienced in February as more citizens return to work.
“It is encouraging that consumers seemed willing to overlook their high debt burden, moderating house price gains and the impact of higher petrol prices,” said David Plank, ANZ’s Head of Australian Economics.
The jump is in line with normal trends which show consumer confidence consistently increases in January as Australians enjoy their summer holidays, However, ‘unfortunately’ for the Turnbull Government, consumer confidence tends to drift lower as more Australians return to work in the coming weeks.
January 3, 2018
Australia is seeing increased growth in exports and small businesses are leading the way, nearly 88% of Australian exporters are small-medium enterprises. An increasing number of firms are ‘born global’, which means they’re exporting at the very beginning
Small Business and Family Enterprise Ombudsman, believes 2018 will see significant growth in the export activity of small businesses.
Australia’s International Business Survey 2017, commissioned by the Export Council of Australia with support from Austrade, Efic and UTS, reflects the opinions of 941 firms from 19 sectors undertaking international activities in more than 90 overseas markets.
The survey findings also showed that two thirds of respondents expected future sales revenue to increase. In agriculture and wholesaling, two thirds of businesses believe the outlook is better than the previous two years.
Further, just over one third of respondents had applied for finance, however nearly 40% of these were unsuccessful. This illustrates the challenge for small businesses to obtain capital from traditional banks, which require property as security.
It’s great that more entrepreneurs are getting started with exports, but rapidly growing small businesses need sources of finance that don’t require putting the family home on the line.
26 December, 2017
Treasurer Scott Morrison has said that if Australia fails to respond to the newly passed US plan for drastic tax cuts, Australian jobs, wages, and investment will suffer.
Morrison made the comments in response to the passage through the US Congress of the Tax Cuts and Jobs Act.
It is the reduction in the US corporate tax rate from 35 percent to 21 percent that should be of most concern for Australia, said Morrison. He warned that this measure “will send Australian jobs and higher wages offshore, constituting a body slam to our economy and Australian workers if we are not able to reduce our company tax rate as planned in order to maintain our international competitiveness.”
“The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment, and wages with them,” he added.
Earlier this year, legislation was passed to phase in both reductions in the Australian small business company tax rate and increases in the turnover threshold for accessing the rate. These changes affect income for the 2016-17 to 2018-19 tax years.
The Government was however unable to secure parliamentary agreement on its full Enterprise Tax Plan. It included further increases to the SME threshold each year to 2023-24 and a reduction in the tax rate to 25 percent for all businesses by 2026-27. It has reintroduced legislation to this effect to the Senate.
Morrison said that, according to Treasury modelling, reducing the company tax rate to 25 percent could increase the size of the Australian economy by around one percent.
Morrison alleged that, by refusing to agree to the company tax cuts, the Labor Party and its leader, Bill Shorten, “are choosing to export investment and jobs, as well as undermine our tax base as companies look to do their business elsewhere.”
He said: “Every single day that Bill Shorten does not reverse his position on the Government’s Enterprise Tax Plan, is costing our economy. Every single day. He can remove that uncertainty today by saying they will support the Government’s Enterprise Tax Plan and ensure that Australia doesn’t stand at the top end of corporate tax rates around the world.”
4 January 2018
Australia’s Productivity Commission has delayed by nearly five months the release of its final report on the distribution of goods and services tax (GST) revenue.
In May 2017, the Commission was asked by federal Treasurer Scott Morrison to conduct an inquiry into the efficiency and stability of the horizontal fiscal equalization system. Morrison said that his aim was to “fix the system, not plaster over a part of it.”
A draft report was published in October 2017. Since then, the Commission has held a number of public hearings and received written submissions on the draft.
The final report was due by January 31, 2018. However, Morrison has now announced that, following a request by the Commission, the final report will now not be due until May 15, 2018.
“It is important that the Commission has sufficient time to work through all this information and to undertake further analysis and consultation on key issues, as necessary, in order to finalize its recommendations to Government,” Morrison said.
Under HFE, all GST revenue (less the cost of administration) is passed to the states and territories. It is based on the concept that each state would have the fiscal capacity to provide services and infrastructure at the same standard, if each made the same effort to raise own-source revenue and operated at the same level of efficiency.
Morrison said that the inquiry “has already demonstrated in its interim report that the system is broken and needs a real fix,” and that this “needs to be achieved in a way that takes account of the impact during any transition period.”
Morrison stressed that, in order to establish appropriate transition arrangements, it will be necessary “to get a clearer view of expected distributions into the future based on the current model, so the impact of any possible changes can be assessed.”
In its draft report, the Commission concluded that Australia achieves a high degree of HFE and that GST payments are less volatile than other source of state government revenue. However, it is noted that the potential for HFE to distort state policy is pronounced for mineral and state energy resources, and that HFE can make worse the fiscal impact of economic cycles when states experience large economic shocks. It put forward a range of options for alternative approaches to HFE.
Morrison said: “The Coalition Government remains committed to the ‘fair go’ principle of HFE and putting in place a real solution that does the right thing by our national economy. Our goal is straightforward, to deliver a fairer, more durable, and more efficient system for implementing HFE into the future in the national interest.”
The current system was agreed by all states prior to the introduction of the GST in 2000. Reform has been held back as unanimous approval by the states and territories, many of which benefit from the current division, is necessary.
11 January 2018
The Australian Taxation Office (ATO) will gain the power to disclose business tax debts to credit reporting bureaus.
The Government is consulting on draft legislation that will allow such disclosures to be made where the business concerned has not effectively engaged with the ATO to manage the debt.
The aim is to place tax debts on a similar footing to other debts. According to explanatory documents released by the Treasury, the changes will strengthen “the incentives for businesses to pay their debts in a timely manner and effectively engage with the ATO to avoid having their tax debt information disclosed.”
Revenue Minister Kelly O’Dwyer said: “Improving transparency by making overdue tax debts more visible will provide businesses and credit providers with a more complete assessment of the creditworthiness of a business.”
“This will reduce the unfair advantage obtained by businesses that do not pay overdue tax debts, and encourage businesses to engage with the ATO to manage their tax debt.”
JANUARY 8, 2018
Peak health bodies and public health experts have supported calls from the Australian Medical Association to introduce a sugar tax, despite fierce opposition from food and drink industry representatives and politicians.
The chief executive of the Public Health Association of Australia, Michael Moore, said a sugar tax was an effective way to steer people away from unhealthy drinks. Twenty-six countries have already put a health levy on sugary drinks.
There is much more awareness now of the damage which sugary drinks inflict on their consumers’ health, such as their direct correlation with obesity and the development of type 2 diabetes,” he said. “While there has been an attempt at the message of consuming these discretionary foods and beverages in moderation, it has been ineffective in significantly reducing excessive consumption of sugary drinks.”
The president of the Australian Medical Association, Dr Michael Gannon said that tackling the impact of sugar on health was a struggle comparable to taking on big tobacco.
“Improving the nutrition and eating habits of Australians must become a priority for all levels of government,” Gannon said. “We need to drag government to action with a variety of measures. One of the easiest to implement, and one of the simplest to call for, is a tax on sugar sweetened drinks. We don’t think that’s the silver bullet to fix our obesity crisis but it’s certainly part of the jigsaw.”
The AMA’s Position Statement on Nutrition 2018 says a tax on sugar sweetened drinks should be introduced as a matter of priority.
Fruit and vegetables should be kept affordable for those on low or fixed incomes, even if it contradicts market demands, the AMA argues. Money raised through a sugar tax could be reinvested towards supporting good nutrition and education, Gannon said.
Research published in the Australian and New Zealand Journal of Public Health in November found one in seven adolescents were drinking more than two cups of sugar sweetened drinks a day – amounting to 11 teaspoons of sugar – and were up to three times more likely to have oral health problems than those who did not drink sweetened beverages.
A study published in the September edition of the Journal of the Academy of Nutrition and Dietetics found sales of soft drinks at the Alfred hospital in Melbourne dropped by 27.6% during a 17-week trial when the price of sugary drinks was increased by 20%. Bottled water sales increased by almost the same amount.
A separate study from the school of health and social development at Deakin University found Australia’s lowest socioeconomic group would receive the greatest health benefits from a tax on sugary drinks. The study used economic modelling to show the increase in annual spending on sugar sweetened drinks would amount to an average of $30 per person, described as a modest increase when the health benefits were considered.
“The health minister is on the record as ruling out the introduction of a sugar tax and we welcome this decision,” Rogut said. “The views of business and consumer groups like ours are often not afforded the same level of consideration as the powerful health lobby, so we are especially grateful that, in this instance, common sense seems to have prevailed.”
JANUARY 16, 2018
Australia is taking on Canada at the World Trade Organization over the sale of wine in British Columbia, Ontario, Quebec and Nova Scotia, alleging that a variety of measures “appear to discriminate” against imported wine.
The complaint follows an existing case filed by the United States last year at the WTO that specifically takes on B.C., where the rules allow only B.C. wine to be sold on the shelves of the province’s grocery stores. Australia, New Zealand, Argentina and the European Union have all joined the United States in that complaint, one that is currently in process.
The new Australian complaint includes the B.C. grocery-store issue and expands on the U.S. case to also claim that imported wine in B.C. is “subject to a wide range of mark-ups, fees and taxes.” Australia further argues that measures around the sale of wine in Ontario grocery stores appear to favour Canadian wine. Quebec and Nova Scotia are also alleged to have measures in place to favour wine from those provinces.
The broader backdrop to the trade dispute is the larger question of the proposed Trans-Pacific Partnership trade deal. The original agreement was made in 2016 but the United States pulled out. Of the remaining 11 countries, Canada now stands as a holdout, after contentious meetings in November in which the other countries, including Australia, were ready to push ahead.
Canada is balancing the TPP talks with the negotiations over the future of the North American free-trade agreement with the United States and Mexico.
Canadians buy about $7-billion of wine each year, according to Statistics Canada. B.C. residents account for about $1-billion, while Ontarians spend the most, at $2.4-billion.
Of the total, Canadians spend $5-billion on imported wine and $2-billion on domestic wine.
Australia exports about $2-billion of wine a year. A 10th – $200-million or so – goes to Canada, according to trade group Wine Australia.
British Columbia will work closely with Ottawa “to defend B.C.’s interests” as the WTO process unfolds, Bruce Ralston, the B.C. minister in charge of trade, said in a written statement.
When David Eby, now B.C.’s Attorney-General, was in Opposition, he said that British Columbia would likely lose the WTO case the United States had filed. The NDP MLA made the comments in early 2017 and blamed the then-Liberal provincial government for “the mess their policy created.”
9 January 2018
The Minerals Council of Australia (MCA) has drawn attention to an independent study into the tax contribution of the mining industry, noting that firms paid an average effective tax rate of 51 percent in 2015-16.
This was the second-highest effective tax rate for the sector since Deloitte first published its “Access Economics’ Minerals Industry Tax Survey” nine years ago.
The report says the Australian minerals industry paid AUD185bn in federal company tax and state and territory royalties between 2005-06 and 2015-16.
The MCA said the findings of the survey, produced with input from 25 mining companies, “conclusively busts the myth that Australian mining companies pay little or no tax.”
Commenting on the findings of the report, the MCA said: “By paying its fair share of company tax and royalties, the Australian minerals industry helps to fund the schools, hospitals, police, and other essential services on which Australians depend. Australia’s world-class mining sector could make an even greater contribution to our economy and society if the company tax rate – currently the fifth-highest in the 35-member OECD – was reduced. Australia’s 30 percent company tax rate is too high for a capital-hungry nation which needs to encourage business investment.”
“Competitive State and Territory royalty regimes are also critical to ensure Australia can attract mining investment capital in the face of fierce competition with other minerals-rich nations. Effective tax reform would encourage companies to invest and create more jobs, especially in regional communities.”
January 19, 2018
This week the ATO announced that it will extend the due date for lodgement of self-managed superannuation fund (SMSF) annual returns for 2016–17 to 30 June 2018.
Deputy Commissioner James O’Halloran said “We recognise there are some major new considerations and decisions for SMSFs and their advisers to make in this first financial year of operation of the superannuation reforms that came into effect from 1 July 2017.
“We have therefore decided to extend the lodgement date for 2016–17 SMSF annual returns so that SMSF trustees and their advisers can focus on these important matters.
“We have heard from many professionals that their current focus is on providing important advisory services to their SMSF clients to ensure they are in the best position to make decisions to take into account some of the recent superannuation reforms including eligibility for transitional capital gains relief.
“Accountants, tax agents and SMSF advisers play a key role in ensuring SMSFs are best placed to make informed financial decisions following the recent reforms. Recognising the crucial considerations and decisions that SMSFs and their advisers need to make in this first year we have sought to reduce some of the burden of SMSF compliance work by extending the due date for 2016–17 SMSF annual returns.
“We acknowledge and appreciate the ongoing support tax professionals and SMSF advisers provide in facilitating change, especially at this important time for the sector and the broader superannuation industry.
“The extended lodgement timeframe also means that all SMSFs who are eligible for transitional CGT relief as a result of the $1.6 million transfer balance cap will have additional time to consider and make relevant elections before the due date for lodgement of their 2016–17 SMSF annual return”, Mr O’Halloran said.
Mr O’Halloran also noted that because the extended due date of 30 June 2018 falls on a Saturday, in accordance with relevant administrative provisions of the tax laws, lodgement of 2016–17 SMSF annual returns can made on the next business day, Monday 2 July, without penalty.
January 18, 2018
The ATO released its latest statistics on the self-managed super fund (SMSF) sector with the publication of the annual Self-Managed Superannuation Funds: A Statistical Overview 2015-16.
Assistant Commissioner Kasey Macfarlane said the annual overview data shows that the sector continues to grow, with positive returns on assets and increasing fund and member numbers.
“SMSFs account for 99.6% of all superannuation funds and 30% of the $2.3 trillion in total superannuation assets in Australia,” Ms Macfarlane said.
“The annual statistics highlight the growth of the SMSF sector. In the five years to 2016–17 we have seen the number of SMSFs grow by 26% to 597,000, with total assets worth $697 billion.”
“In 2015–16, SMSFs also experienced a positive return on assets of 2.9%. SMSFs have experienced annual positive growth for the five years to 2016 and are in line with the return on investment achieved by APRA funds of more than four members. In 2015–16 both SMSFs and APRA funds report the same return of 2.9%.
“This year we revised our data set used to determine SMSF trustee structure. Last year we reported 77% of SMSFs had an individual trustee structure, however moving to this more reliable data set has resulted in significant changes At 30 June 2017, 57% of SMSFs had a corporate trustee.”
Ms Macfarlane said the data shows some interesting trends in relation to SMSF member demographics and borrowings.
“While we continue to see strong growth in average member balances overall at 26% over the last five years, female members have grown their balances at a higher rate than their male counterparts, at 30% and 22% respectively over the last five years.
“We also continue to see a decrease in the median age of new members in newly established funds. In 2016 the median age was 47 years compared with 50 years in 2012. This tells us that more trustees are entering the SMSF sector at an earlier stage in their working life than in previous years.
“The annual overview also reports that in 2015–16, 7% of SMSFs held assets under limited recourse borrowing arrangements (LRBAs), slightly higher than the prior year of 6%.
“The value of estimated assets held under LRBAs as a proportion of total SMSF assets remained relatively low in 2015–16 at approximately 4%. Additionally we continue to see that real property assets make up over 90% of the total value of LRBA investments by SMSFs.
“SMSF LRBA assets are supported by borrowings. Our current data cannot distinguish the level of total borrowings by SMSFs related to LRBAs specifically. At June 2016, the estimated value of total SMSF borrowings were equivalent to 3% of total SMSF assets. The proportion of SMSFs with total borrowings increased from 4% in 2012 to 9% of funds in 2016.”
Accompanying this release will be a feature piece focusing on the characteristics of funds that lodged their first return in 2012 and tracing where they were five years later, in 2016.
12 January 2018
The Australian Government is consulting on two measures designed to strengthen the superannuation tax rules.
The consultation covers proposals that were previously announced in the 2017-18 Budget.
The first measure includes a member’s share of the outstanding balance of a Limited Resource Borrowing Arrangement (LRBA) in their total superannuation balance (TSB). Under the current rules, the liability under a LRBA reduces a member’s TSB by reducing the amount available for commutation or withdrawal. The new measure will cancel out this effect.
The second measure ensures that non-arm’s length expenditure is taken into account when determining whether the non-arm’s length income (NALI) taxation rules apply to a transaction. The change is intended to deny concessional tax treatment to income derived from a non-arm’s length arrangement where fund expenditure is set below-market rates.
The aim of both measures is to ensure that LRBAs or related party transactions cannot be used to circumvent superannuation contribution caps. The Government said the changes are not intended to prevent the use of LRBAs.
January 16, 2018
To reflect what modern New Zealanders are spending their money on, NZ has updated its Consumer Price Index (CPI).
The CPI, a basket of typical goods and services bought by consumers, is updated every three years and based on surveys carried out by Stats NZ.
New items featuring in the basket include olives, craft beer and bicycle helmets, while Uber fares, Airbnb rents and body massages are among the new services added.
Also featuring for the first time are smartphone accessories and clothing alterations, but sewing machines are out.
Other items and services to be expelled from the CPI include DVD players, DVD rental, MP3 players, in-car satnavs, external computer drivers, cottage cheese, luncheon meat and prams.
Stats NZ’s Prices Senior Manager Jason Attewell said: “People are changing what they buy to keep up with changes in technology, and as a result, we’re removing several items from the CPI basket. These items are still available to buy, but New Zealanders just don’t spend as much on them.
“We’re introducing the sharing economy to the CPI to keep it relevant for New Zealand. People don’t have as much time to do things themselves, and are prepared to pay others to do jobs for them.”
The New Zealand CPI has been compiled and updated for more than 100 years, reflecting Kiwi consumer habits over time. For instance, early victims to be culled from the basket include tapioca in 1914, candles in 1949 and powder puff in 1955.
More recent removals include mops in 1974, men’s pyjamas in 2002 and swimming pools in 2006. Among the standout more recent additions include pets, cider and frozen prawns, all added to the CPI basket in 2016.
January 17, 2018
The long awaited, rail project connecting Brisbane and Melbourne has reached a significant milestone after the first shipments of track steel were received.
Spanning some 1,700km, the $8.4bn project will require 266,000 tonnes of steel to complete, with this first delivery for 14,000 tonnes enough to cover a 60km section from Parkes to Narromine. Liberty OneSteel Whyalla Steelworks is providing the material.
Deputy Prime Minister and Minister for Infrastructure and Transport Barnaby Joyce said: “This project is a game-changer for our regions, creating thousands of jobs nationwide, and returning $16bn to the national economy during the delivery phase and the first 50 years of operation.
“It will improve travel times for local farmers and producers, reduce the number of heavy vehicles travelling through small towns, and slash business costs for freight operators.”
It is thought that the new line will bring journey times to under 24 hours once completed in 2024-25.
Construction works on the Parkes to Narromine section will commence once all necessary approvals have been received. Works will include reconstruction of the existing track, replacement of bridges and culverts, enhanced level crossings and crossing loops.
January 8, 2018
Insurance provider Suncorp has said it expects the recent hailstorm that swept across Melbourne to cost it somewhere in the region of $160mn to $170mn.
Through its brands such as AAMI, GIO and Suncorp, it expects around 21,000 home and vehicle-related claims, and will blow its payout budget for the fifth period in a row.
Indeed, Suncorp’s total natural hazard claim costs across the whole of ANZ for the six months to 31 December 2017 is currently estimated to be in the range $406-416mn, which is $60-70mn above its allowance for the half.
Suncorp CEO & Managing Director Michael Cameron said: “Following the recent storm in Melbourne we quickly established a hail assessment centre in Melbourne’s east. This facility is assessing as many as 600 cars per day.
“The centre is designed to quickly triage and assess all hail affected vehicles, so we can make the repair process as seamless and efficient as possible for our customers.”
The storm struck on 19 December 2017, the Insurance Council of Australia (ICA) declaring it a catastrophe for damage that struck parts of regional Victoria and metropolitan Melbourne. At the time insurance losses were predicted to be at $105mn.
The storm was the fourth catastrophe declared by ICA, following storms and bushfires in New South Wales in February, and Cyclone Debbie which struck March and led to $1.61bn in claims.