Business Council Of Australia Seeks Tax Answers From Liberal Pollster

One of Australia’s most influential lobby groups, the Business Council of Australia, has commissioned Liberal Party pollsters Crosby Textor to conduct private research on changes to the tax system, including the GST.

In a clear sign the BCA has heeded Prime Minister Tony Abbott’s call for help last year to make the case for tax reform in Australia, Crosby Textor will conduct qualitative and quantitative polling for the organisation.

The research comes as the Abbott government prepares to launch a sweeping review of Australia’s tax system in the first quarter of this year.

Last October, Mr Abbott told a BCA dinner that “the last time Australia had big tax reform the BCA was leading the charge. There is a lesson for these times. We will only get change if the people who do believe in it are prepared to fight for it”.

The research also comes as Liberal MPs including Trade Minister Andrew Robb and backbench MPs Dan Tehan, Dean Smith and Ian Macdonald have stepped up calls for changes to the GST in recent weeks.

The BCA decision to conduct both quantitative and qualitative polling on the tax system – which carries a price tag that runs to the tens of thousands of dollars – signals its willingness to play a more prominent role in advocating for reform of the tax system in 2015.

The BCA represents the chief executives of Australia’s top 100 companies and is politically close to the Abbott government, with former president Tony Shepherd heading up the last year’s Commission of Audit.

And in 2013 the organisation’s “Action Plan for Enduring Prosperity” report urged “consideration should be given to raising the rate of GST as well as broadening its base”.

Other issues being examined in the polling include Australia’s workplace relations system as well as the health and education systems. The Abbott government launched a sweeping review of the industrial relations system by the Productivity Commission late last year.

That review is due to report back by November 30 this year and is expected to guide the Coalition’s second term industrial relations agenda.

BCA director of media and public affairs Scott Thompson played down the significance of the Council’s examination of the tax system.

“The BCA, as many organisations do, regularly conducts research in the community to stay up to date about views across a range of issues affecting the economy and society,” he said.

“This helps ensure the BCA’s advocacy is conducted in a way which focused on achieving benefits for reform in the interest of the broad community, not just business.”

“Our research is not focused mainly on one or two issues, it is very broad based and focused on a wide range of issues across the spectrum of the BCA’s policy interests.”

Any rise in the rate or breadth of the GST would potentially raise billions of dollars in extra revenue. Applying the GST to private health insurance and education, for example, would raise an estimated $2.3 billion a year, and would not be regressive in the same way that applying the indirect tax to fresh food.

That revenue would be expected to be passed on to the states to help cover the growing cost of health and education.

But all states and territories have to agree to any changes to the indirect tax and the Labor states of South Australia and Victoria have indicated their unwillingness.

Crosby Textor managing director Mark Textor declined to comment on the polling when contacted by Fairfax Media.

This news story is reprinted from www.smh.com.au

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Australias Record Jobs Growth Is A Game Changer

The December jobs number was a fairly pivotal report. It’s a game-changer, as it shows the nation enjoyed the strongest jobs growth on record in three months to December. In fact, 188,000 jobs were created over that period (original terms), which compares to more ‘normal’ jobs growth of about 90,000 (10-year trend over that period).

That’s a fantastic outcome, yet somehow the Australian Bureau of Statistics reckons this equates to jobs growth of about 100,000 when you adjust for seasonality. That’s still strong — the best result in about a decade — but it’s not that much above ‘normal’. That’s a problem given the unadjusted numbers suggest jobs growth was well and truly above normal. It looks like the ABS is still working to soften the numbers to make them more palatable, when the seasonal adjustments should in fact be working the other way.

On a more positive note, this latest labour force print does correct in part, for obvious seasonal adjustment errors, on the unemployment rate. There is still some way to go.

For instance, the decline in the unemployment rate from an unbelievably high 6.3 per cent, now looks a little more realistic at 6.1 per cent. Yet that is still above what the unadjusted numbers tell us at 5.9 per cent.

On the unadjusted figures, the unemployment rate has been broadly steady at around 5.9 per cent since April 2014. So we can’t say the difference between the original figures and the adjusted figures is seasonality. The nine months it’s been steady shows that it clearly isn’t. It is more likely a measurement error. In any case, in unadjusted terms, this is the first December we haven’t seen a spike in the unemployment rate since 2010. Prior to that you have to go back to 1998.

So realistically (and if you want to talk seasonality) the unemployment rate must be closer 5.7 per cent, or even lower when you plug in the correct seasonal factors for employment growth.

The reputation of the ABS was dealt a mortal blow last year following problems with the labour force survey. Investors need to keep that in mind when we interpret these latest results. The truth is, the numbers confirm the underlying economy is growing at a solid clip.

This news story is reprinted from www.businessspectator.com.au

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Australia Launches Online Visa Pilot Programme For Indians

A pilot programme was today launched to make it easier for Indian business and tourism visitors to apply online for travel to Australia.

The pilot programme, which has been kicked off on a trial basis, covers online lodgement of subclass 600 visas for Indian business and tourism visitors. It will be rolled out through selected travel agents across India.

“India is one of the world’s fastest growing outbound travel markets. This trial will make it easier for Indian visitors to apply for visas to travel to Australia,” Australia Trade and Investment Minister Andrew Robb, who also has the responsibility for Tourism, said at the launch.

“Under the Australian Government’s national tourism strategy, Tourism 2020, India has the potential to contribute between $ 1.9 billion and $ 2.3 billion annually to our tourism industry by 2020. That’s why in the first half on 2015, the Australian Government is rolling out a trial of online visa applications to capitalise on this rapidly growing visitor market and create jobs,” Robb said.

Robb is leading Australia’s largest ever trade mission to India, made up of 450 delegates, for Australia Business Week in India from January 9-16.

“The trade mission and this visa trial are putting runs on the board under the Australia-India Memorandum of Understanding on Tourism signed during Prime Minister Modi’s visit to Australia in November last year,” Robb said.

Under the MoU, Australia and India will work together to encourage cooperation between tourism stakeholders in Australia and India.

This news story is reprinted from economictimes.indiatimes.com

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Tax Office Targets Rental Property

Owners of rental properties may need to exercise greater prudence when it comes to assessment of rental incomes and tax expense claims in 2015.

The Australian Tax Office (ATO) has indicated that it will expand the scope of its investigations of the rental incomes and expense claims of owners of residential properties this year as part of efforts to ensure that taxpayers pay the appropriate amounts.

According to the ATO, it still faces an ongoing problem with taxpayers making errors with respect to either assessment rental revenues or deductions for rent – an issue that has become more salient following the recent surge in sales of residential investment properties.

While many rental property expenses are legitimately tax deductible, such as council and water rates, real estate management fees, advertising costs and travel costs for property inspections, the ATO has found that property owners are making incorrect deductions in a multitude of other areas.

Errors made by rental property owners while lodging expense claims frequently relate to stamp duties on the transfer of property, legal costs arising from family divorce proceedings, borrowing expenses confined to a single year (as opposed to those spread over five years as required by law,) the inclusion of renovation costs as repairs and maintenance instead of as part of the capital cost of the property, and solicitors fees for property purchases.

Another common problem relates to empty rental properties that are left idle. According to the ATO, expenses arising in relation to rental properties that are vacant are only considered deductible if such property is both available for rent and owners are actively searching for tenants.

The ATO says it will expand its investigations to include issues such as the improper apportionment of income and expenses based on ownership holdings, the apportionment of expenses for holiday homes, the claiming of expenses for vacant land, as well as the claiming of interest expenses for private borrowings.

The ATO will also send what it refers to as “re-designed” letters to taxpayers containing information on rental, legal and/or borrowing expense claims that the department is currently reviewing, including proposed adjustments and how to handle disagreements over claims.

This news story is reprinted from sourceable.net

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Australian Equities Market

In Australia, the Performance of Services index is released. In the US, trade data is expected together with the ADP employment report and the minutes of the last Federal Reserve meeting.

OVERNIGHT MARKETS

US Equities

US sharemarkets fell again on Tuesday. Economic data was weaker-than- expected, lower oil prices weighed on energy stocks and investors continued to fret about the European economy. At the close of trade, the Dow Jones was lower by 130 points or 0.8%, after earlier being down 239 points. The S&P 500 index was down by0.9% and the Nasdaq was down by 60 points or 1.3%.

US longer-term treasuries rose sharply again on Tuesday (yields lower). Another fall in the oil price and weaker-than-expected economic data prompted buying of Treasuries, especially given further weakness in equities. US 2 year yields fell by 4 points to 0.629% while US 10 year yields fell by 9pts to 1.947%.

Major currencies were again mixed against the greenback in European and US trade on Tuesday. The Euro fell from highs near US$1.1970 to lows near US$1.1885, and was around US$1.1895 in afternoon US trade. The Aussie dollar fell from highs near US81.55c to lows around US81.00c and was trading near US81.00c in afternoon US trade. And the Japanese yen lifted from 119.38 yen per US dollar to JPY118.06 before settling near JPY118.52 in afternoon US trade.

World oil prices fell for a fourth straight day on Tuesday. Saudi Arabia has given no signs of cutting production with King Abdullah saying that the country will meet the challenge of low oil prices “with a firm will”. Saudi Arabia has also announced oil price discounts for European and US buyers. Brent crude fell by US$2.01 or 3.8% to US$51.10 a barrel while the US Nymex crude price fell by US$2.11 or 4.2% to US$47.93 a barrel.

Base metal prices were generally little-changed on the London Metal Exchange on Tuesday. The exceptions were aluminium (down 1.8%) and tin (up 1.4%). Gold rose on Tuesday as investors continued to embrace safe-haven assets. The Comex gold futures price was up by US$15.40 an ounce or 1.3% to US$1,219.40 per ounce. Iron ore rose by US30c to US$71.10 a tonne on Tuesday.

YESTERDAY’S MARKET

Local Markets Update.

This news story is reprinted from www.businessspectator.com.au

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