by Alan Thornhill
Australia’s tax system has had a major overhaul, for the new financial year which starts on Sunday.
That has included the insertion of a radically new trickle down device, to spread some of Australia’s vast mineral wealth, to the broader community.
That, of course, rests on the new Minerals Resource Rent Tax, which is still to be tested in the High Court.
But Wayne Swan, who designed the minerals tax is confident that it will be robust enough, to survive that challenge, launched by the West Australian mining magnate, “Twiggy” Forrest.
The minerals tax – and the still controversial new carbon tax – both come into effect on Sunday, July 1.
Those two changes, alone, would add up to the biggest reform the nation’s tax system has seen, since John Howard’s “never, ever” Goods and Services Tax was introduced, on July 1, 2000.
But there is much more to the present overhaul, than that.
There will, for example, be tax cuts, for everyone earning up to $80,000 a year, increased pensions and benefits, and completely new payments, like the Schoolkids Bonus.
Those on higher incomes, though, will mostly miss out, on the promised benefits.
These changes might well stimulate the economy.
That’s because this overhaul will put more cash into the pockets and purses of the relatively less well off Australians.
There is not much that economists agree upon, these days.
But they do admit that low to middle income people have “a greater propensity to spend” than the rich.
So much of that extra money, from those tax cuts and higher benefits, might soon be setting the nation’s cash registers ringing again, after their long, oppressive silence, since onset of the global financial crisis, back in 2008 .
Mr Swan did not mean the budget he introduced back in May to be stimulatory.
The Treasurer, himself, was quite specific about that.
And he backed his words, at the time, by promising to produce a surplus, in the new financial year.
But the stimulatory angel is buried in the detail, of Mr Swan’s tax changes, anyway.
His decision to treble the tax free threshold, alone, would see to that.
The new threshold will be $18,200.
So every worker, earning up to $80,000 a year will pay less tax.
Pensioners – and others on benefits – have already had extra payments, to help them meet the higher electricity bills – and other extra expenses – that will come with the new carbon tax.
There will also be a new Schoolkids Bonus, paid each January and July, from 2013.
In short, these are clever changes, just right for the present, still difficult times.
by Alan Thornhill
Julia Gillard announced tonight that a former defence force chief, Angus Houston, will head an expert committee to advise the government on what might be done to stop asylum seekers setting out for Australia in leaky boats.
The Prime Minister was speaking shortly after the Senate had rejected a government plan to do that.
That would have involved sending asylum seekers to Malaysia and reopening a processing centre on Nauru.
Federal parliament was then due to rise for its six week winter break.
It was clear, by then, that it would do so without agreement on any plan to stop the boats..
The government, opposition and Greens had all stuck doggedly, instead, to their own rival plans.
That was despite hours of passionate debate, in both houses of Parliament, in which members on all sides declared their grief at the deaths of more than 90 refugees, who drowned this week, when two boats capsized, days apart, in waters off Christmas Island.
As debate in the upper house approached its conclusion, the Government Leader in the Senate, Chris Evans pleaded with other Senators to support the government plan, which would see asylum seekers sent to Malaysia or Nauru.
He said the challenge before the Senate was to “do something” that might discourage asylum seekers from boarding those boats, or doing nothing.
“You have the opportunity to do something,” Senator Evans declared.
The Senate was then debating a bill, that an independent member, Rob Oakeshott had moved in the House of Representatives, where it had attracted government support, before it was passed by the lower house.
Throughout the long parliamentary debate , the Coalition has opposed the government’s plan to send asylum seekers to Malaysia.
The Opposition Leader, Tony Abbott, said that would be done under “a dud deal” which “stripped away protection” from asylum seekers.
In the Senate, today, Greens Senator, Christine Milne, proposed that Australian’s humanitarian migrant intake be increased from 13,750 to 20,000 a year.
However her move was defeated, on a 53-8 vote.
The Oakeshott bill, itself, was also defeated, a short time later, on a 39-29 vote.
by Alan Thornhill
Small, but important, tax reforms came before Federal parliament today, ahead of the sweeping reforms that start on Sunday.
Assistant Treasurer David Bradbury issued two statements, to explain.
He said one set of changes affects company directors.
The other introduced a range of improvements, including provisions covering living away from home allowances.
“Tax Laws Amendment (2012 Measures no. 2) Bill was passed by the Senate and includes provisions to strengthen the director penalty regime and protects workers’ superannuation entitlements and amendments to the taxation of financial arrangements and consolidation regimes,” Mr Bradbury said.
“These changes are part of the Government’s continued commitment to maintaining the integrity, equity and fairness of the tax system,” he added.
The Bill will strengthen directors’ obligations to arrange for their companies to meet Pay As You Go (PAYG) withholding and superannuation obligations and help counter phoenix activity.
“The Gillard Government is committed to protecting workers’ entitlements,” said Mr Bradbury.
“This legislation makes it clear that directors have an obligation to ensure that provision is made for the ongoing payment of workers’ superannuation.
“It also ensures that fraudulent directors who use phoenix companies to try and avoid their debts can be held personally liable for their PAYG withholding and superannuation obligations,” Mr Bradbury warned.
In his other statement, Mr Bradbury said: “The Tax Laws Amendment (2012 Measures No. 4) Bill 2012 will reform the tax concession for Living Away From Home allowances and benefits.”
He said it would also, clarify GST rules relating to incapacitated entities.
The major tax reforms, which start on Sunday, include mineral resource rent tax, the carbon tax and raising the income tax threshold, to help people on low to middle incomes.
by Alan Thornhill
People caught smuggling tobacco in future can expect to be jailed for up to ten years.
Legislation, just introduced into Federal Parliament will create a specific new offence of smuggling tobacco, or conveying or possessing smuggled tobacco
The Attorney-General, Nicola Roxon, said: “The Government is proud of its world-leading action to combat smoking.
“ This legislation reinforces our commitment to that cause,” she added.
“Current penalties for illegal tobacco importation are very low compared to other serious instances of fraud against the Commonwealth,” Ms Roxon said.
“This new offence means tobacco smugglers face prison time for the first time,” Ms Roxon said.
Meanwhile, a new study has linked second hand smoking with increased obesity and Diabetes 2.
A study of over 6,000 people presented this week at the US Endocrine Society’s Annual Meeting in Houston, Texas showed that adults who are exposed to secondhand smoke, have higher rates of obesity and Type 2 diabetes than those who are not exposed to it.
Study co-author Dr The study’s co-author, Theodore Friedman of Charles R. Drew University, Los Angeles, warned of the consequences.
He said: “More effort needs to be made to reduce exposure of individuals to secondhand smoke.”
by Alan Thornhill
Public sector job cuts are starting to bite.
The Bureau of Statistics reports that the number of job vacancies, available in the public sector, has dropped by 3.1 per cent, over recent months.
That is between the end of February and the end of May.
Private sector job vacancies also fell, over this time, but only by 2.6 per cent.
In both cases, these figures were based on trend estimates.
The Bureau also reported, that on trend figures, there were 174,4700 vacancies, overall, at the end of May.
On original figures, police, public administration, nursing and health care vacancies all fell in the three months to the end of May.
However there was a rise in the number of teaching, education and training vacancies.
by Alan Thornhill
After a long, often emotional debate, the House of Representatives tonight passed a private member’s bill, designed to stop asylum seekers boarding leaky boats, to come to Australia.
The bill which Rob Oakeshott put up as a possible compromise, proposes offshore processing of asylum seekers both in Malaysia and on Nauru.
The government supported the bill.
The Opposition sought an amendment, excluding Malaysia.
The six hour debate was dominated, though, by the news that a second asylum seeker boat had capsized off Christmas Island, just days after another, which also capsized, with loss of perhaps 90 lives.
The Prime Minister Julia Gillard said 125 people had been rescued from the second boat, which is thought to have been carrying up to 150 asylum seekers.
However only one death had been confirmed, at the time of writing.
The final vote on the Oakeshott bill was 74-72.
The opposition had fought hard to amend the bill, to block processing in Malaysia, under an agreement with that country, which the Opposition Leader described as “a dud deal.”
Mr Abbott declared processing in Malaysia deal would strip away “protections” from asylum seekers, sent to that country.
“Their standards are not our standards,” he said.
But the opposition’s amendment was defeated.
The Oakeshott bill will go to the Senate tomorrow (Thursday), with one amendment.
That small, but successful, moved by a Tasmanian Independent Andrew Wilkie, inserted a 12 month “sunset clause” in the bill.
This means that if the bill becomes law, it would automatically lapse after 12 months.
The issues would then have to be debated again.
However that is unlikely.
That’s because the Oakeshott bill faces almost certain defeat tomorrow in the Senate.
Earlier in the day, some 40 MPs, from all sides in Parliament, had met privately, hoping to find a practical solution to the asylum seeker issue.
But that has not yet emerged, even though there was some movement, on both government and opposition stands.
Julia Gillard’s announcement, that the government would be prepared to re-open a processing facility on Nauru, was meant to attract Opposition support for the Oakeshott bill.
However Tony Abbott said the Coalition would be prepared to lift Australia’s refugee and humanitarian intake to 20,000 a year, over three years, if the Malaysia agreement was scrapped.
But that didn’t happen, either.
This means that the government and opposition are still at odds, over what should be done, to prevent further asylum seeker deaths at sea.
by Alan Thornhill
You now have only three days to grab a government incentive that would boost your superannuation.
The offer is open to Australians, under 71, whose income is below $61,920.
It comes in the form of a government co-contribution
And the Association of Superannuation Funds of Australia (ASFA) says it is one of the best ways for Australians to boost their superannuation balances each financial year.
“The co-contribution really is like free money and it’s one of the simplest ways those on lower incomes can top up their super balance,” said ASFA CEO Pauline Vamos.
So what do you have to do?
And who is eligible, precisely?
“Most working Australians won’t need to do anything other than make a personal after-tax contribution to their super account before 30 June and then lodge their tax return as they normally would to receive the contribution,” Ms Vamos says.
“The initiative helps eligible individuals boost their retirement savings by the Government matching personal contributions up to $1,000,” she adds
“For the 2011-12 financial year, after-tax super contributions will be matched at $1 for every $1 contributed up to a maximum co-contribution of $1,000 for those on incomes up to $31,920,” Ms Vamos says.
You are eligible for a co-contribution this financial year if:-
- You’re under 71 years of age on 30 June 2012.
- Your total income is below $61,920.
- You make a personal after-tax contribution by 30 June 2012 into your super fund or retirement savings account.
- At least 10 per cent of your income is from eligible employment, running a business or a combination of both.
- You do not hold a temporary resident visa at any time during the year.
- You lodge a tax return for the 2011-12 year.
by Alan Thornhill
Australians are quick to spot a bargain.
And we respond quickly to economic changes.
These developments – evident in a new study – are radically changing the way we shop.
The study, by the ANZ Bank, shows steady growth in the small business sector.
It revealed that small business sales a grew by 6.9 per cent, in the 12 months to the end of May.
The sector also chalked up 3.8 per cent growth, in the first five months of this year.
In the current economic climate, these are strong figures.
As always, though, it’s the detail that really counts.
The study also shows, for example, that many traditional shopkeepers are still going through tough times.
Those selling electrical goods and appliances, for example, saw their sales shrink by 2.6 per cent, in the 12 months to the end of May.
Sales in clothing and fashion stores also fell, dropping by 1.2 per cent.
Home wares and furniture sales were down, over this time, too, falling by 1.9 per cent.
So what is happening, here?
Ivan Colhoun, who heads the ANZ’s economic and property research, notes that the electrical and clothing sectors are “heavily exposed to the high Australian dollar.”
This makes local shopkeepers, in these areas, “vulnerable” to competition from internet shopping sites.
The high Aussie dollar has also made foreign cars cheaper, in this country, over the past year.
Australia’s car dealers have done very well, out of that.
The bank’s survey showed that the automotive sector increased its sales by a truly impressive 7.8 per cent over the year.
It also showed that we are eating out more, with restaurant sales rising by 6.9 per cent, in the same time.
The business service sector performed well too, with its sales rising by 5.9 per cent over the year.
Where we live matters, too.
Small business sales in resource rich regions have generally been rising most strongly in the nation’s resource rich States and Territories.
Those in Western Australia, for example, rose by 6.5 per cent in the year to the end of May, while small businesses in Queensland saw a 5.1 per cent increase, and small business sales in the Northern Territory jumped by 6.1 per cent.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Friday May 24
The Dow Jones Index fell 12.44 points to 15,294.70
Ford Australia says it will close its Australian manufacturing plants in October 2016. Some 1,200 jobs to go.
Hazel Hawke dies at 83
A British soldier is hacked to death in the London suburb of Woolwich, in an apparent terrorist attack
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