THE Queensland Resources Council (QRC) has welcomed the release of the State Government’s North West Queensland Economic Diversification Strategy, and said it was important to strengthen the resources sector and ensure it continues to develop alongside other key industries.

QRC chief executive Ian Macfarlane said the resources sector would continue to be the main economic driver of the region, but all sectors would benefit through a plan to grow the region and encourage more investment.

“North West Queensland is a resources heartland,” Mr Macfarlane said.

“The resources sector supports almost 10,000 jobs and makes up $1.7 billion, or more than a third, of the region’s economy.

“It is already delivering for our state and it is also one of the most prospective regions of Queensland for new exploration, new investment and new jobs.

“The North West Minerals Province is rich in potential for critical minerals that are the building blocks of just about every part of our lives, including rare earths.

“The Geological Survey of Queensland has an estimated $40 billion dollars of geological information and explorers are combing through these rock libraries for clues to where the next deposit of new energy minerals might be found.

“Queensland has a world class reputation in metallurgy and minerals processing, which stands us in good stead for refining and recovering these new energy minerals.

“They will also be in growing demand on global markets, so it is important that Queensland seizes the opportunities for ongoing resources investment in the North West.

“It is important that investments in energy infrastructure, including supply and transmission, provide opportunities for common user projects, which was identified as a priority in the Strategic Blueprint for Queensland’s North West Minerals Province.

“Expanding energy opportunities in the North West will not only power the resources sector for example in mineral processing, but it will provide the reliable electricity needed to support other industries in the region including agriculture, and support the development of towns and communities.

“QRC has also welcomed the Palaszczuk Government’s commitment earlier this year to upgrading the Townsville to Mount Isa rail line and reducing rail charges.

“The opportunities for resources development in the North West could help secure Queensland’s role as a resources superpower for decades into the future.

“We are calling on both the State and Federal Governments to continue to provide incentives for exploration and development, such as the $100 million Exploring for the Future program from the Australian Government.

“Investment in common use infrastructure, exploration and supporting industries can all help deliver on the full potential in the North West.”

THE ATO Small Business Tax Gap report released today highlights a $11.1 billion tax gap, almost two-thirds (64%) of this credited to black economy behaviour such as not declaring income, workers paid cash ‘under the table’ or exaggerating expenses.

Some 71 percent of small businesses reported their tax correctly and a further 18 percent attempted to report correctly but made mistakes, mainly due to poor record keeping or human error. 

For the more than four million small businesses in Australia, it is essential to have proper records in place for tax time, so they can substantiate and justify all claims.

Australian tax leader at Chartered Accountants Australia and New Zealand Michael Croker said the report is a warning to the millions of small businesses now completing their 2019 income tax returns to ensure documentation is complete and accurate.

“We are pleased to see that the ATO has found Australian small businesses use tax professionals more than those in countries that have reported a larger tax gap,” said Mr Croker.

“It is important to ensure that all income is recorded and that private components of an expense are not inadvertently claimed as a business expense. It is also essential for businesses to disclose all financial transactions to your Chartered Accountant to ensure you are compliant. 

“Businesses that do not accurately share their claims need to consider that the ATO has considerable powers to investigate, claim money back and penalise.”

The impact of the few businesses that are participating in the black economy is enormous. 

“This is not 'their' money, it’s Australia’s money, and each incorrect claim adds up to billions being diverted from Australian services and infrastructure,” said Mr Croker.

“The black economy places undue and unfair competitive pressure on the majority of small business operators who are doing the right thing.

“The Black Economy Taskforce made a number of recommendations to reduce the impact of the black economy and this report certainly gives the argument credence. 

“The anonymity of cash ensures those participating in black economy remain under the radar.

“An extremely conservative RBA estimate shows that $1 billion is warehoused by the black economy with a further $5 billion used for operational purposes which represents up to 8 percent of bank notes in circulation," he said.

“Implementing a ban on cash transactions of $10,000 or more will make it more difficult to operate in the black economy with very limited impact on those who prefer cash and operate within the regulatory systems.”

About Chartered Accountants Australia and New Zealand

Chartered Accountants Australia and New Zealand is a professional body comprised of over 120,000 diverse, talented and financially astute members who utilise their skills every day to make a difference for businesses the world over. Members are known for their professional integrity, principled judgment, financial discipline and a forward-looking approach to business which contributes to the prosperity of our nations. 

www.charteredaccountantsanz.com

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NEW FIGURES released by the Australian Taxation Office (ATO) today estimate that almost 90 percent of income tax from small businesses is paid voluntarily or with little intervention from the ATO.

“This shows that the vast majority of small businesses in the tax system are trying to do the right thing,” Deputy Commissioner Deborah Jenkins said.

“Small businesses make up more than 99 percent of all Australian businesses. They contribute $380 billion to the economy each year and employ around five million people," Ms Jenkins said.

“Considering how much small businesses have on their plate, we’re grateful for the level of work they put in to get their tax right.”

The ATO estimates the 2015-16 income tax gap for the small business sector to be approximately 12.5 percent, or $11.1 billion, with over $7 billion (or over 64% of the total value of the gap) being attributed to black economy behaviour.

Small business tax gaps that have been released overseas range from 9-30 percent.

Around 90 percent of small businesses use a registered tax professional to help them comply with their income tax obligations. 

“We recognise the important role that tax professionals have in helping small businesses get their tax right and we would not have been able to achieve this result without the support of our tax professionals," Ms Jenkins said.

“In addition to seeking qualified advice from a registered tax professional, we know that small businesses who keep good records and have invested in record keeping software are more likely to get their tax right.

“We’ve found that some small businesses are making mistakes with their tax, but these are often unintentional errors which are easily fixed.  Our objective is to support these honest small businesses to better understand their obligations and to help them get it right the first time.”

The ATO has a research program that measures tax performance across all market segments. This work helps measure the effectiveness of the tax system.

As part of this program, the ATO measures tax gaps – estimates of the difference between the tax collected and the amount that would have been collected if everyone was fully compliant with the law.

“Internationally, tax gaps are difficult to compare, but what’s clear is we are performing well in terms of small business compliance, and that is something worth celebrating.”

The ATO’s research shows a small percentage of businesses are deliberately avoiding their tax obligations, but by dollar value this adds up to a significant portion of the gap. This behaviour could be motivated by a desire to avoid tax, limit impacts on welfare payments, or to avoid law enforcement. 

“Hiding income, exaggerating expenses and operating outside the system are all considered to be black economy behaviours. Businesses doing the wrong thing are about to attract our full attention,” Ms Jenkins said. 

The Black Economy Taskforce estimates that the black economy costs community as much as $50 billion, approximately 3 percent of Gross Domestic Product (GDP). 

“Small business operators that engage in black economy behaviour are not competing on a level playing field. They have an unfair advantage over those doing the right thing,” Ms Jenkins said.

“We’re implementing a number of initiatives to tackle the black economy. Changes like a ban on sales suppression software and a new tip off line where people can report suspected black economy behaviour to us.”

The ATO is also expanding their sophisticated data analytical tool that spots red flags indicating omitted income or other black economy conduct.

“We’ve stepped up our enforcement activities, including highly visible mobile strike teams. We visited close to 10,000 businesses around the country last year and we plan to visit another 30,000 over the next three years.”

The ATO provides free, educational resources, guidance materials and online tools and services on its website. The ATO also works with tax professionals and provides them with tools to educate and inform their small business clients to ensure they can meet their tax obligations.

EXTRA INFORMATION

Tax gap estimates are an important feature of the performance and accountability story of any modern tax authority. (Find out more at ato.gov.au/taxgap.)

The ATO has previously released the net income tax gap for large corporates, estimated at 4.4 percent or $1.8 billion in 2015-16, and the net income tax gap for individuals not-in-business for 2014-15, is estimated at 6.4 percent, or $8.7 billion.

To measure the 2015-16 income tax gap for small business, we use findings from our random enquiry program to estimate the difference between what we expected to collect, and what was actually collected for the given year.

Initially, the ATO undertakes a detailed profile of the tax affairs for each taxpayer in the sample, which helps to identify all tax risks or issues for each taxpayer.

The ATO makes use of all information provided by the taxpayer as well as data collected by the ATO, for example, interest and dividend payments, and public domain data.

Where we find issues, we, escalate to an audit. The audit results contribute to the calculation of the tax gap.

This method is considered highly credible, and is commonly used in other tax jurisdictions for tax gap estimation in similar situations. 

The small business income tax gap estimate provides a better understanding of compliance in this segment. This information helps the ATO better tailor our products, support and strategies to mitigate these risks, and improve the experience for taxpayers.

More information about the small business tax gap including how we calculated it is available through the ATO website at ato.gov.au/SmallBizTaxGap.

Tax gap estimates are an important feature of the performance and accountability story of any modern tax authority. Find out more at ato.gov.au/TaxGap. 

About the Black Economy Taskforce

The Black Economy Taskforce was established to provide a whole-of-government approach to combat the black economy in Australia. It was established in December 2016 to develop a policy framework involving new proposals to tackle black economy activity. The Black Economy Taskforce's Final Report was released in October 2017.

The ATO plays a significant role in leading and delivering on the Black Economy Taskforce recommendations accepted by the Government. Since 1 July 2018, the ATO has coordinated an extensive program of work to tackle the black economy. This program of work includes a multi-faceted approach.

The ATO is responsible for addressing the following aspects of the black economy:

• deliberate under-reporting income and over-claiming expenses
• ensuring businesses meet their employer obligations – so they don’t pay employees or contractors cash in hand, underpay wages, fail to withhold tax or not contribute to super
• addressing illegal phoenixing (together with Phoenix Taskforce partner agencies) – deliberately liquidating and reforming businesses to avoid obligations
• preventing tax fraud
• dealing with illicit tobacco, duty and excise evasion
• targeting intermediaries and agents who enable black economy behaviour

www.ato.gov.au

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THE Queensland Resources Council (QRC) has welcomed the release of the Australian Government’s Coal in India 2019 report, reinforcing the enormous potential for new jobs and economic benefits through expanding our resources trade with India.

QRC chief executive Ian Macfarlane said Queensland was in the ideal position to make of the most of the opportunities through more trade with India.

“Queensland should keep playing to our strengths.  And that means seizing the opportunities to meet an expanding market for coal and other Queensland commodities,” Mr Macfarlane said.

“The Australian Government Coal in India 2019 report underlines the potential jobs, export and royalty tax benefits from expanding Australia’s thermal coal exports to India, with more than 4000 new direct jobs forecast for regional areas.

“It makes sense to export Australia’s high quality coal for use in global markets, because our coal has a higher energy content and produces lower emissions than coal from other exporting nations," he said.

“By creating stronger trading partnerships with India, Queensland can help deliver a range of commodities that India needs to grow and deliver a higher standard of living for its people, and at the same time benefit every Queenslander.

“There are opportunities for the expansion of both thermal and metallurgical coal exports to India," Mr Macfarlane said.

“India is already Queensland’s third largest customer for coal, behind China and Japan.  In 2018 the total value of Queensland coal purchased by India was $9.5 billion.

“India is now the world’s second largest steel producer, and Queensland’s world-leading metallurgical coal is helping power that growth. In 2018, India was the largest buyer of Queensland metallurgical coal.

“There are also rich new opportunities for the export of Queensland zinc, gold and LNG as a result of India’s continuing economic growth and urban development. For example, India’s demand for zinc is forecast to grow by 7.6 per cent each year to 850 million tonnes in 2021," Mr Macfarlane said.

“New resource projects and new markets for Queensland commodities means more jobs, more investment and more money paid back to Queenslanders through royalty taxes.

“QRC looks forward to further strengthening the trading partnership between Australia and India, and in particular between Queensland and India.”

www.qrc.org.au

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