by Alan Thornhill
Are you paying more than your fair share of tax because others aren’t paying theirs?
Others, perhaps, like big corporations, that are minimising their tax, through tricks like thin capitalisation.
That’s what happens when a big company, trading globally, attributes more of its debt to its Australian operations than it really should.
They can get bigger tax deductions in Australia that way.
At your expense – and mine.
If this kind of thing leaves you angry, this may be the time to speak up.
The Federal Treasury is seeking public submissions, right now, on this kind of trick.
The government announced late last year that it would proceed with reforms to tighten the thin capitalisation rules.
Its aim was to prevent erosion of the Australian tax base.
The proposed amendments in its draft Bill include:
• tightening the debt limit settings in the thin capitalisation regime to more closely align with commercial debt levels
• increasing the de minimis threshold from $250,000 to $2 million to minimise compliance costs for small businesses
• introducing a test for inbound investors to allow gearing of Australian operations up to the level of gearing of the worldwide group and
• reforming the exemption for foreign non-portfolio dividends to address integrity issues.
The closing date for submissions is Friday, 6 June
The address for written submissions is:
Law Design Practice
PARKES ACT 2600
Or you can email your submission to firstname.lastname@example.org
by Alan Thornhill
The chief executive of a collapsed technology company has appeared in court on multiple deception charges.
The charges, against Peter Mavridis, of Bentleigh, Victoria, follow investigations conducted by the Australian Securities and Investments Commission.
These followed the collapse of the S Central Group of companies, which provided information technology services to customers in Victoria, New South Wales and Queensland.
ASIC also alleges that Mr Mavridis falsified other documents that were required by NAB in support of the false invoices that were submitted.
Mr Mavridis has also been charged with dishonestly using his position as a director by allegedly using $20,000, held on trust for the NAB, to clear a personal credit card debt.
He faced 24 charges of obtaining financial advantage by deception, 10 charges of false accounting and 1 charge of dishonest use of position as a director.
The matter was adjourned until June 10.
by Alan Thornhill
Australia’s construction industry is still shrinking, although that is now occurring at a slower rate.
The Performance of Construction Index, produced by the Housing Industry Association and the Australian Industry Group rose by 2 points in March to 46.2.
Results below 50 indicate contraction.
The easing in the sector’s contraction was due to slower declines in both new orders and activity.
The Australian Industry Group’s Public Policy Director , Peter Burn, said that although there had been gains in the house building sector and further signs of improvement in commercial construction, these had been outweighed by a further decline in engineering construction and a pull-back in apartment building.
The Housing Industry Association’s Chief Economist, Harley Dale, said: “Following promising signs at the end of last year, it is disappointing to now observe a full 2014 quarter where the Australian PCI has again been in contractionary territory.”
The study also showed that:-
* Employment was down 3.3 points to 42.7 points in response to continued efforts by businesses to contain costs and
* Input costs were higher rising by 6.0 points to 72.4 points, while selling prices were down 1.4 points to 43.2 points, highlighting on-going pressures on profit margins.
by Alan Thornhill
The former assistant federal treasurer Arthur Sinodinos admitted today that he did not know why Australian Water Holdings expenses were “going through the roof.”
Senator Sinodinos, who stood aside from that post, was replying to questions at an anti-corruption hearing in Sydney today.
Counsel Assisting Geoffrey Watson who was questioning him at the time, asked why AWH’s costs had risen sharply, while Sinodinos was a director of that company.
Senator Sinodinos replied: “I don’t know the full answer to that.”
Mr Watson asked him if he did nothing to ascertain the facts behind the costs.
“Not specially, no,” Senator Sinodinos replied.
Watson: “What did you do as a director of the company to get to the bottom of his dispute?”
Sinodinos: “I participated in the board discussion.”
Watson: “What did you do beyond participating in the board discussion?”
Sinodinos: “That was it.”
The Independent Commission Against Corruption, which is holding the hearing hap previously been told that Sinodinos – who was not then a Senator – stood to make up to $20 million if AWH won a lucrative contract with the state-owned Sydney Water company.
He was Prime Minister John Howard’s right hand man for several years and has also been NSW Liberal Party treasurer.
by Alan Thornhill
Labor says the new Assistant Treasurer, Matthias Cormann, is clearly “out of his depth” in that job.
Senator Cormann took the post, after his predecessor, Arthur Sinodinos, stood aside after his business dealings were aired at a hearing of the New South Wales Independent Commission Against Corruption.
In a statement today, the Shadow Minister for Financial Services and Superannuation, Bernie Ripoll, said Senator Cormann had got “the most basic facts wrong on the dismantling of the Labor’s Future of Financial Advice Reforms.”
Mr Ripoll noted that Senator Cormann had told the Insiders program that “”people have suggested we are bringing back conflicted remuneration for financial advisers – not true.”
“This is straight out, plainly wrong,” Mr Ripoll said.
“Page 28 of the Explanatory Memorandum of the Government’s Bill sets out that an exemption to the ban on conflicted remuneration benefits can be paid on general advice and in certain circumstances on personal advice,” he added.
So far, Senator Cormann has not replied to Mr Ripoll.
by Alan Thornhill
Is democracy slipping away from us, as we slide – silently – towards something much worse?
That is, a type of government in which power effectively rests with a small number of people.
The French economist, Thomas Piketty, thinks so, though he prefers the term “patrimonial capitalism” when he identifies this danger.
He does that, primarily, in his new book, Capital in the Twenty-First Century.
The Nobel Prize winning American economist, Paul Krugman, says Picketty’s warning is not to be dismissed lightly.
Not in the United States, anyway.
“As Mr Piketty notes, the risk of a drift towards oligarchy is real and gives little reason for optimism,” Krugman wrote, in a recent article for the New York Times.
But what of Australia?
No-one here has studied the shifts in income and wealth, which lie behind this threat, more closely than Andrew Leigh, a Labor MP, who holds one of two suburban Canberra seats, in the House of Representatives.
Leigh addressed reporters, at the National Press Club last week, in a speech he called “Battlers and Billionaires: Australian Egalitarianism under threat.”
So how does this self –styled “lapsed economist”, who is now in politics, assess the threat, that disturbs both Piketty and Krugman?
“It’s a risk,” he says, frankly.
Leigh notes that there were some “seven figure donations” before the recent Federal elections last September.
“That’s something we haven’t seen before,” he adds.
If asked to identify a “patrimonial capitalist” most Australians would, undoubtedly, find the name Rupert Murdoch, springing to mind, even though he is now a US citizen.
Media barons, like Mr Murdoch, have seldom been shy about expressing their views, before elections.
But the declaration “Let’s get rid of this mob” which appeared in Murdoch’s Sydney Daily Telegraph, before last September’s Federal elections was, perhaps, unusually blunt.
So those looking for signs of “patrimonial capitalism” in Australia might well be tempted to include it as evidence.
The Greek philosopher, Plato, who didn’t like democracy, once suggested rule by “philosopher-kings” instead.
But that idea didn’t take off.
Instead, most oligarchies, since then, have been based on royalty, backed by limited nobilities, religion, or wealth.
It’s that last lot, the super-wealthy, though, who most worry Piketty and Krugman.
Aspects of rising inequality unsettle Leigh, too.
“Egalitarianism goes deep in the Australian character,” he says.
“In Australia, it’s quite normal to sit in the front seat of a taxi.
“ If the plumber drops around, we’ll offer a cuppa.
“One of our billionaires is ‘Twiggy’ and past Australian Reserve Bank governors include ‘Nugget’ and ‘Nobby’.”
But Leigh warns that inequality has been rising strongly in this country.
And “money talks,” very eloquently, in politics.
“Since 1975,” Leigh says “real wages for the bottom tenth have risen 15 per cent, while wages for the top tenth have risen 59 per cent.”
“Relative poverty,” too, has risen, he adds.
So has inequality in wealth.
Leigh says the share of Australia’s wealth, held by Australia’s “top 200” has tripled since the mid 1980s.
“The richest 3 people in Australia have more wealth than the bottom 1 million,” he adds.
There has also been much talk, lately, about “union corruption” and two, particular, cases, involving theft, have been widely – and properly – condemned.
But, perhaps, there is there a darker side to this talk, too?
Leigh suggests that there might be a touch of self-interest, behind the currently popular sport of union-bashing.
He says the decline of Australia’s unions, over recent decades, has been “a significant driver” of rising inequality.
“It’s become fashionable lately to deride unions, but no serious economist could doubt their role in reducing earnings inequality,” Leigh says.
There’s a lot at stake, including a free and easy lifestyle that has long been traditional, in Australia.
At least, as Leigh says: “We need to talk about the impact of inequality on our social fabric.
“If we miss this chance, there is a risk that we will sleepwalk into a more unequal Australia without realising what is being lost.”
by Alan Thornhill
A senior Liberal, Andrew Robb, says the role of independent anti-corruption bodies should be reassessed.
The Federal Trade Minister made the comment, in a television program, after an interviewer described the Independent Commission Against Corruption as “a star chamber.”
The former Assistant Treasurer, Arthur Sinodinos, stood down from that post last week, after a witness at an ICAC inquiry in Sydney said Sinodinos had stood to receive a payment of $10 to $20 million, if a proposed deal with Sydney Water had gone ahead.
The interviewer, Peter Van Onselen, said ICAC struck him as “a star chamber” that could damage reputations, without producing findings against people.
Mr Robb responded cautiously.
Well, as a public figure, I’m always reluctant to start making strong statements or rash statements about bodies that have been set up to keep public figures accountable,” he said.
“So I’m careful in that regard.
But he added: “I think that’s something that needs to be assessed when we are assessing – or the states are assessing – the roles of these bodies, such as ICAC – that have been put in place in various states.”
by Alan Thornhill
Arthur Sinodinos may have a big future in business or lobbying.
But not in politics.
The Prime Minister, Tony Abbott, would like to restore Senator Sinodinos to his ministry, if the Independent Commission Against Corruption, vindicates him, after its inquiry into the affairs of Australian Water Holdings.
Even if it does, though, the Senator will still be carrying the mark of the Obeids.
And that – alone – would attach “a distraction” to the government.
That’s the very thing Senator Sinodinos said he wanted to avoid, when he stood aside from the position of Assistant Treasurer, earlier this week.
Mr Abbott said, several times, that the Senator had done “the right thing” by standing aside, until ICAC completes its inquiry.
And he said Arthur Sinodinos’s connection with AWH had proceeded his entry into
But similar circumstances did not stop Mr Abbott, himself, attacking a Labor PM, Craig Thomson, before the last election.
Sinodinos, who was John Howard’s right hand man for about 10 years, has very extensive experience in Australian politics.
So he should have known that any association with the Obeid’s might well damage him in future.
Even it was the disgraced Eddie Obeid’s son, also known as Eddie, not the disgraced former Labor MP, himself, Eddie senior, who was in charge at AWH, when Sinodinos joined the company.
In business, particularly, people are still judged by the company they keep.
So Eddie senior’s secret purchase of AWH shares, later, made Arthur Sinodinos’s troubles even deeper.
A witness told the ICAC hearing, this week, that Sinodinos stood to acquire a $10 to $20 million payment, if a proposed deal between Sydney Water and AWH went ahead.
That’s not a good look, even for an Assistant Federal Treasurer.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
|Bhp Blt Fpo||23.97||+0.07||+0.29%|
|Macq Group Fpo||89.25||+1.15||+1.31%|
The News This Week
- Postscript 2
- Postscript 1 – Australia in the age of Trump
- Thank you
- The news: Friday January 20
- Scrap debt reduction plan:Greens
- How prices are moving:ABS
- Trade:Trump warned
- The News: Wednesday January 14
- It’s one rule for them…and
- The news:Wednesday January 11
- Retail growth flattens
- The news:Tuesday January 10
- The news:Monday January 9
- The news: Sunday January 8
- Don’t come the raw prawn with us:Barnaby
- agriculture (203)
- Airlines (329)
- Banking (3,951)
- Business (4,227)
- climate (107)
- Communications (127)
- corruption (33)
- crime (84)
- defence (105)
- Diplomacy (106)
- disability (19)
- Disaster (180)
- Economics (4,246)
- education (177)
- employment (435)
- Environment (214)
- farms (135)
- Financial advice (3,783)
- Health (266)
- Housing (1,094)
- Inflation (662)
- Insurance (155)
- Investment (3,169)
- Law (34)
- manufacturing (203)
- Markets (3,121)
- Media (157)
- medical (152)
- mining (577)
- pay (348)
- pensions (121)
- Politics (4,585)
- population (1,228)
- property (138)
- Regulation (1,460)
- retail (113)
- retirement (207)
- rural (68)
- Rural australia (185)
- Security (66)
- Social security (497)
- Superannuation (324)
- Tax (672)
- terrorism (29)
- The latest (1,519)
- Trade (1,572)
- transport (112)
- Uncategorized (1,006)
- welfare (219)