Business News Releases

Buyback loophole unfair - accountants

 

IN A FISCAL deficit environment that Australia finds itself in, it’s time to have a hard look at the share buyback scheme loophole that continues to reduce the Commonwealth revenue line, says the Institute of Public Accountants (IPA).

“The share buyback system is inequitable and reduces Australia’s revenue options to fund other initiatives, especially those supporting small business,” said IPA chief executive officer, Andrew Conway.

“People on higher marginal tax rates receiving a dividend have to pay ‘top-up’ tax and are therefore, much less likely to participate in share buyback schemes.

“This creates an inequitable distribution of franking credits and reduces the attraction of buybacks for specific groups of taxpayers. Off-market buybacks are mostly attractive to low tax paying shareholders.

“Given that one of the principles of developing tax policy is equity, then this issue should be considered in future tax reform, so that all taxpayers receive the same treatment.

“For entities that pay no tax and superannuation funds paying no or up to 15 percent tax, share buybacks can be a genuine benefit as they receive the additional incentive of an imputation rebate from the Government.

“While buybacks may be a useful tool for corporate entities in terms of capital management, they come at a cost to the taxpayer, as Treasury coffers miss out on top up tax due to  skewed  distribution of franking credits.

“Telstra is the first major listed company since the GFC that has announced a buyback and no doubt there will be many more to follow.  Therefore, it may be timely to consider the tax treatment of buybacks, for the benefit of all taxpayers and for the benefit of companies that are offering share buybacks.

“The Government should seriously look at the artificial streaming of franking credits which buybacks create,” said Mr Conway.

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies with more than 24,000 members and students in over 51 countries.  The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants.  The IPA was recognised in 2012 as Australia’s most innovative accounting organisation and listed in the top 20 in the 2012 BRW Most Innovative Companies List.  

www.publicaccountants.org.au

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Reduction in penalty rates crucial to stimulating business and jobs growth

PEAK retail industry body the Australian Retailers Association (ARA) said reducing penalty rates is a crucial step in creating higher levels of employment for Australians.

ARA Executive Director Russell Zimmerman said the Australian Chamber of Commerce and Industry’s (ACCI) recent comments regarding the detrimental effects of penalty rates on both employers and employees were 100 percent warranted, despite union criticism about ACCI supposedly ‘misleading’ the community.

“It’s all over the news at the moment – Australia’s unemployment rate has soared to its highest level in 12 years.

“There’s no denying the fact that retailers would employ more staff if they did not have to pay penalty rates. SME retailers in regional areas in particular, who do not currently open on Sundays, would definitely consider their options if penalties were reduced.

“Retail staff in regional areas do not usually have the opportunity to work on Sundays and a lower penalty rate would mean these retail employees would have the opportunity to work extra hours. We cannot ignore the major benefits for all involved, including additional hours retailers will be able operate, if penalties are reduced.

“A number of larger retail members have advised the ARA that whenever their stores are not ‘forced’ to open under their lease requirement, they close the store completely due to severe double-time penalty rates. If these stores could afford to be open, they would in turn employ a number of staff on a Sunday and this would not only improve business in country and regional stores but increase employees discretionary spending.

“Seeking to be the voice of reason, the ARA is not calling for penalty rates to be abolished but there is a strong need to get the balance right so that retailers can operate competitively on weekends and offer increased employment opportunities,” Mr Zimmerman said.

Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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Travel figures show need for MCEC expansion as a priority

 

VECCI Chief Executive Mark Stone said the release of Tourism Research Australia’s International Visitor Survey results highlights the need for both major parties to commit to expanding the Melbourne Convention and Exhibition Centre.

"Tourism Research Australia’s International Visitor Survey shows that for the year ended June 2014 in Victoria, visitor numbers increased 11% to 2,049,000 and expenditure increased 8% to $4,886,000," Mr Stone said.

"This growth exceeded that of the nation as a whole, where visitor numbers increased by 8% to 6,147,000 and total trip expenditure increased 7% to $30,101,000.

"The number of visitors traveling to Australia for the purpose of business is unchanged on the previous year at 822,000.

"It’s positive to see visitor numbers and expenditure increasing for Victoria overall, but growing business visitation must be a priority."

VECCI’s 2014 state election agenda, Taking Care of Business, calls for both major parties to commit to expanding MCEC to take advantage of the lucrative business events sector.

"MCEC currently turns away 17% of potential new events due to capacity constraints," Mr Stone said. "The $300 million investment in the expansion is estimated to generate an excellent return to Victoria of $150 million annually through its contribution to the state’s business events sector."

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the peak body for employers in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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Retailers displeased with another rate stay – time to support consumer confidence,jobs in lead up to Christmas

PEAK retail industry body the Australian Retailers Association (ARA) said the Reserve Bank of Australia’s (RBA) decision to keep the cash rate on hold at 2.5 percent does little to support consumer confidence and jobs growth.

ARA Executive Director Russell Zimmerman said that despite a small uplift in recent retail sales figures, consumer confidence remains extremely fragile.

“Worsening employment figures are also painting a picture of an economy needing monetary support.

“Lowering interest rates today would have been a supportive step in the right direction for the retail sector and jobs but unfortunately this wasn’t the reality.

“Given the current fiscal tightening of the economy to balance the budget, retailers believe the RBA will need to continue to support the economy via low interest rates for some time. The RBA remains one of the few central banks able to offer that support to the economy globally.

“There were some signs of life for the retail sector in the 2013-14 financial year, however, this activity has been short lived and extra stimulus is now needed for the consumer-lead economy.

“It is imperative that the RBA do all that it can to ensure that retail trade does not suffer as we gear up toward the spring/summer racing season and also the Christmas trading period.

“With the festive season right around the corner, retailers are beginning to invest in new marketing strategies and have also begun hiring Christmas casuals. The cost of doing business is increasing daily. Now is the time for the RBA to lower interest rates and aid retail growth,” Mr Zimmerman said.

Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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Senate report backs Reef plan

THE peak representative body for the Queensland resources sector said the Senate report into the Great Barrier Reef backs the work that is well under way to improve reef health.

Queensland Resources Council Chief Executive Michael Roche said the report published 29 recommendations that largely reflected the work of a host of stakeholders on the Reef 2050 Long-Term Sustainability Plan. 

‘We thank the Senate for its comprehensive inquiry into the Great Barrier Reef that adds to the pool of evidence and information that is aiding in the rehabilitation of the reef against its biggest threats,’ Mr Roche said.

‘We also fully support increased resources being directed towards management of the reef, however we do not support any blanket ban on dredge spoil disposal at suitable locations at sea.

‘While the blame for the degradation of the reef has been unfairly heaped upon the ports and shipping servicing Queensland’s minerals and energy producers, containing the managed expansion of Queensland ports to meet the demand of trade markets will not make a difference to the frequency of storms, starfish outbreaks or the terrestrial water run-off that scientists agree are responsible for the current health challenges for the reef.

‘The draft Reef 2050 Long-Term Sustainability Plan, soon due for release, is a comprehensive action plan that has been put together by all relevant stakeholders from state and federal government, scientists, industries including, agriculture, tourism, resources, ports and fishing, as well as NGOs including WWF.

‘We are part of a team that is working together to help the reef and I am pleased to say that most of the recommendations in this report are already in train,’ Mr Roche said.

Despite most of the recommendations aligning with current work across the reef stakeholder group, Mr Roche said it was unsurprising that Labor and the Greens had taken a negative stance against the one stop shop for environmental approvals.

'Opposition to the one stop shop flies in the face of report after report backing this important reform.

‘We welcome the Coalition’s stance to support the reforms to the EPBC Act that will streamline approvals processes between state and federal governments,’ Mr Roche said.

Mr Roche said that a ban on at sea disposal of dredge spoil made no environmental sense.

'Every project must be examined on its merits given that land based options are sometimes simply not viable where adjacent coastal lands may have high conservation or cultural value.

‘The challenge is how well we manage the reef for positive economic and environmental outcomes and to work together, as is being done through Reef 2050 Long-Term Sustainability Plan.'

www.qrc.org.au

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