ECONOMY

23 October, 2017

The latest release of data from the 2016 census shows that the gig economy, characterised by temporary jobs and part-time contracts, has taken hold in Australia.

Over the past five years the Australian labor force population has grown by more than 800,000 people, rising to 11,471,298 in 2016, according to data from the Australian Bureau of Statistics.

The number of Australians employed part-time has risen by 14% since 2011. At the same time the number of full-time workers has only gained 4%.

Today, one in three working Australians are employed part-time, up 3% since 2011. A quarter of a century ago, just one in 10 were employed part-time.

Australia ranks only behind Switzerland and the Netherlands as having the highest proportion of workers employed part-time.

The number of Australians with a university degree up 6% in a decade, a higher proportion are driving to work, and work-life balance is more important.

The three most common qualifications, by field of study, are management and commerce, engineering and society and culture.

The proportion of workers driving to work has increased by 0.5% since 2011. Nearly seven in 10 (69%) drive themselves to work while another 5% ride along as passengers. Today an additional 466,885 are commuting by car compared to five year ago.

Sydney, Australia’s biggest city, leads travel by public transport with nearly double the proportion of commuters travelling by train, bus, tram or ferry than any other capital city (Sydney 21%, Melbourne 13%, Brisbane 11%, Adelaide 8%, Perth 8%, Hobart 5%, Darwin 7% and Canberra 7%).

One in five (22%) working men are tradesman or technicians with the three most popular male-dominated occupations being electricians, carpenters/joiners and truck drivers. For women, the top occupations are registered nurses, general clerks and receptionists.

The biggest fall in employment by industry is manufacturing, which has seen the loss of 219,141 workers in the five years since the previous census.

Australian’s working hard but trying to get a balance, Australians are most likely to work 35 to 40 hours per week, with two in five (40%) working these hours.

The census shows the percentage working more than 40 hours a week dropping to 26% in 2016 from 29% in 2011.

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21 September 2017

Australia and Indonesia have agreed to proceed promptly with their plan to implement tariff reductions on key commodities.

The two sides have agreed that Indonesia will reduce tariffs on the import of Australian raw sugar, and that Australia will eliminate import duties on Indonesian herbicides and pesticides.

According to the Australian Government, these measures will boost Australia’s sugar industry and Indonesia’s chemical industry, and will provide flow-on economic benefits to both countries.

The Government also said that Indonesian pesticides and herbicides will be more competitive in the Australian market as a result, offering greater choice to consumers. It also expects Indonesia’s processed food and beverage industries to benefit from lower raw sugar prices.

The Government did not however give a precise implementation date for the tariff cuts.

Talks are currently underway on a proposed Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). Negotiations were first launched in 2010, and “reactivated” in March 2016 following a three-year hiatus. Both sides are hopeful that negotiations can be concluded by the end of the year.

Australian Trade Minister Steven Ciobo said that the latest tariff cuts to be announced “reflect our shared ambition” for the IA-CEPA.

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24 October, 2017

 

Australia’s housing affordability problem has compounded further, after Residential land prices have soared to new highs across capital cities.

 

The median lot price increased 8.5 per cent to $256,683 in the 12 months to June, according to the latest Housing Industry Association-Core Logic Residential Land Report.

 

As a result, the cost of vacant land in Sydney jumped over $1,000 per square metre for the first time, HIA Senior Economist Shane Garrett said.

 

Real progress on affordability would require improved financing of housing infrastructure, monitoring and timely reporting on land release, and speeding up the zoning and sub-division process, he added.

 

Residential land prices rose the most in Melbourne, up 19.6 per cent over the year.

 

Price growth remained strong at 9.8 per cent in Sydney, while Adelaide saw an eight per cent increase and Perth had five per cent gains.

 

Brisbane prices were nearly flat, up just 0.1 per cent over the 12 months, while Hobart was the only capital city to experience a reduction in median land price, recording a 15.8 per cent decline.

 

‘Record high lot prices over the past five quarters are likely to have contributed to worsening affordability and influenced the unprecedented level of high-density residential development that is currently under construction,’ Core Logic commercial research analyst Eliza Owen said.

 

Home sales across the capital cities have continued to rise in recent weeks, but the auction market has softened, with the clearance rate drifting below 70 per cent.

 

New and prospective infrastructure developments such as the east coast’s inland freight rail and a second Sydney airport may open up employment opportunities outside of the metropolitan regions, which may stimulate housing demand in more affordable areas, Ms Owen said.

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TAXATION NEWS

 

16 October, 2017

Australia risks claiming the third highest company tax rate in the OECD if the Turnbull government fails in its bid to shift the top tax rate from 30%, the Business Council of Australia has warned.

BCA has upped its advocacy for change, cautioning that moves by the US, the UK and France to drop their tax rates spelled bad news for Australia when it came to investment and competitiveness.

“As other countries have slashed their company tax rates to improve competitiveness, Australia has been left to languish with a rate that has been unchanged for 16 years, the average company tax rate across the OECD is 24% and falling. The average across Asia is 21%” BCA chief Jennifer Westacott said in a statement.

Australia currently has the fifth highest company tax rate in the OECD and it will be third highest once other countries deliver on their pledges to slash their company tax rates.

Australia needs a pro-growth, competitive tax system for all businesses, big and small, to stimulate investment, raise productivity and increase the real wages of working Australians.”

 

In March, the Senate passed legislation to phase in three years’ worth of changes to the Australian company tax system. The legislation provided for an increase in the maximum turnover threshold for the small business company tax rate from AUD2m (USD1.6m) to: AUD10m, effective from the 2016-17 financial year; AUD25m from the 2017-18 year; and AUD50m in 2018-19. It also retrospectively reduced the company tax rate for these businesses from 28.5 percent to 27.5 percent, from July 1, 2016.

However, the Government failed to secure an agreement on its full Enterprise Tax Plan, which had covered a period of 10 years, and included further increases to the SME threshold each year to 2023-24 and a reduction in the 27.5 percent rate to 25 percent for all businesses by 2026-27.

 

In the times, when the world is moving to lower taxes on corporate investment all around the world. Australia should revamp its tax rates soon.

 

SOURCE

18 October, 2017

The Australian Government has introduced legislation that will clarify that passive investment companies cannot qualify for the small business company tax rate.

Australia’s headline company tax rate is 30 percent. The small business tax rate was recently reduced from 28.5 percent to 27.5 percent, effective July 1, 2016. The maximum turnover threshold for this rate was increased from AUD2m (USD1.6m) to AUD10m for the 2016-17 year, and to AUD25m for 2017-18. The threshold will be AUD50m from 2018-19.

The Government has now announced that it will amend the tax law to ensure that a company does not qualify for the lower company tax rate if more than 80 percent of its assessable income is passive income – such as interest, dividends, or royalties.

This new “bright line” test will replace the previous requirement that a company be “carrying on a business.”

The Australian Taxation Office (ATO) will release guidance on what constitutes the carrying on of a business. The ATO has advised the Government that it will adopt a “facilitative approach” to compliance with the “carrying on a business” test for the 2016-17 year. It will not select companies for audit based on their determination of whether they were carrying on a business in 2016-17, unless their decision is plainly unreasonable.

The amendment will apply prospectively from the 2017-18 income year. In the 2016-17 income year, a company will need to be carrying on a business and have a turnover of less than AUD10m to qualify for the 27.5 percent rate.

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13 October, 2017

The Western Australian Government has introduced legislation to implement a new temporary payroll tax scale for the largest employers.

Under the amendments to the Payroll Tax Assessment Act, Western Australian employers with an Australia-wide payroll of between AUD100m (USD78.4m) and AUD1.5bn will have that part of their payroll taxed at a rate of six percent. The current rate is 5.5 percent.

Western Australian employers with an Australia-wide payroll exceeding AUD1.5bn will have that part of their payroll taxed at 6.5 percent.

The Government estimates that the changes will raise AUD435m over the forward estimates period. The new rates will apply from July 1, 2018, until June 30, 2023.

Treasurer Ben Wyatt said: “We are asking all sectors of the economy to contribute towards budget repair, and that includes the major corporate sector.”

He added that the temporary increases in the payroll tax will affect less than one percent of businesses in the state, and will not have any impact on small firms.

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11 October 2017

The Australian Taxation Office has estimated that the tax gap for the large corporate groups sector is AUD2.5bn (USD1.9bn) or 5.8 percent.

The tax gap is an estimate of the difference between the amount of tax collected and the amount that would have been collected if every taxpayer was fully compliant. The figure for the large market is calculated after all tax is paid voluntarily and the ATO has conducted compliance activities. It is based on data from 2014-15.

The ATO said that at 5.8 percent, the size of the large corporate groups gap “reflects a tax system that is operating well, demonstrates a high degree of voluntary compliance, and compares favourably with other international jurisdictions.”

Large corporate groups contributed AUD41bn in corporate tax in 2014-15.

The definition of a large corporate group is a group with gross income over AUD250m in a given income year.

SOURCE

19 September 2017

A group of 34 Australian health organizations has called for the introduction of a 20 percent levy on sugary drinks.

Together, the groups have produced “Tipping the Scales,” an action plan for addressing obesity.

According to the report, a levy that raises the price of sugary drinks by 20 percent is likely to significantly reduce consumption. It said that the levy could apply to all non-alcoholic beverages with added sugar, and could potentially exclude 100 percent fruit juices and milk-based drinks.

The report cited a 2016 study on the impact of a tax on sugar-sweetened drinks, which it said showed that increasing the price by 20 percent could reduce consumption by 12.6 percent. The group calculated that a reduction in consumption on this scale has the potential to “generate a decline in the prevalence of obesity of 2.7 percent among men, and 1.2 percent among women, and could reduce the number of cases of type-2 diabetes by 800 per annum.”

The report added that the levy would likely lead to the reformulation efforts by manufacturers, to reduce sugar content.

The group would like to see the revenue raised by any such levy allocated to a national obesity prevention strategy and to initiatives that support healthy lifestyles.

Releasing the report, Jane Martin, Executive Manager of the Obesity Policy Coalition, said: “Sixty-three percent of Australian adults and 27 percent of our children are overweight or obese. This is not surprising when you look at our environment – our kids are bombarded with advertising for junk food, high-sugar drinks are cheaper than water, and sugar and saturated fat are hiding on so-called ‘healthy’ foods. Making a healthy choice has never been more difficult.”

The initiative was however rejected by Prime Minister Malcolm Turnbull. He was reported by The Guardian as saying: “I think we have enough taxes and there are enough imposts on us all when we go to the supermarket and we go shopping. The other thing is, too, where do you draw the line? There is a lot of sugar in a bottle of orange juice. Are you going to put a tax on that?”

“I think you are better off focusing on the health message, to get that across, so that people are more aware of what they are eating and the consequences of what they are eating.”

SOURCE

The Australian Government has released draft legislation to clarify that passive investment companies cannot access the lower company tax rate for small businesses.

The draft bill amends the tax law to ensure that a company will not qualify for the lower company tax rate if 80 percent or more of its income is of a passive nature (such as dividends and interest). In addition, it clarifies that the lower rate will only apply if the entity carries on a business in the income year, and if its aggregated turnover for the income year is less than the turnover threshold for entry to the lower rate for that income year.

The company tax rate for small businesses is 27.5 percent. The turnover threshold for the rate was recently increased from AUD2m (USD1.6m) to AUD10m, effective from the 2016-17 financial year. The threshold increased to AUD25m for the 2017-18 financial year, and will rise again in 2018-19, to AUD50m.

The Government intends to continue to increase the turnover threshold, to reach AUD1bn in 2022-23. The threshold would then be removed in 2023-24, making the 27.5 percent rate available to all businesses.

Revenue Minister Kelly O’Dwyer said: “The Turnbull Government is committed to lower taxes on business because we want to see them invest and grow. These amendments will provide greater clarity about who qualifies for the lower company tax rate by excluding passive investment companies.”

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SUPERANNUATION

 

22 September 2017

The Australian Taxation Office has said that there are over 6.3 million lost and ATO-held superannuation accounts, with a total value of almost AUD18bn (USD14.3bn).

The ATO has released its latest figures on lost and unclaimed superannuation accounts, which are correct as at June 30, 2017.

According to the ATO, superannuation funds are holding AUD14.12bn of lost super, while the ATO holds a further AUD3.75bn of unclaimed super.

The term “lost superannuation accounts” is used to refer to accounts held by super funds where they have lost contact with the fund member. By law, where the fund is unable to contact the member or the account has not received contributions for five years, lost accounts and balances are then transferred to the ATO and considered to be “unclaimed super” held by the ATO.

The ATO said that people can lose contact with their super funds when they change jobs, move house, or fail to update their details with their fund. They may also lose track of their super from accounts established earlier in their career. The ATO noted that although the number of people with multiple accounts has been falling, there are still almost 2.3 million Australians with three or more super accounts.

ATO Assistant Commissioner Debbie Rawlings advised that the easiest way for people to keep track of their super is to use ATO online services through the myGov platform. She explained: “By using myGov to track down your super, the money will be transferred to your preferred fund, generally within three working days.”

She added: “Once you have linked your myGov account to ATO online services, you will be able to view all your super account details, including any that have been lost or forgotten, and you can choose to claim or transfer your super online.”

SOURCE

23 October, 2017

The government has introduced a number of bills into Parliament relating to contributions including the removal of an employer loophole with salary sacrifice arrangements. Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 entered the House of Representatives and is aimed at improving choice for members and the integrity of salary sacrifice arrangements.

The bill amends the Superannuation Guarantee (Administration) Act 1992 (SGAA) to ensure that employees under workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions.

If passed, the measure will apply to new workplace determinations and enterprise agreements made on or after 1 July 2018.

The bill also removes a loophole from the legislation that allows unscrupulous employers to use their employee’s salary sacrifice contributions to pay their own Superannuation Guarantee (SG) obligations and ensures that SG is paid on a pre-salary sacrifice base.

The government also introduced Superannuation (Excess Non-concessional Contributions Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, which increases the superannuation excess non-concessional contributions tax from the current rate of 47 per cent up to 47.5 per cent for the 2019-20 financial year and later financial years.

The third bill that was introduced, the Superannuation (Excess Untaxed Roll-over Amounts Tax) Amendment (National Disability Insurance Scheme Funding) Bill 2017, makes changes to the rate at which excess untaxed roll-over amounts are taxed.

The bill amends the Superannuation (Excess Untaxed Roll-over Amounts Tax) Act 2007 to increase the rate at which excess untaxed roll-over amounts tax is payable on an individual’s excess untaxed roll-over amounts from 47 per cent to 47.5 per cent.

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19 October, 2017

The bills for the First Home Super Saver Scheme and the downsizing measures for Australians over the age of 65 have now passed the House of Representatives.

The First Home Super Saver Tax Bill 2017 and Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 were introduced into Parliament last month, and are now before the Senate.

The First Home Super Saver Tax Scheme, first announced in the federal budget in May this year, will enable prospective first home buyers to save for a deposit inside their superannuation account, if passed.

Individuals will be able to contribute up to a total of $30,000 or up to $15,000 annually to superannuation, and later withdraw these contributions from 1 July 2018, said Treasurer Scott Morrison.

“These contributions, along with deemed earnings, can be withdrawn for a deposit with withdrawals taxed at a marginal tax rate less a 30 per cent offset,” he said.

Dixon Advisory managing director — head of advice Nerida Cole previously urged both sides of governments to pass the legislation so that first home buyers have certainty that the proposal will be available for use in 2017.

“The proposed First Home Super Saver Scheme offers tax concessions for first home buyers, to help them get to their savings target more quickly,” said Ms Cole.

The downsizing measures will enable older Australians to contribute proceeds from the sale of their family home into their superannuation accounts.

“From 1 July 2018, people aged over 65 will be able to make an additional non-concessional contribution of up to $300,000 into superannuation when they sell their home which they’ve held for at least 10 years,” said Mr Morrison.

“Both members of a couple can take advantage of this measure, meaning up to $600,000 of contributions may be made by a couple from the proceeds of selling their home.”

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