Mixed views stir pot on corporate tax

Assumptions drawn by the Business Council of Australia (BCA) in its Corporate Taxation: An International Comparison – 2006 Update, prepared in conjunction with KPMG, have been labeled ‘misleading’ by Treasurer Peter Costello.

The corporate taxation update compared the overall burden of taxes on Australian companies with those in competitor countries, such as trading partners, the OECD and the European Union.

The report alleges Australia’s corporate tax burden – up from 5.1 per cent of GDP a year ago to 5.7 per cent – is unfairly high compared to countries such as the United States and United Kingdom.

It also points out that in the past 12 months Australia’s corporate tax rate has remained at 30 per cent, while in the same period there have been falls in the average rates in the OECD from 29.1 per cent to 28.4 per cent, 25.3 per cent to 24.8 per cent in the European Union and 30.4 per cent to 30.1 per cent in the Asia-Pacific region.

Treasurer Costello says as corporate tax is levied on profits, the BCA’s approach perversely rates countries with more profitable corporate sectors as less internationally competitive. He says the results do not really illustrate tax comparisons, and what they actually show is how profitable Australian companies have been in recent years.

According to Treasurer Costello, growth in company taxes is explained by growth in profitability rather than any tax increases. He says profits have gone up by 69 per cent over this period while company taxes have increased by 65 per cent.

In-house GST advisers 'underpaid and undervalued': survey

In-house good and services tax (GST) advisers in Australia believe they are underpaid and that their role is undervalued, according to a survey conducted by Deloitte with the support of the Corporate Tax Association (CTA) at the CTA annual ‘GST Big Day & A Half Out’ in October 2006.

The investigation into the role of the Australian in-house GST adviser, in which 80 advisers participated, found that half of those surveyed were of the view that their peers in in-house income tax roles were more highly paid than those in GST advisory.

Sixty per cent said they believed that their organisation’s chief financial officer (CFO) considers GST to be either not very important, of little importance or of no importance to the organisation’s business today.

On the other hand, the vast majority – 86 per cent – perceived that their head of tax considered GST to be either very important or important.

Participants were also quizzed on their relationship with the Australian Taxation Office (ATO). Although channels of communication appear to be good, 70 per cent of the respondents considered the ATO’s general stance on GST to be ‘too aggressive’ or ‘aggressive’. Fifty per cent were of the view that the ATO rarely or never focuses on the right areas of the business with regard to GST compliance.

Half agreed with the view expressed by the ATO in its 2006-07 compliance program that some large businesses have failed to keep up-to-date their internal corporate governance processes and systems for GST.

Looking into the future, there was a significant discrepancy between what people thought they should focus on in the next two years, compared to what they thought they will end up focusing on. Forty four per cent of the respondents were of the view that system and process improvement should be the focus, but only 28 per cent thought that this would be the case, with compliance and risk being the anticipated focus.

Almost half of the audience believed GST ‘risk’ to be higher for their business than income tax, while more than half believed there to be less GST ‘planning opportunities’ than income tax planning opportunities.

While the 80 advisers who participated in the survey were thought to represent more than 50 per cent of the current in-house GST advisers in Australia (excluding the profession), it was acknowledged by Deloitte that the sample group is a small population and the results should be treated accordingly.

For further information, view the survey results from the Deloitte website.

Tax Press-Australian Financial Review

'Contribution conundrum for volunteers' (Does doing charity work allow people to contribute to super over 65?) AFR [p 29], Wed 21.2.2007

'Ratings not a reason to switch' (Complex super rules mean good advice is needed) AFR [p 32], Wed 21.2.2007

'ATO taxes the patience of big business' (Report that big companies are increasingly unhappy with the Tax Office and have registered a drop in their overall satisfaction levels) AFR [p 1], Tue 20.2.2007

'$600,000 storm in a coffee cup' (Report of a court dispute over a $600,000 NSW stamp duty bill on a multimillion dollar international branding deal re a coffee franchise) AFR [p 5], Tue 20.2.2007

'Getting a handle on small business' (Proposed tax changes seen as a help to small business, but clarification wanted on exactly what is a small business) AFR [p 17], Tue 20.2.2007

'Call for tax cuts to boost productivity' (The Australian Industry Group calls on Federal Government to cut tax burden for low-income families and to cut the company tax rate) AFR [p 9], Mon 19.2.2007

'High corporate tax checks productivity' (Opinion that tax reform in Australia is unfinished business) AFR [p 63], Mon 19.2.2007

'Vizard caught up in tax office fraud probe' (Report of a Victorian Supreme Court case involving allegations of tax fraud) AFR [p 3], 17-18 February 2007

'Planners test advice limits' (Report that the financial services industry is lobbying the Federal Government to allow financial planners to provide limited advice) AFR [p 5], 17-18 February 2007

'Make your salary work for you' (Strategies to boost superannuation savings before, and after, 1 July 2007) AFR [p 44], 17-18 February 2007

'How to keep them down on the farm' (Changes to the assets test treatment of land) AFR [p 45], 17-18 February 2007

'AMP super probe widens' (Report that AMP will offer more clients a full review of their superannuation investments) AFR [p 1], Fri 16.2.2007

'Tax break runs to listed trusts' (Employee share scheme tax concessions extended to certain stapled securities) AFR [p 30], Fri 16.2.2007

'Female lawyers head to court over tax' (Report that the Victorian Women Lawyers group is fighting the Tax Office in the Federal Court as to whether or not it is a charity) AFR [p 57], Fri 16.2.2007

'Work needed to bolster confidence' (Comment that the advisory industry needs to work on its compliance with the disclosure laws that govern the financial services sector) AFR [p 73], Fri 16.2.2007

'Call for rethink on hasty tax changes' (Concerns that a one-year reprieve from tax changes for non-forestry agribusiness MIS is not enough) AFR [p 6], Thur 15.2.2007

'Wickenby on the defensive' (Tax Commissioner appears before Senate committee and talks about Operation Wickenby) AFR [p 9], Thur 15.2.2007

The Australian

'Make your contributions to super tax deductible' (Strategy to reduce employment income and to make personal super contributions tax deductible) AUSTRALIAN [Wealth, p 4], Wed 21.2.2007

'Join the millionaire club' (Strategies to make undeducted contributions to super of up to $1m before 30 June 2007 eg home equity, sell investment property, CGT exemptions on the sale of business, contribute to parents' super) AUSTRALIAN [Wealth, p 5], Wed 21.2.2007

'Allocated pensions to last longer' (Report on changes to the way some allocated pensions operate may mean they will last much longer) AUSTRALIAN [Wealth, p 9], Wed 21.2.2007

'Put those tax cuts into super' (Edited excerpts of former prime minister, Paul Keating's address to a pension forum on current government policy on super and ageing population) AUSTRALIAN [p 32], Mon 19.2.2007

'ATO warns greens over politicking' (Report that environmental groups have been warned they could be stripped of their status as charities for engaging in political activity) AUSTRALIAN [p 5], 17-18 February 2007

'Taxman plans test case on schemes' (Report that the Tax Office will issue a draft ruling on its revised view of managed agribusiness schemes within a month, then identify a test case) AUSTRALIAN [p 33], 17-18 February 2007

'A MIStake in investment schemes' (Comment that there are likely to be fewer tax deductions for agribusiness schemes in the future) AUSTRALIAN [p 39], 17-18 February 2007

'Go SMSF' (According to a SMSF administrator, 3 times as many people than usual are transferring assets, especially into self-managed funds) AUSTRALIAN [p 39], 17-18 February 2007

'Former watchdog caught in tax net' (Report of Federal Court dispute regarding Tax Office revised assessments re tax losses involving horse-breeding joint venture) AUSTRALIAN [p 1], Fri 16.2.2007

'AMP super bungle blows out to 35,000' (Update on bank's internal review process after switching super advice issue) AUSTRALIAN [p 21], Fri 16.2.2007

'A world of horses, law and tax' Publish(Further report of litigation between a taxpayer and the Tax Office re claims of lease and interest expenses claimed as losses) AUSTRALIAN [p 24], Fri 16.2.2007

'Foreign flyers ponder stamp duty legal action' (Report of international airlines considering legal action against Vic Government to stop possibly illegal stamp duty payments) AUSTRALIAN [p 29], Fri 16.2.2007

'More charges to come in tax fraud probe' (Report that the Tax Commissioner has told a Senate committee that more individuals were likely to be charged under Project Wickenby) AUSTRALIAN [p 2], Thur 15.2.2007

'Tax bug threatens to bite farmers' (Claim that the Tax Office treats compensation payouts for water buyouts as assessable income) AUSTRALIAN [p 6], Thur 15.2.2007

Melbourne director of self-managed super companies fined

ASIC has announced that Mr Damian Tolson has appeared before the Melbourne Magistrates Court charged with operating a financial services business without a licence. ASIC said Mr Tolson pleaded guilty to the charge and was convicted and fined $2,500. ASIC alleged that Mr Tolson, a director of several Personalised Finance Solutions (PFS) group companies, encouraged people to invest their superannuation monies in property development projects being undertaken by PFS. In most cases, ASIC said the superannuation funds involved were self-managed, and had been set up for the investors by another PFS company.

Tax Press-Australian Financial Review

'Tax schemes win stay of execution' (Report that the Tax Office is expected to offer a one-year reprieve to non-forestry agribusiness MIS) AFR [p 1], Wed 14.2.2007

'Insurance a benefit, but it depends' (Claim that, with the coming abolition of RBLs, super funds need to be careful about boosting their life insurance cover) AFR [p 29], Wed 14.2.2007

'Costello should rule on buybacks' (Letter to the Editor from S E K Hume QC about off-market share buy-backs - he says tax is the main consideration) AFR [p 52], Wed 14.2.2007

'MIS investors seek more time' (Prediction that non-forestry MIS investors will get transitional arrangements to ease the Government's tax decision) AFR [p 6], Tue 13.2.2007

'Super performance but fees are on the rise' (Claim that red tape and increased advertising costs are eradicating the beneficial effects of choice of super fund) AFR [p 20], Tue 13.2.2007

'Change comes slowly for ATO' (Report that the Tax Office's $450m Change Program has run into difficulties, with performance and resource issues slowing progress) AFR [p 31], Tue 13.2.2007

'ATO warns on super fund risks' (ATO and the Government warn investors about the risks of establishing self-managed super funds) AFR [p 1], Mon 12.2.2007

'PM might act to ease tax scheme pain' (Report that the PM is considering introducing transition arrangements re the Government's planned changes to the tax treatment of non-forestry MIS) AFR [p 1], Mon 12.2.2007

'Plan to lure foreign research spending' (Report that multinationals will be encouraged to conduct R&D under plan to lift restrictions on foreign companies claiming tax deductions on R&D conducted in Australia) AFR [p 1], Mon 12.2.2007

'Farm funds tapped as big dry hits hard' (Report that farmers are starting to draw down on their Farm Management Deposits) AFR [p 5], Mon 12.2.2007

'Possible relief for penalty tax' (Call for threshold to be raised before the superannuation no TFN penalty tax applies) AFR [p 54], Mon 12.2.2007

'Costa rejects end to stamp duty' (Report that NSW Treasurer rejects call for stamp duty exemption on all new houses and apartments across NSW to boost housing industry) AFR [p 57], Mon 12.2.2007

'Small business sceptical of red-tape reforms' (Draft legislation released to standardise thresholds for small business tax concessions from 1 July 2007) AFR [p 7], 10-11 February 2007

'Miserable - tax schemes backlash' (Reaction to the Government's changes to the tax treatment of non-forestry MIS) AFR [p 25], 10-11 February 2007

'Agribusiness threatened with capital drought' (Government is being pressured to provide transitional arrangements for its planned changes to the tax treatment of non-forestry MIS) AFR [p 25], 10-11 February 2007

'Super help for repayments' (Ways to use superannuation to accelerate mortgage payments) AFR [p 39], 10-11 February 2007

'Stay ignorant at your own peril' (Legislation will lift the bar for DIY super fund trustees) AFR [p 40], 10-11 February 2007

'MPs appeal for tax scheme phase-out' (Report that some Government MPs have appealed for a phase-out period for agribusiness schemes in light of Cabinet's decision to end tax breaks) AFR [p 3], Fri 9.2.2007

'Tax agents fight rise of bookkeepers' (Report that tax agents and accountants fear that the Tax Office wants to provide further support for bookkeepers, at the expense of accountants) AFR [p 25], Fri 9.2.2007

'MPs furious over tax scheme decision' (Report of fury over Federal Government's decision to allow the Tax Office to end tax breaks for agricultural schemes without transitional arrangements) AFR [p 1], Thur 8.2.2007

'Dutton ploughs on rocky road' (Further report on Government's decision on agricultural MISs) AFR [p 4], Thur 8.2.2007

'Call for car tax' (According to report tabled in Parliament yesterday, Australia must consider imposing vehicle congestion charges in major cities) AFR [p 11], Thur 8.2.2007

'Investor gains from DIY super flows' (Claim that more investors are deciding to place super money in listed investment companies) AFR [p 21], Thur 8.2.2007

'Agriculture schemes a bit hit and MIS' (Comment that regulatory risk has long cast a shadow over the future of tax-driven agricultural schemes) AFR [p 24], Thur 8.2.2007

'ATO takes axe to money trees' (Report that the Federal Government's decision on non-forestry products has wiped more than $400m from the sector's market capitalisation) AFR [p 25], Thur 8.2.2007

'ATO ruling axes timber group's name change' (Comment on impact of a company's name change and Tax Office's decision re non-forestry MISs on the company's share price) AFR [p 42], Thur 8.2.2007

'Tax rates at heart of fiasco' (Comment on Federal Government's decision on non-forestry products and opinion that punitive marginal tax rates drove demand for tax schemes) AFR [p 62], Thur 8.2.2007

'Sky's the limit for top end's favoured few' (Strategy to use travel as an incentive for high achieving employees and comment on tax effectiveness and FBT) AFR [p 10, Special Report Section], Thur 8.2.2007

The Australian

'PM gives in on tax breaks' (Comment that the Government is considering transitional arrangements following earlier decision to remove tax breaks for non-forestry MIS) AUSTRALIAN [p 2], Wed 14.2.2007

'Retirees shun work and fund reforms' (According to a survey, nearly 70 per cent of retired and semi-retired Australians aged 55 or over are upbeat about their super savings) AUSTRALIAN [p 33], Wed 14.2.2007

'Hogan linked to tax cases in court' (Report of taxpayers' links to Federal Court cases to stop ACC investigators using seized documents as part of Project Wickenby) AUSTRALIAN [p 3], Tue 13.2.2007

'Agri tax lurks under fire' (Claims that profits in non-forestry MIS were being made from tax losses and not from production) AUSTRALIAN [p 19], Tue 13.2.2007

'Coalition brawl on tax breaks' (Report that the Prime Minister will listen to his colleagues' concern re scrapping of tax breaks for non-forestry MIS) AUSTRALIAN [p 12], Mon 12.2.2007

'States see tax revenue in carbon trade' (Report that States' agreement recommends any revenue raised from the auction of carbon credits be given directly to the states) AUSTRALIAN [p 6], 10-11 February 2007

'Tax-break lobby blasts MIS decision' (Comment of lobby efforts to reverse Government's decision on non-forestry MIS) AUSTRALIAN [p 35], 10-11 February 2007

'Brief opportunity to invest in agribusiness schemes' (Further report on Governments' announcement re: non-forestry MIS) AUSTRALIAN [p 35], 10-11 February 2007

'How to put $1m into your super' (List of superannuation strategies for baby boomers to consider doing before 30 June) AUSTRALIAN [p 44], 10-11 February 2007

'Who should take the plunge and make the big contribution' (Report on who should be making a $1m contribution to super before 30 June) AUSTRALIAN [p 44], 10-11 February 2007

'Wheatley's wife in court over tax return' (Report of a taxpayer being charged for allegedly failing to lodge a tax return) AUSTRALIAN [p 3], Fri 9.2.2007

'Qantas deal may hit tax revenue' (Claim that the takeover is debt reliant for funding and could cost $200m in lost tax, because interest payments are tax-deductible and company tax is charged on profits) AUSTRALIAN [p 6], Fri 9.2.2007

'Libs at odd over tax breaks for agribusiness' (Report that some Liberal MPs are calling for ruling on non-forestry MISs to be reversed) AUSTRALIAN [p 6], Fri 9.2.2007

'Instos go short on BHP in tax punt' (Report that a Tax Office technical guideline means investors who want to receive franking credits of the off-market buyback had to buy the stock by yesterday) AUSTRALIAN [p 22], Fri 9.2.2007

'Tax ruling savages farms schemes' (Report that shares in agribusiness fund managers have dropped following the Government's announcement that certain tax concessions were set to be abolished) AUSTRALIAN [p 21], Thur 8.2.2007

Eliminating double super coverage with Germany

The Minister for Foreign Affairs has signed a supplementary Social Security Agreement with Germany which, he says will, for the first time, include provisions covering Australia's Superannuation Guarantee scheme. These provisions will eliminate the need for double contributions for workers sent temporarily between Australia and Germany. Australian workers sent to Germany will remain subject to Australia's Superannuation Guarantee and will not need to make contributions to the German social security system.

Super simplification Bills pass House of Reps

The House of Representatives has passed the package of 11 superannuation simplification Bills without amendment and they now move to the Senate:

• Tax Laws Amendment (Superannuation Simplification) Bill 2006
  
  

• Superannuation (Excess Concessional Contributions Tax) Bill 2006
  
  

• Superannuation (Excess Non-Concessional Contributions Tax) Bill 2006
  
  

• Superannuation (Excess Untaxed Roll-over Amounts Tax) Bill 2006
  
  

• Superannuation (Departing Australia Superannuation Payments Tax) Bill 2006
  
  

• Superannuation (Self Managed Superannuation Funds) Supervisory Levy Amendment Bill 2006
  
  

• Superannuation Legislation Amendment (Simplification) Bill 2007
  
  

• Income Tax Amendment Bill 2007
  
  

• Income Tax (Former Complying Superannuation Funds) Amendment Bill 2007
  
  

• Income Tax (Former Non-resident Superannuation Funds) Amendment Bill 2007
  
  

• Income Tax Rates Amendment (Superannuation) Bill 2007