New legislation drafted by the Australian Government last week would allow the Australian Taxation Office (ATO) even more power to withhold tax refunds for an undefined period of time, BDO tax partner Mark Molesworth warned yesterday.

BDO tax analyst warns the ATO is about toget new legislation to withhold refunds indefinitely.

The draft legislation, released on February 15, would allow the ATO to withhold refunds, from both businesses and individuals, for at least 60 days without challenge if it considered the refund required further verification.

Mr Molesworth warned the proposed legislation "essentially allows the ATO the right to hold a refund indefinitely when it deems further verification is needed".

"Basically, the proposed legislation would allow the ATO more power to retain refunds for any period of time to undertake checks to verify the correctness of the amount claimed," Mr Molesworth said.

"At the end of the initial verification period, the taxpayer can challenge the continued withholding of the refund, but this would be at the taxpayer's expense."

Mr Molesworth said such processes could mean unnecessary costs for the honest Australian tax payer.

"The proposed legislation could mean a significant amount of unnecessary costs to the honest tax payer, who may be forced to challenge the ATO to access their refund," Mr Molesworth said.

"While verification checks within a reasonable timeframe are absolutely necessary, there needs to be a positive obligation on the ATO to either refund the money or to take action in the tribunal to validate continuing to withhold the refund.

"With many Australian tax payers relying on tax refunds to meet cash-flow requirements, we need to be certain that public officials who are making the decisions to withhold taxpayers' money are held accountable for such actions," he said.

Mr Molesworth said the ATO has always had the ability to assess - or re-asses - the taxpayer if it is considered the refund is not owed, "therefore extensive powers to withhold refunds are simply not necessary".

The proposed legislation would apply in relation to refunds and payments arising under all taxation laws that the ATO administers.

The Federal Government has allowed just under a week for consultation on the proposed legislation, with submissions havign closed yesterday, Mr Molesworth said.

www.bdo.com.au

www.ato.gov.au

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The Australian Retailers Association (ARA) has not received its desired early Christmas present of a rate cut by the Reserve Bank of Australia (RBA) today. The ARA took the RBA's decision to leave the cash rate unchanged at 4.75 percent as a blow for retailers as they try and put the woes of last Christmas behind them, prepare for the busiest time of the year and adjust their staffing levels accordingly.

No early Christmas gift for retailers as RBA keeps interest rates on hold.

ARA executive director Russell Zimmerman said the six weeks over the Christmas and New Year trading period are critical for the sector given that up to 40 percent of a retailer’s yearly earnings can be made around this time.

“I am disappointed the RBA did not reduce the cash rate," Mr Zommerman said.

"Retailers are wondering when they will be able to enjoy some Christmas cheer after hearing the RBA has maintained the strain on consumers’ wallets as they struggle to find any discretionary spend in their stretched household budgets.

“As Australia’s largest employer, retailers would usually be looking at putting some Christmas casuals on the roster in readiness for the festive season. Retailers facing a bad year of trade and bad memories of last Christmas will be forced to employ less staff.

“We are also fast approaching the Spring Racing Carnival, which traditionally delivers a bit of a boost for fashion retailers. After a dismal winter sales period, businesses in this category are hoping for some respite.

“We believe an interest rate cut would have been an obvious decision as consumers are clearly struggling to cope with mortgage stress and are tightening their belts as they react to uncertainty in the world economy.

“The RBA has to form a delicate balance between sectors posting different levels of growth as well as manage inflation levels, but we believe today’s decision to maintain the cash rate will be detrimental to the retail sector and will certainty affect employment levels,” Mr Zimmerman said.

www.retail.org.au

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The Australian Retailers Association (ARA) has slammed Fair Work Australia's (FWA) ruling today to increase the minimum wage by over $19 per week as thoughtless, "one size fits all" decision making which will have a disastrous impact on the retail sector.

Russell Zimmerman.

ARA executive director Russell Zimmerman said FWA's blanket decision lumped retailers in with other award-reliant sectors and "shows a total disregard for the bleak trading conditions of Australia's largest employer and will result in job cuts".

"Instead of paying heed to the already tough trading conditions specific to the sector, retailers will feel the biggest impact of the wage increase with the shop assistant rate increasing by over $21 per week," Mr Zimmerman said.

"Small to medium businesses will be hit the hardest. Many of the bigger companies are protected from the rise due to the EBAs they have in place. Meanwhile, the smaller players are facing the same struggles as Australian workers with interest rate increases, more taxes, increased utility bills and a higher cost of living.

"Many will simply have to close their doors.

"This decision is disastrous for retailers and it's unreasonable to expect them to pay increased wage bills while the sector struggles to post any significant growth and when retailers are already facing wage increases as of July 1 with the second transition to the Modern Award," Mr Zimmerman said.

"The double increase will give retailers no choice but to shed staff, especially since retail trade figures have shown little growth and any year -on-year boost in sales is still well below the rate of inflation.

"FWA's decision has disregarded the fact that we are operating in a two speed economy, with retailers traveling in the slowest gear and pitted up against the booming mining sector," Mr Zimmerman said.

The ARA represents Australia's $240billion retail sector which employs over 1.2 million people. The ARA promotes and protects more than 5000 independent and national retailers throughout Australia, Mr Zimmerman said.

www.retail.org.au

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Round-the-world sailor and Young Australian of the Year Jessica Watson opens the Australian Banana Industry Congress today (June 2) as the industry changes tack for greater professionalism.

Jessica Watson talks about determination to Australia’s banana industry.

Also on the agenda is innovative Queensland businessman Phillip Di Bella, the founder and managing director of Di Bella Coffee, who will present a very different way to develop and sustain a successful business.

Australian Banana Growers’ Council (ABGC) president Cameron MacKay said he expected Jessica Watson would impress growers and industry stakeholders alike.

“Congress is all about the business of growing and marketing bananas – and Jessica’s determination and vision in her own life emulate what our growers need – in particular after recent climatic events across Australia,” Mr MacKay said.

“She also represents one of our most important demographics – that of the post teen, early adult market so we are very keen to hear what she has to say,” he said.

The congress takes place at the Hyatt Regency Coolum, on the Sunshine Coast Queensland, to June 4 and will attract the attention of growers and industry stakeholders Australia wide. It also marks the 50th Anniversary of the ABGC and will provide attendees with a unique opportunity to see what the industry has achieved in that time.

“It will be a time to celebrate and recognise the extraordinary contribution of many of the individuals, families and organisations that have made and continue to make our industry what it is today,” Mr MacKay said.

Other features of the Congress include Darral Ashton, chairman of Apple & Pear Australia Ltd, who is providing an insight into recent experiences of the apple industry and the decision to import from New Zealand; plus Visy Fibre Packaging, the council’s major foundation sponsor, will canvas their industry to present the latest in packaging trends from around the world and anticipate upcoming technical advances.

“It is an opportunity not to be missed so I strongly encourage growers and industry alike to make this most of this occasion,” Mr MacKay said.

www.abgc.org.au

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