Tax News December 2013

Fate of unresolved tax reforms announced by Treasurer Joe Hockey

The government has outlined its plans regarding several announced but as yet un-legislated or unresolved tax and super proposals. Treasury will “definitely not” proceed with seven initiatives – including the former government’s $1.8 billion change to the fringe benefit tax on cars; the proposed tax on superannuation pension earnings above $100,000 and the $2,000 cap on work-related self-education expenses. However, Taxpayers Australia’s Head of Taxation Products and Services, Mark Chapman, said there remains plenty for the government to do if it is genuine about removing the uncertainty around tax and super measures as only 32 out of 92 reforms were dealt with.

What the repeal of the mining tax means for your business

In the last Regulatory Roundup, we ran through effects of the carbon tax repeal but the government’s release of exposure legislation to repeal the Mineral Resources Rent Tax (MRRT) on top of the carbon tax holds wide-ranging consequences for businesses. Among them are: repeal of the loss carry-back rules; reduction in the small business instant asset write-off threshold; repeal of accelerated depreciation for motor vehicles; re-phasing of the change in the superannuation guarantee charge; repeal of the low-income superannuation contribution (LISC); repeal of the income support bonus and repeal of the schoolkids bonus.

Various industry bodies up in arms over government’s proposed tax break scraps

Numerous industry groups have come out to voice their disapproval at the government’s recent commitment to a wide overhaul of tax reforms, including the axing of various tax incentives that were to be funded by both the carbon tax and MRRT. Council of Small Business Organisations of Australia (COSBOA) chief executive said he would be meeting with Treasurer Joe Hockey to reconsider the scrapping of the instant asset write-off and the loss carry-back initiative. Meanwhile, Australian Industry Group (AIG) chief executive Innes Willox said he was disappointed by the decision to narrow the scope of the research and development (R&D) tax incentive, and Women in Super (WIS) penned an open letter decrying the scrapping of the LISC which disproportionately affects women.

Pre-Christmas spending spree tipped, but also post-Christmas gift voucher spending

Retail spending for the period from mid-November to Christmas has been predicted to reach $42.1 billion this year, up 3.3% from the 2012 figure of $40.7 billion, according to new research from the Australian Retailers Association (ARA) and Roy Morgan Research. ARA executive director Russell Zimmerman said his members expected the bulk of sales to be made over the week immediately before Christmas day, with many shoppers making the usual last-minute purchases. However, post-Christmas spending is also expected to receive a delayed boost through consumers realizing the locked-in value of gift cards and vouchers.

Top 50 most searched for home-based businesses

A report from local service search website Oneflare found that removalists, handymen and builders were among the most searched-for job services over the third quarter of this calendar year. In fact, removalists replaced cleaners as the most sought-after category compared with the previous quarter. The largest growth in demand by sector was for construction trade services, with requests for builders, concretes, plasterers and glaziers all booming. Carpet cleaners, plumbers and gardeners were also in high demand. The biggest growth by far however was recorded by wedding photographers, with a recorded growth over the quarter of $263%, although this was also dictated by seasonal factors. The high growth in demand for celebrants, at 148%, looks to be similarly influenced.

Fast food businesses under Fair Work’s spotlight

Almost 7,000 fast food businesses across the country are set to receive a letter from the Fair Work Ombudsman, as part of a campaign focused on the hospitality industry. Fair Work Ombudsman Natalie James said the fast food sector was selected for attention because it employs a large number of workers and includes many small to medium-sized enterprises (SMEs). “We are committed to providing small business operators, who are often not supported by an in-house human resources and payroll team, with the assistance they need to understand their obligations under workplace laws and comply with them as early as possible,” James said. As part of the campaign, the Ombudsman will also randomly select 300 fast food businesses in metropolitan and regional locations for audit early next year.

Majority of businesses make late payments, especially in retail and construction

Many Australian businesses are failing to pay their bills on time, with 60% of invoices settled beyond the standard 30-day payment period, Dun & Bradstreet’s (D&B) latest Trade Payments Analysis found. D&B found that businesses are paying their bills in 53 days on average – more than three weeks beyond standard terms. Transportation and agricultural businesses had the best invoice payment times but retailers and construction businesses recorded a notable yearly increase (19% for the former, 25% for the latter) in the number of “very late” payments that were made at 61-90 days. From a business size view, Australia’s small businesses employing fewer than five staff paid their invoices at the national average of 53 days, while large businesses took three days longer than any other business to settle their accounts.

Construction sector expands for first time since 2010

Despite late payments, the Australian construction sector expanded for the first time in more than three years after it jumped 6.8 points to 54.4 in October, according to the AIG and Housing Industry Association’s Australian Performance of Construction Index. According to the survey, both the apartment and house building sub-sectors expanded at higher rates than last month, at 8.5 points and 3.8 points respectively, while commercial construction and engineering construction returned to growth. Most significantly, employment in the construction sector increased to 52.5 in October after 40 months of decline.

New online hub for small businesses

Australian businesses can now access a new online hub launched by the Australian Securities and Investments Commission (ASIC) to better help them understand their legal obligations. An online survey conducted by ASIC in 2012 found that small businesses have little understanding of their compliance obligations, find it difficult to get relevant information from ASIC, and find information provided by ASIC difficult to understand because of its legal jargon. The hub features information on starting and closing a small business, legal requirements for small business operators, one minute guides on popular topics and access to ASIC newsletters.

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