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

ends

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.

ends

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.

ends

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

ends