THIS WEEK, the Full Federal Court ruled in favour of the Australian Taxation Office (ATO), agreeing that horse racing clubs and state racing boards are required to pay superannuation contributions on behalf of jockeys. 

The court upheld the ATO’s superannuation guarantee (SG) charge assessments that were issued to a New South Wales thoroughbred race club and Queensland’s principal racing authority with respect to riding fees paid to jockeys during the period 1 July 2009 to 30 June 2014.

ATO Deputy Commissioner John Ford said this outcome is an excellent example of the ATO’s ongoing focus on reducing the incidence of non-payment of superannuation guarantee in the community, especially by larger businesses.

The ATO takes the non-payment of SG very seriously. Employers that do not pay the correct amount of SG contributions for their workers deprive them of their retirement savings they are entitled to.

“Super is money set aside for employees’ future retirement and financial wellbeing,” Mr Ford said.

In the matters of Commissioner of Taxation v. Scone Race Club Limited (SRC) and Commissioner of Taxation v. Racing Queensland Board (RQB), both SRC and RQB argued that they weren’t liable for super payments, because they only made the payments of riding fees to the jockeys on behalf of the owners for administrative purposes.

The court ruled in favour of the commissioner, agreeing that it was the SRC and RQB which were liable to pay riding fees to jockeys for riding in a horse race and are therefore deemed to be their employers for the purposes of the SG legislation.

Where the ATO finds that an employer hasn’t met their obligations, they are liable for the super guarantee charge (SGC), made up of:

• the amount of super the employer should have paid,
• interest on those amounts, and
• an administration fee of $20 per employee per quarter.

SRC and RQB have 28 days to seek special leave to appeal to the High Court.

The ATO has a range of strategies and activities in place to educate, support, monitor and enforce compliance by employers. The ATO encourages people to report instances of non-payment and responds to every report of possible non-payment of SG from employees or former employees.

“We will pursue outstanding debts, aiming to collect and distribute unpaid super and interest to employees as soon as possible,” Mr Ford said.

In 2018-19, the ATO contacted more than 22,000 employers as a result of reviews or audits, and raised assessments of over $805 million.

ato.gov.au/unpaidsuper

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THE NUMBER of owner occupier loans relating to new homes reached a 14-month high during October while investor participation in the market also stretched higher, according to Master Builders Australia chief economist, Shane Garrett. 

Today’s new set of figures from the ABS indicate that the number of loans to owner occupiers for new home building rose by 5.5 percent during the month, with the number of loans for the purchase of new dwellings up by 1.3 percent compared with September. Taken together, this means that the volume of loans relating to new homes has reached its highest level since August of last year. 

“There is also solid evidence that confidence has is returning to the investor side of the market with the value of lending on that side of the market up by 1.4 percent during October. Having declined for 11 straight months since mid-2018, investor lending has turned around registering increase during four of the past five months,” Mr Garrett said. 

“Based on recent results around building approvals, house prices and lending, it does seem that people are optimistic about the prospects for the housing market in 2020. Activity is going to get a further boost in January with the activation of NHFIC’s First Home Loan Deposit Scheme,” he said. 

“Managed properly, the clear improvement in housing market sentiment could help re-ignite confidence amongst consumers more widely and across the business community. The absence of optimism amongst these players is one of the main stumbling blocks for economic growth at the moment.

“The best way to build momentum is for the government to do everything it can to get new infrastructure projects rolling as early as possible. Building and construction projects are highly visible and represent the best way to signal to everyone that we are gearing up for a bright economic future,” Mr Garrett said.

www.masterbuilders.com.au

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THE Institute of Public Accountants (IPA) has confirmed a grant from the National Health and Medical Research Council (NHMRC) which will support the IPA’s research endeavours into the mental health of small business.

“The IPA is very pleased to partner with Beyond Blue, Mental Health First Aid Australia, Worksafe Victoria and Deakin University and to receive the research grant of $559,073 from the NHMRC,” said IPA chief executive officer, Andrew Conway.

“It is an exciting development considering this is a world first in this type of research and I am humbled to be recognised as introducing this initiative.

‘In terms of mental health research, this is a genuine game changer; we intend to put our collective backing behind this. 

“Through our Australian Small Business White Paper development, we have heralded the fact that the mental health of small business is a significant issue in Australia, and we are intent on doing what we can to arrest the tide of growing health concerns," Prof. Conway said.

“Our nation-wide small business road show in 2017 provided many anecdotes of small businesses battling with depression, anxiety and other issues; too many stories to ignore.

“We are very grateful to the NHRMC for this funding which will extend research in protecting the mental health of SME owners; evaluating real-world approaches to mental health first aid; and, client-relationship building training for small business advisers," he said.

“Our members are very often the first to see the struggle signs within their clients and therefore, we would like to see our members better equipped to support their clients and themselves through mental health first aid training. 

“They need to be skilled appropriately, to have those early conversations and point the way to the health professional that is required,” Prof. Conway said.

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 38,000 members and students in over 80 countries.  The IPA Group is the largest SME focused accountancy organisation in the world. 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. 

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“THE Mid-Year Economic and Fiscal Outlook (MYEFO) released this morning shows that short-term prospects for economic growth and employment are weaker than was expected six months ago,” Denita Wawn, CEO of Master Builders Australia said. 

“While we welcome the expectation that we will still record a Budget surplus this year -- and continue to do so over MYEFO’s forecast horizon, the immediate priority must be for the Federal Government to redouble its commitment to economic growth,” she said. 

“Fast-tracking the actual construction of infrastructure projects so that there is money being spent to generate activity on the ground is the most effective way to achieve to this. 

“Our industry depends on growth to be the biggest provider of full time jobs in the economy. The Federal Government has enough fiscal space to boost demand in the economy while still achieving budgetary surplus.

“An expanded productivity agenda is also needed to build on the government’s continuing initiatives such as the deregulation taskforce to strengthen economic growth over time,” Ms Wawn said. 

“The government still needs to look at ways of providing an immediate and effective boost to demand in the economy to get us over the soft patch we currently find ourselves in.

 “Ramping up spending on construction of infrastructure is the best course of action. It offers a real opportunity to restore confidence amongst households and businesses and send everyone the message that our economy’s best days lie ahead of us,” Ms Wawn said.

www.masterbuilders.com.au

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CANBERRA will play host to a meeting of parliamentarians from around the world, with the 28th Asia Pacific Parliamentary Forum to be held at Parliament House in January.

The APPF is an annual forum where national parliamentarians from the Asia Pacific region meet to identify and discuss important matters of common concern.

Speaker of the House of Representatives and president of the APPF Executive Committee, Tony Smith MP, said the forum would bring together more than 300 delegates from parliaments from the 27 member countries and another 11 observer countries.

"Since the first APPF in 1993, the forum has been an incredible opportunity for parliamentarians to share experiences with colleagues from around the world," Mr Smith said.

"I’m especially pleased that in 2020, the forum will welcome delegates from countries in the Pacific Island Forum.

"Events such as APPF28 form part of the Australian Parliament’s International Program, which helps to promote understanding, sharing of knowledge and democratic development with our fellow parliaments around the world."

Australia was one of nine originating countries of the APPF. The Australian Parliament hosted the second preparatory meeting in Canberra in 1991 before the inaugural meeting of the APPF in January 1993 in Tokyo. Australia last hosted the APPF in 2000.

Delegates will participate in a number of plenary sessions, discussing subjects such as security, economics and trade, and regional cooperation. At the conclusion of the forum, a joint communique will be published, outlining all agreed resolutions from APPF28.

For more information about the forum, visit appf28.org.

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the Federal Government's mid-year budget update (the mid-year economic forecast outlook, MYEFO), saying it contained some welcome gifts for small businesses.

“It’s encouraging to see the Federal Government has allocated funds to establish the national payment times reporting framework,” Ms Carnell said.

“The framework will require large businesses to publish information about their payment policies, including how much time it takes to pay their small business suppliers.

“Critically, the government will provide $156.2 million over four years to streamline regulatory compliance processes and cut the cost of doing business.

“This includes the creation of a single national business register and the introduction of Director Identification Numbers," Ms Carnell said.

“We also welcome continued efforts by the government to combat illegal phoenixing behaviour. Illegal phoenixing not only hurts small businesses, it costs the economy as much as $3 billion per year. 

“The government will spend $10 million over two years on its deregulation agenda to make it easier for small businesses to employ staff and invest in growth.

“A new online checklist will provide small business employers with a guide to employing their first worker, along with a commitment to developing a new prototype ‘regtech’ platform.

“Funds have also been committed to extend the free tax clinic program, following a successful pilot program," Ms Carnell said.

“While small businesses will still use the tailored and comprehensive advice of their accountant or bookkeeper, there are many Australian microbusinesses that would benefit from additional support in understanding their tax and superannuation obligations.

“Of course, in the May 2020 Budget there are a number of items on our small business wish list, beginning with the extension of the instant asset write-off scheme.

“A lift in the $30,000 threshold for the instant asset write-off would be welcome with some industries such as farming requiring a higher threshold to enable them to purchase equipment," she said.

“We also want to see some funds towards implementing the recommendations in the Joyce review, so that small businesses can get the staff they need with the right skills and training.

“At the end of the day, small businesses just want to be able to get on with the job of growing their business," Ms Carnell said.

“We will continue to talk further with the government on measures that will benefit the small business sector and stimulate the economy.”

www.asbfeo.gov.au

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has welcomed Coles Group’s announcement of adopting world-class core finance and procurement platforms, saying this should translate into quicker payment times for small to medium enterprises (SMEs) in its supply chain.

“We hope this digital transformation will mean all SMEs will be paid in 20 days or less, without discount,” Ms Carnell said.

“Better still, if Coles can implement e-invoicing for all SMEs in its supply chain, businesses should be able to be paid in five days.

“If the Federal and NSW Governments can pay suppliers in five days, Coles with its ‘multi-enterprise connectivity’ and improved speed should be able to do so as well.

“Coles Group works with an enormous number of farmers and suppliers across our nation. We hope Australia’s SMEs will directly benefit from this digital transformation.”

www.asbfeo.gov.au

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AUSTRALIAN executive employment has had its equal biggest fall in 12 months as banks continue to block business lending and economic growth sputters, according to the highly accurate indicator of Australian executive employment trends, the E.L Executive Demand Index.

The EL Index fell 6 percent in November, its lowest position in 2019.

Grant Montgomery, managing director of search firm EL Consult that publishes the EL Index, said, “Employment opportunities for executives fell heavily this month bottoming out the year in a clear warning call for Australia’s overall employment trends."

A fall in the index indicates a weakening within 3-9 months, he said.

“It has been a year of correction, with the Reserve Bank trying to chase after the economy to keep it moving by lowering rates, and at the same time trying to jawbone the economy higher by pleading with companies to lower their hurdle rates for new investment," Mr Montgomery said.

“But the real problem for is that small business, which accounts for 57 percent of Australia’s GDP, is being held in a massive credit squeeze. 

“Recent denials by ASIC and AFIC that the post Royal Commission new “responsible lending’ rules do not apply to business lending is as ignorant as it is wrong.

“The truth is that banks in their highly protected comfortable environment have never actually lent to business but have lent against property for business purposes," Mr Montgomery said.

“The distinction here means they have no skills or capacity to differentiate or assess a business loan outside the lien they put on a property. So as soon as the regulators bought in 'responsible' lending the banks naturally applied the higher interest cover rules.

“This is not how business works.

“If someone has a highly innovative piece of technology and wants to set up a business, they used to get bank funding by putting their house on the line. As a new business with a high potential has very little income on inception. 'responsible lending' means they can no longer get funding to start.

"Even existing businesses rarely have consistent week on week or year on year incomes and if they seek funds for a tight period such as during drought the banks have no ability to assess the risk outside of morphing the 'responsible' lending rules and consequently refusing to lend regardless of the backing security.

“The whole small business sector isn’t spending or investing money. Ill-conceived borrowing rules are affecting innovation and entrepreneurship and it represents around half of the Australian working population or more than 5 million people. It is very easy to see why there are very few pay rises and very little wages growth," he said.

"Maybe the Federal Government very recently was trying to address this and spark innovation lending by setting up a venture capital lending vehicle. They had to drag the banks kicking and screaming into it -- unlikely to change anything. Its initial funding by a pool of $200 million is totally inadequate and ultimately won’t work because, you guessed it, Australian banks have absolutely no skills outside of property lending. 

“December last year saw a large fall, through seasonal factors, so we are on tenterhooks to see if the same thing will be repeated this year.” 

The good news is that the information technology sector was the standout winner for the month, following on from two months of sizeable falls," according to Mr Montgomery.

“Spending on technology will continue to be the focus of cost-conscious business. What’s more technology, especially online spending has now captured more and more of the marketing budgets,"he said. 

“The shift to the cloud is a further growth example as more and more business ditch their own hard storage. The downside of IT spending is of course that it ultimately saves jobs and employment falls.

“Still many have being predicted a crisis but that is unlikely to occur unless technology reaches a pinnacle of development with every advancement possible completed. Not going to happen!" Mr Montgomery said.

All of the other sectors put in negative results, with Engineering registering the biggest loss. New South Wales was again the strongest state during the month, almost pulling off a positive result thanks to gains in IT and Management.

About the E.L Index
The E.L Index is a comprehensive monthly analysis of employment trends at executive level. An Australian analysis is produced in Sydney and an Asian analysis in Hong Kong and Singapore. The E.L Index has shown by two separate University studies to correlate strongly with general economic and business trends. It is featured by most of the major news services and is closely followed by government and central bank analysts. The E.L Index is actually a combined national index of all executive demand made up of five separate indices; E.L Finance Index, E.L IT Index, E.L Management Index, E.L Marketing Index and the E.L Engineering Index.

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