Qantas Swings Back To H1 Profit

Qantas Airways has swung back to a first-half profit, delivering its best interim performance in four years, as its massive transformation program continues to reap results.

In the six months to December 31, Qantas posted a statutory net profit of $203 million, from a loss of $235m a year earlier.

On an underlying basis, the national carrier posted a net profit of $367m, a sharp improvement on the $252m loss it posted in the previous corresponding period, and beating its target for earnings of between $300m and $350m.

The national carrier flagged last year that it expected to return to an underlying profit in the first half, as it reaps the benefits of a wide-reaching transformation strategy as well as a drop in the Australian dollar and oil prices.

Revenue in the period rose to 2.1 per cent to $8.07 billion, from $7.9bn a year earlier.

Qantas declined to pay an interim dividend.

The airline said the repeal of the carbon tax was significant factor in the underlying profit result, adding $59m.

Qantas chief executive Alan Joyce pointed to the removal of the carbon tax as one of the “positive drivers” behind the result.

Lower fuel prices also improved the underlying profit by $33m.

“While fuel prices produced a modest benefit in the first half, we expect fuel costs for the full year to be no more than $4 billion at current prices – which will be a significant boost to the bottom line in the second half,” he said.

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

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Spending Slowed To Crawl In January

Economy-wide spending has slowed to a crawl but cheap petrol and the recent interest rate cut should hopefully turn that around.

Spending rose just 0.2 per cent in January, marking the slowest spending growth since 2012, figures from the Commonwealth Bank on Monday show.

Sales growth has been slowing for the past five months, but CommSec chief economist Craig James said consumers should start splashing more cash this year.

“With household finances improving following the fall in petrol prices and recent interest rate cut, we can expect many consumers to slowly start opening their wallets and increasing their spending as we progress through 2015,” he said.

“Overall, the economy is in a relative stable position, so business owners should start planning for growth in 2015 and take advantage of the expected increase in household disposable income.”

The strongest performing sectors last month were hotels and motels and transportation, according to the Business Sales Indicator, which tracks credit and debit card transactions on CBA machines.

Spending rose in the ACT, Tasmania, Western Australia and Queensland, but had fallen in NSW, Victoria, South Australia and the Northern Territory.

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

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Bowen Stumped On Tax-Free Threshold

Shadow Treasurer Chris Bowen is under fire for not being able to identify the cut-off point for the tax-free threshold.

Under repeated questioning during the interview on Sky News’ Richo and Jones program, Mr Bowen was not able to correctly nominate the figure of $18,200.

But Opposition Leader Bill Shorten is sticking by his shadow treasurer saying Mr Bowen ‘absolutely’ still has his confidence.

‘Chris knows what he got wrong last night. He also knows the tax free threshold,’ he told reporters in Melbourne.

‘The person I don’t have confidence in, and I think I speak for millions of Australians, is Joe Hockey.

‘Mr Bowen insists he knows Australia’s tax rates after being unable to identify the cut-off point for the tax-free threshold.

Liberal frontbencher Simon Birmingham said everybody made mistakes and had ‘slips of the mind’.

‘But you do expect that the shadow treasurer will at least in ball-park terms – if not in the precise dollars – be able to talk about the tax rates, the tax-free threshold,’ Senator Birmingham told Sky News.

Labor MP Ed Husic defended his colleague’s performance in Tuesday night’s interview, saying running the country was not about ‘getting a sash for the best rote learner’.

‘Does anyone seriously believe if later today Treasurer Joe Hockey is given a pop quiz on the tax scales and he passes that that means he’s going to be able to frame a good budget?’ Mr Husic asked.

Speaking after the interview, Mr Bowen said he thought Mr Jones was quizzing him about superannuation tax, rather than personal income tax rates.

Mr Bowen maintains his knowledge of the country’s personal tax rates is solid.

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

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Cuts To Research And Development Tax Breaks May Lead To Job Losses

Australian companies will lose out against against foreign players and may have to lay off workers if the Abbott government succeeds in passing laws that would cut research and development tax breaks for big companies, experts say.
The federal government has struck a deal with the Palmer United Party in attempt to pass the laws, which were first introduced by the former Labor government.
The original proposal would have affected about 15 to 20 of Australia’s largest companies, such as Telstra, BHP and Rio Tinto. Tax experts say the changes will now impact another 50 companies including pharmaceutical giants such as CSL.
The government’s original proposal was to reduce tax offsets by 1.5 per cent and abolish R&D tax incentives to companies with a yearly turnover of $20 billion or more, a measure that would save a government desperate to reduce its budget deficit $1.1 billion over four years.
While the measures passed the lower house at the end of 2013, it struggled to pass through the Senate, opposed by both Labor and the Greens.
The government agreed to amendments from PUP which now change the conditions upon which the tax break can be claimed. Under the deal with the PUP, the amended legislation states that the laws will apply retrospectively – backdating to July 1 last year – and that there will now be a reduced tax offset rate for companies with expenditure above $100 million.
KPMG’s head of R&D, David Gelb, said the changes would not impact targeted revenue collection, but would bring pharmaceutical and manufacturing industries into the mix of companies now facing limited R&D tax concessions.
“While the number of companies might seem to be insignificant, companies in these industries are the ones that employ a lot of the people in research,” he said.
“It may unfortunately discriminate against Australian companies as there will be foreign companies that get their full entitlements for R&D tax concessions.”
An Australian company spending $150 million on R&D, whose claim is now limited to $100 million, of which the tax reduction is $10 million, is disadvantaged against a foreign company spending $80 million on R&D and getting the full $8 million tax reduction, he said.
“As they move into next year’s budget they will have no choice but to reduce next year’s headcount and take their R&D offshore where there are better incentives,” he said.
He said the decision to apply the laws retrospectively was “unprecedented globally”.
“Companies have already spent the money and done the R&D on basis they will have that entitlement there,” he said. “Each company will have to make their own decision as to whether they reduce headcount between now and end of the year.”
Mr Gelb said the Abbott government would have been better off examining these issues as part of its innovation review and tax white paper. “They should have put things on hold until there had been proper consultation,” he said. “There’s been no consultation and industry is entitled to feel hard done by.”
The changes come as other countries increase tax incentives aimed at drawing new investment including patent box regimes in Britain.
This news story is reprinted from www.smh.com.au
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Tax Office Knew About Australians Channelling Money Into Swiss Accounts

The Tax Office has revealed it has investigated hundreds of Australians with Swiss bank accounts as a massive international data leak named prominent Australians, including late media baron Kerry Packer, model Elle Macpherson and former ANZ chairman Charles Goode, as having held accounts in the famous haven.

An International Consortium of Investigative Journalists investigation found that the Swiss arm of HSBC had almost 500 clients linked to Australia, with 856 accounts, and total combined holdings of about $US959.2 million ($1.24 billion).

The Tax Office told Fairfax Media on Monday it was already aware of the ICIJ data and had initiated reviews and audits after an infomer in 2010 handed the agency a list of hundreds of Australians with Swiss bank accounts.

“The ATO received a disk from a tax treaty partner containing data on 261 HSBC Swiss bank accounts held by Australian taxpayers. We believe this to be the same data received by the ICIJ and reported today,” a Tax Office spokesman said.

“The reporting by the ICIJ of the HSBC Swiss data highlights that no taxpayer is safe from being uncovered.”

It said in some cases, it was found that taxpayers had correctly reported their accounts to the ATO. In others there were “a number where there were discrepancies” that resulted in reviews and audits.

The Tax Office said to date these audits had resulted in more than $30 million being recovered.

On top of that the Tax Office last year ran an amnesty for wealthy Australians with hidden income and assets in Swiss accounts and tax havens to come forward. The amnesty ended in December and led to 1750 Australians declaring a total of $240 million in income and $1.7 billion in assets. Another 800 expected were expected make voluntary disclosures.

The biggest individual disclosure by a taxpayer was $30 million in income and $120 million in assets that had been held in Liechtenstein and Switzerland.

The Tax Office said about 70 HSBC account holders came forward under the amnesty and disclosed previously unreported income and assets.

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

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Australian Bitcoin Exchange Claims Exemption from 10% Government Tax

Australian exchange Coin Loft has received an official ruling exempting it from having to charge Goods and Services Tax (GST) on local bitcoin sales, according to the company.

The exchange claims the private ruling from the Australian Taxation Office (ATO) means that it need not apply the GST to its bitcoin exchange price. As a result, the firm ceased charging the tax on 26th January and says it is the first Australia-based exchange to do so.

The tax must still be charged on the commission component of the order, however, and a Coin Loft blog post also stated that commission fees would increase from 3 to 5% as a result of the process, though the overall price would remain competitive with its GST-charging competitors.

This news story is reprinted from www.coindesk.com

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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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