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Regulatory Roundup May 2014
Corporate tax in Australia needs to be cut to 25%: Macquarie Group
The Macquarie Group has called for the corporate tax in Australia to be reduced to 25% in a submission to the Financial System Inquiry. In its submission, the bank noted that the corporate tax is 17% in Singapore, 16.5% in Hong Kong, and dropping in the UK from 23% to 20% by 2015. The corporate tax in Australia at present is 30%. “All Australian businesses, including financial services, will be disadvantaged by Australia’s higher tax rate, however the fluidity of money will mean the impact on many elements of the finance sector may be profound,” the bank said in its submission.
Bank calls for a funding alternative for aspiring small businesses
In yet another submission to the Financial System Inquiry, Westpac called for a range of alternative financing solutions for small and medium sized enterprises (SMEs). The bank recommended that the inquiry establish a task force, comprising government and industry representatives, to examine alternative financing for Australian SMEs. The submission went on to list private equity, start-up and growth funds, venture capital and emerging trends among the financing options for the task force to consider, as well as “current barriers to market development and potential opportunities to enhance the financing mix available to SMEs”.
Payment firm calls for ACCC inquiry into ballooning small business bank fees
Strong action is needed to end the unfair punishment of Australia’s SME community, according to independent merchant payments provider Tyro Payments. Tyro said an ACCC enquiry is needed to establish why Australia’s 350,000 SMEs are being charged an estimated $400 million more in fees than they should be every year, or up to 10 times more than big businesses (a figure Tyro said is based on data released by the RBA last year). “On average, an SME processes about 250 Visa and MasterCard credit or debit card transactions monthly. The interchange fee on each transaction cost them 53 cents, adding up to $1,600 per year. In comparison, big retailers bring in much larger profits and only pay about 16 cents for the same transaction,” Tyro chief executive JostStollmann said.
Savings from carbon tax repeal would be immediate
Energy retailers have been reassured that they can immediately start charging lower prices, if and when the carbon tax repeal takes place. As is typical procedure, retailers usually adjust their standing offer prices on or soon after July 1. However, the carbon tax repeal – which businesses are hoping will pass through the lower house in the months after July 1, 2014 – means some retailers may not be able to immediately pass through savings to their customers if the legislation has not become law by the time they next adjust their standing offer prices. The Australian Energy Regulator has allayed such fears by confirming that it would not take action against retailers that immediately lower prices to reflect savings.
Increase in minimum wages could force many retailers to close shop
Around 40% of businesses surveyed by the Restaurant and Catering Association of Australia said they would close their business if the minimum wage is increased by 5%, with another 30% saying they would reduce the hours of their staff and 14% saying they would reduce their trading hours. The association said labor costs represent 45% of total expenditure for the Australian industry, and that labor costs in Australia are second only to Luxembourg.
Businesses face high taxes and government charges
Business taxes and government charges remained the largest constraints on business investment for the 23rd successive quarter, according to the ACCI Survey of Investor Confidence. After business taxes and government charges, the next most pressing constraints on business investment were: insufficient demand, insufficient retained earnings, wage costs, current levels of debt, non-wage labor costs, local competition, charges by lending institutions, interest rates, and raising loans from financial institutions.
Free tax calendar tool for small businesses
The Tax Office has provided a downloadable small business tax calendar, which it said is an easy-to-use tool that will help small business owners, including sole traders, plan and manage tax obligations and give out timely reminders when lodgement or payment tasks are due. The calendar can automatically build a 12-month schedule tailored to your business’s specific lodgement and payment needs. And if running more than one concern, business owners can set up a unique tax calendar for each business or, for instance a bookkeeping service, can set up a unique tax calendar for each client.
Australia has fewer businesses now, according to ABS
The number of businesses in Australia slumped to just less than 2.1 million as of June 2013, a fall of 2.9% according to data recently released by the Australian Bureau of Statistics (ABS). The ABS data showed fewer new businesses are starting up in Australia, although the number of businesses closing down has also decreased slightly. The entry rate of businesses was 11.2%, down from 13.5% in 2011-12, while the exit rate was 14.1%, up from 13.1% in 2010-11. The figures revealed that the highest entry rates were in the accommodation and food services industry as well as the public administration and safety industry. The lowest entry rates were found in agriculture, forestry and fishing as well as the rental, hiring and real estate sector.
Australia’s first bitcoin ATM opens in Sydney
Sydney’s Westfield Central Plaza on Pitt Street became home to Australia’s first bitcoin ATM – allowing people to buy and sell the virtual currency and exchange it for cash. Administered by Australian Bitcoin ATMs, also known as ABA Technology, the orange bitcoin ATM resembles a regular banking ATM and removes the intimidating and difficult aspects of buying and selling bitcoins. “With an intuitive, straight-forward interface and the convenience of immediate liquidity, Bitcoin ATMs attract both first time users with almost no knowledge of the cryptocurrency and its seasoned traders,” ABA said in a statement. It expects to install 100 Bitcoin ATMs in Australia by 2015 and more than 500 globally by 2016.
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