SMALL business payment terms, times and practices are in the spotlight thanks to an inquiry of the Australian Small Business and Family Enterprise Ombudsman, Small Business Minister Michael McCormack says.

THE Institute of Public Accountants (IPA) has voiced its support for the passing of the proposed Misuse of Market Power Bill.

“To date, the misuse of market power provision has not adequately protected small business, and by extension consumers, from the predatory actions of companies with substantial market power,” said IPA chief executive officer, Andrew Conway.

“Australia’s concentrated market structure means that some markets are not competitive and, where collective bargaining is not possible or sufficiently expeditious, small or medium sized businesses are especially vulnerable to exploitation or exclusion by firms with substantial market power.

“The IPA has continued to advocate for an ‘effects test’ to be introduced. So we are pleased that the Bill is consistent with the Harper Review in relation to misuse of market power and importantly, provides that a corporation with substantial market power must not engage in conduct having the purpose or likely effect of substantially lessening competition in that or any other market.

“The most significant deficiency with the current test is that, through narrow judicial interpretation of the phrase ‘take advantage’, it does not catch conduct by firms with market power, when the same conduct could have been carried out by a firm without market power.

“This fails to recognise that conduct capable of being engaged in by firms without market power has a greater propensity to foreclose the market and produce economic harm when it is engaged in by firms with market power.

“The proposed s46(1) in the Misuse of Market Power Bill is significantly more convoluted than that proposed in the Harper Report.  This has resulted from attempts to define, in some detail, the market or markets in which the substantial lessening of competition must occur.

“In particular, it specifies that the substantial lessening of competition must occur in the market in which substantial market power is held, or any other market in which it, or a related body corporate, supplies or acquires goods or services.

“The IPA believes this amendment to be unfortunate and that it unnecessarily complicates the law.  However, as it is not envisaged that this change will significantly diminish the scope of the provision, it does not alter the IPA’s support for the Bill.

“The Harper Report recommendation corrects the two key deficiencies in the existing legislation by removing the ‘take advantage’ element; and, expanding the focus of the provision to capture conduct having the effect of substantially lessening competition in a market.

“The proposed changes to section 46 as reflected in the Bill, represent a sensible and long overdue improvement to Australia’s misuse of market power laws.  Importantly, the shift of the focus to competition rather than competitors will help ensure that unilateral conduct by firms with market power cannot be permitted whether its design or effect is to substantially lessen competition,” 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.  In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 35,000 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.  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. 

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THE Australian Retailers Association (ARA) said the trade figures released today by the Australian Bureau of Statistics (ABS) illustrate a healthy lead up to the 2016 Christmas period with a year-on-year growth of 3.27% seasonally adjusted.

ARA Executive Director Russell Zimmerman said this year-on-year growth is a positive sign for the industry as retailers remain hopeful that the ARA and Roy Morgan predicted pre-Christmas sales figure of $48.1 billion over the Christmas trading period (November 15 to December 24, 2016) will be achieved.

“We won’t be able to confirm the actual pre-Christmas spend until December retail figures are released next month. However, after speaking with retailers across the country, many reported a strong start to Christmas sales in November due to many consumers getting on top of their holiday shopping early.”

With November leading into holiday season, consumers likely spent more time out and about enjoying the good weather and social drinks as reflected in liquor sales growth of 4.85% year-on-year.

“The Takeaway Services category also demonstrated robust growth, taking the lead again with a 9.91% increase year-on-year reflecting consumer uptake of innovative services and products in the space,” Mr Zimmerman said.

“Another category experiencing a strong year-on-year increase was Clothing, Footwear and Accessories at 5.82%. With the warmer weather approaching and Christmas around the corner, consumers appeared to have hit the shops to update their wardrobes with the early summer fashion trends.”

Despite the closure of a number of Masters stores across Australia, other hardware retailers, particularly Bunnings, lead the charge for another exceptional growth in Hardware at 10.15% year-on-year.

New South Wales proves to be the strongest of the states with a 4.25% growth year-on-year, while all other states remain steady (VIC 3.45%, QLD 3.67%, TAS 3.72%, SA 2.82%, ACT 6.44%). As expected, the mining jurisdictions, WA (-0.57%) and NT (0.31%), reflected a weakness in sales due to the downturn in resources in these regions.

“Though these figures don’t necessarily reflect Christmas sales, they generally provide a strong indication as to what we can expect for retail sales over the festive season,” Mr Zimmerman said.

“I’m confident December figures will prove to be strong as many consumers, including myself, usually leave their Christmas shopping until the last minute,” he added.

MONTHLY RETAIL GROWTH (October 2016 – November 2016 seasonally adjusted)

Household goods retailing (0.2%), Other retailing (-0.1%), Food retailing (0.4%), Clothing, footwear and personal accessory retailing (1.7%), Cafes, restaurants and takeaway food services (-0.8%) and Department stores (-0.3%). Total sales (0.2%). 

Northern Territory (0.3%), South Australia (-0.4%), Australian Capital Territory (0.1%), Victoria (0.4%), Tasmania (0.1%), Western Australia (-0.6%), New South Wales (0.5%) and Queensland (0.1%).

YEAR-ON-YEAR RETAIL GROWTH (November 2015 – November 2016 seasonally adjusted)

Household goods retailing (3.08%), Cafes, restaurants and takeaway food services (4.99%), Food retailing (3.07%), Clothing, footwear and personal accessory retailing (5.83%), Other retailing (10.55%) and Department stores (-3.21%). Total sales (3.28%).

New South Wales (4.25%), South Australia (2.82%), Tasmania (3.72%), Victoria (3.45%), Australian Capital Territory (6.44%), Western Australia (-0.57%), Queensland (3.67%) and Northern Territory (-0.31%).

About the Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $300 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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THE Joint Committee of Public Accounts and Audit has launched inquiries into the 2015-16 Defence Major Projects Report, and Defence Sustainment Expenditure.

The JCPAA is a central committee of the parliament with the power to initiate its own inquiries on the Commonwealth public sector.

The Committee has inquired into the Defence Major Projects Report on an annual basis since 2009, and will continue its oversight of the reporting of major Defence acquisitions through its inquiry into the 2015-16 Major Projects Report, which it is anticipated will be published shortly.

The inquiry into Defence Sustainment Expenditure will be considered in parallel to the Committee's inquiry into the Major Projects Report, and will examine matters of finance and public administration. Defence sustainment includes the provision of ongoing parts, supplies and services to Defence systems and assets. This inquiry has been readopted by the Committee after it lapsed following the prorogation of the 44th Parliament.

The Committee invites submissions to the inquiries by Friday, 17 February 2017, noting each inquiry has separate terms of reference. Public hearings will be held in late March 2017. Further information about the inquiries can be accessed via the Committee’s website.

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SALARY packaging bus travel appears to be another tax perk that has slipped through the fringe benefits tax (FBT) net according to the Institute of Public Accountants (IPA).

The ATO class ruling (CR 2016/58) allows an employer to provide a bus travel smart card as part of a salary sacrifice arrangement for bus travel between home and work subject to a few rules.

“This ruling allows a person to salary package bus travel between home and place of employment from pre-tax income,” said IPA chief executive officer, Andrew Conway.

“Normally for taxation purposes, this travel is considered private in nature and employees have to bear this expense from post-tax dollars with no tax relief.

“However, this ruling confirms the anomaly, providing a tax break relating to bus transport whereas such a benefit does not apply to any other form of public transport such as trams, trains and ferries.

“While difficult to comprehend, this absurd anomaly arises from the fact that a bus does not fall within the definition of ‘car’ for FBT purposes. It’s a convoluted process to get to this outcome.

“While it may be a good deal for bus travellers, it is an inconsistency within the tax regime that does not sit well with other modes of transport.  In a world where we are trying to encourage the use of public transport for congestion and environmental reasons, it is hard to justify this outcome from a policy perspective.

“This ridiculous outcome is just the tip of the iceberg when it comes to FBT.

“The IPA has long argued for an overhaul of the current FBT rules which are well past their use by date and no longer reflect modern work practices.

“There has been some effort in recent times to address some of the issues surrounding FBT, such as placing a $5K cap on salary packaged meal and entertainment expenses; and, reforming the statutory formula for cars to remove the incentive to travel more kilometres to lower the FBT charge. 

“In the main, however, the approach has been that of band-aid fixes which has not addressed the complexities associated with FBT.

“FBT has the unenviable reputation of being the tax which is the most administratively difficult for employers and incurs the highest compliance costs relative to the revenue it generates for the Government,” said Mr Conway.

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WITH THE SCHOOL holidays drawing to a close in a few weeks, retailers across Australia are packing the shelves with back to school products.

The Australian Retailers Association (ARA) expects school shoes, uniforms, backpacks, lunchboxes and stationery purchases to peak in the coming weeks, as parents prepare their kids for the new school year.

The ARA expects many stores and shopping centres to shift their focus from the festive season to back to school supplies this month, as it is their biggest trading period of the year for these product categories.

ARA Executive Director, Russell Zimmerman says retailers providing apparel, footwear, stationary and technology will see a big boost in sales this month with the first day back at school rapidly approaching.

“The start of the new year is a milestone for each student around the country, and the purchases associated with back to school products are crucial to many small and large retailers,” he said.

“With the increased use of technology in our education system and more schools implementing 'Bring Your Own Devices', electronic retailers will likely see a surge in sales for laptops, tablets and other electronic learning accessories.”

Mr Zimmerman says although the cost of stocking up kids for the classroom can add up, savvy parents who are organised and seek out the best deals can minimise the pinch when it comes to purchasing these necessary items.

“Every year we see an increase in back to school supplies online,” Mr Zimmerman said, “And with many parents now back at full time or part time work, online platforms provide parents with the convenience and flexibility they need to prepare their children for the new school year.”

As the school year starts in late January, the ARA encourages those parents still in holiday mode to relax and enjoy the shopping experience, especially with post-Christmas discounts continuing right throughout the month.

“The next big discounting period after January will be mid-year sales in June, so I would encourage shoppers to spend their time in physical stores, enjoying the full customer experience and significant savings across the board,” said Mr Zimmerman.

The ARA and Roy Morgan Research predicts that shoppers will spend $17.2 billion nationwide, in the post-Christmas sales during the period from December 26, 2016 to January 15, 2017.

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $300 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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IT IS TIME to up the ante on the turnover threshold associated with the small business entity definition, according to the Institute of Public Accountants (IPA).

“The $2 million dollar turnover threshold for small business that came into play in July 2007 has not been indexed since its introduction,” said IPA chief executive officer, Andrew Conway.

“The Board of Taxation’s 2014 Review of the Tax Impediments Facing Small Business recommended an increase to the threshold, noting that it would reduce the number of businesses who are at or near the current threshold and so face uncertainty as to their tax treatment.

“Increasing the threshold would also assist businesses with a higher aggregated turnover with low margins to access the concessions. 

“It is estimated that increasing the threshold to $10 million would allow an additional 90,000 to 100,000 businesses access to the full suite of small business tax concessions, decreasing their compliance costs and increasing cash flow.

“This would enhance the capacity to reinvest in small businesses, providing the opportunity for these businesses to grow with increased employment and wages.  It would also incentivise small businesses at or near the $2 million threshold to grow, as currently they would lose these concessions once they pass the threshold.

“According to ABS data, around 61 per cent of actively trading small businesses are non-employing. However, increasing the turnover to include small businesses in the growth phase is likely to contribute to employment growth as these businesses are already employing and in a position to increase their productive capacity. 

“The revenue foregone is likely to be substantially covered by the economic benefits from increased employment, higher wages and lower compliance costs.

“Increasing the threshold would allow more entities access to simpler depreciation rules, lower corporate tax rate and the newly enacted small business rollover restructure relief.

“The IPA recommends that small businesses with aggregated turnover of less than $10 million be given access to the small business tax concessions,” said Mr Conway.

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