The Australian Government announced in its Budget that it would be bringing forward personal tax cuts that had been scheduled for 2022.
The Australian authorities additionally unveiled new reliefs for businesses, announcing that from October 6, 2020, until June 30, 2022, businesses with turnover up to AUD5bn will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
The Government also outlined plans for enhanced incentives for research and development, and revealed that companies with turnover up to AUD5bn will be allowed to offset losses against previous profits on which tax has been paid, to generate a refund.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look
In Australia, the ATO is highlighting non-compliance by some businesses with the rules regarding eligibility for providing JobKeeper payments.
The JobKeeper Payment scheme is a temporary wage subsidy for businesses significantly affected by COVID-19. The ATO explained that although the majority of large businesses are doing the right thing, a small number have been identified that may have manipulated their projections or financial positions to access JobKeeper payments they aren’t entitled to receive.
The tax authority went on to reveal that it has also found that some businesses have not kept adequate records to support their enrolment in the scheme. The ATO therefore stated that it was encouraging businesses to review its guidance on eligibility for JobKeeper payments and on the records that should be maintained, and urged them to contact it for assistance if they have made an honest mistake or … Read More »
Another Australian tax development caught my eye recently. This was the announcement of tax cuts for craft brewers – the third time in less than a year that the Australian Government has announced tax concessions for the brewing industry. Well, it has been a tough few years for governments of both political stripes in Oz, I suppose.
There’s also an election to be fought soon. And what better way is there to ingratiate yourself with the electorate than to help cut the price of the nation’s favorite tipple? Yes, I know, cynical old me returns!
But there could also be another trend emerging here. It probably went largely unnoticed, but the TCJA included provisions to temporarily extended tax cuts for beverage makers, from brewers, to vintners and distillers. Then, in February 2019, a bipartisan bill was introduced in the Senate that would … Read More »
The main focus of national and international tax policy makers at present is on the highly mobile, hare-like nature of business income, which whizzes from one jurisdiction to another at lightning speed, leaving tortoise-esque tax regimes trailing in its wake. But let’s not forgot that people are highly mobile too, as major advances in transport and communications technology have enabled individuals to live and work in all corners of the world and stay in touch with their work and family base with relative ease.
However, personal income tax codes, specifically rules on residency, have by and large also failed to catch up with the often-peripatetic nature of modern life. Indeed, some of these laws are so ancient, I’m sure Homer would still recognize them. Although the bit in the Odyssey about how Odysseus had to fill in numerous tax returns on … Read More »
Isn’t it strange how governments seek to cut tax just before elections? It’s not by happenstance, and something that has happened for eons.
However, it used to be rare that anyone under the age of 40 would be considered for the highest national office. Now, millennials are winning elections left, right, and center, politically as well as figuratively.
Earlier this month the International Monetary Fund warned the Israeli Government to maintain fiscal discipline as elections approach, with cuts to individual and corporate income tax being considered.
And last week the Australian Government showered personal income taxpayers with tax gifts in what could be the last federal Budget before elections to the House of Representatives, where the Government is formed. Personal and corporate income taxpayers have been promised fairly significant tax cuts. But, with an election looming large, the risk is that the current … Read More »
The Australia Institute recently urged the Government to resist partaking in the ”race to the bottom” on corporate tax rates. Instead, it recommended that Australia tackle tax loopholes and avoidance schemes, arguing that the priority is to ensure enough revenue is raised to fund public services and infrastructure. But if you look around the world, you’ll find that parliaments are voting through tax reforms that do both – cut corporate tax while shoring up the corporate tax base.
It’s no coincidence that in recent times a succession of governments have announced, are legislating for, or have completed, tax reforms which reduce the rate of corporate tax while restricting interest deductions and strengthening controlled foreign company regimes, among other anti-avoidance measures. These moves are largely a response to base erosion and profit shifting (BEPS), but they also show that tax competition is far from … Read More »
Bitcoin appears to be gaining increasing regulatory acceptance in some parts of the world. In Australia, for example, the Government recently introduced legislation to ensure that virtual currencies operate on an even tax playing field with “physical” money. Treasurer Scott Morrison hopes that the legislation will make it easier for new innovative digital currency businesses to operate in Australia, and some offshore financial centers are already vying to become leading jurisdictions in FinTech expertise.
On the other hand, regulators and tax authorities in other parts of the world seem deeply suspicious of virtual currencies, given the anonymity they provide to users. A notable example is the United States, where the Internal Revenue Service obtained a court order in December 2016 compelling bitcoin exchange Coinbase to produce records identifying US taxpayers who have used its services.
Indeed, there are some who believe that sooner or … Read More »
In the current political climate, with the financial crisis still fresh in the memory (even though the height of the crisis was almost a decade ago), political parties can almost certainly expect to gain some votes with proposals to impose higher taxes on banks. At the very least, it’s hard to imagine such a policy being a vote loser. But what is politically popular doesn’t necessarily equate to effective tax policy.
Some would say that the banking sector got off very lightly for its role in creating the financial mess that still hasn’t been fully cleared up. But governments have to be very careful in how they structure additional taxes on banks, because as the Australian Bankers’ Association warned in response to the recent announcement of a new levy on Australia’s five largest banks, such measures can have “unintended consequences.”
Poland is a good … Read More »
Australia’s rap sheet of tax-related misdemeanors grew yet longer in the past few days. First, we had further backpeddling on the backpacker tax, followed by the news that Australia is forging ahead with a UK-style diverted profits tax, a BEPS-inspired measure that has made even the OECD a little uneasy. Then the OECD itself was on the Government’s case for repeated failures to follow through on tax reform pledges.
There was one bright spot though, and it came in the form of an announcement by the Australian Tax Office that it would issue “tax certainty” letters to taxpayers, guaranteeing them that, as far as the tax man is concerned, they are fully tax compliant and that they need not fear checks or audits. However, given the upending of the tax ruling systems in other parts of the world, namely the EU, … Read More »
A group of 50 economists recently signed a letter imploring the Australian Government not to cut corporate tax, a move which is being viewed as perplexing by some observers in a country which now has an unfashionably high rate of corporate tax, at 30 percent, and is beginning to trail the pack of leading industrial and developing economies by some margin, the OECD average now being about 24 percent.
Of course it’s also easy to make the case, as the aforementioned economists have, that this is a matter of fairness, and that the Government should put the vulnerable in society first, and not, as the letter argues, give tax cuts to big business. All of which sounds wholesome and worthy, but Australia is in a bit of an economic and fiscal hole at the moment, having suffered particularly badly at … Read More »