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

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THE peak representative body for the Queensland resources sector said the Senate report into the Great Barrier Reef backs the work that is well under way to improve reef health.

Queensland Resources Council Chief Executive Michael Roche said the report published 29 recommendations that largely reflected the work of a host of stakeholders on the Reef 2050 Long-Term Sustainability Plan. 

‘We thank the Senate for its comprehensive inquiry into the Great Barrier Reef that adds to the pool of evidence and information that is aiding in the rehabilitation of the reef against its biggest threats,’ Mr Roche said.

‘We also fully support increased resources being directed towards management of the reef, however we do not support any blanket ban on dredge spoil disposal at suitable locations at sea.

‘While the blame for the degradation of the reef has been unfairly heaped upon the ports and shipping servicing Queensland’s minerals and energy producers, containing the managed expansion of Queensland ports to meet the demand of trade markets will not make a difference to the frequency of storms, starfish outbreaks or the terrestrial water run-off that scientists agree are responsible for the current health challenges for the reef.

‘The draft Reef 2050 Long-Term Sustainability Plan, soon due for release, is a comprehensive action plan that has been put together by all relevant stakeholders from state and federal government, scientists, industries including, agriculture, tourism, resources, ports and fishing, as well as NGOs including WWF.

‘We are part of a team that is working together to help the reef and I am pleased to say that most of the recommendations in this report are already in train,’ Mr Roche said.

Despite most of the recommendations aligning with current work across the reef stakeholder group, Mr Roche said it was unsurprising that Labor and the Greens had taken a negative stance against the one stop shop for environmental approvals.

'Opposition to the one stop shop flies in the face of report after report backing this important reform.

‘We welcome the Coalition’s stance to support the reforms to the EPBC Act that will streamline approvals processes between state and federal governments,’ Mr Roche said.

Mr Roche said that a ban on at sea disposal of dredge spoil made no environmental sense.

'Every project must be examined on its merits given that land based options are sometimes simply not viable where adjacent coastal lands may have high conservation or cultural value.

‘The challenge is how well we manage the reef for positive economic and environmental outcomes and to work together, as is being done through Reef 2050 Long-Term Sustainability Plan.'

www.qrc.org.au

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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.

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AUSTRALIAN cricketer-turned-entrepreneur Matthew Hayden will address a business lunch on how to turn new business ideas into action in Roma tomorrow as part of 2014 Queensland Small Business Week.

Minister for Tourism, Major Events, Small Business and the Commonwealth Games Jann Stuckey MP hosts the event at Explorers Inn, Roma at 12.30pm on Friday 5 September.

Ms Stuckey said the event was the final in five major activities held across Queensland celebrating the role of small business in the state’s economy.

Mr Hayden is joined by Roma business owner Mark Huntley from Pumps N Solar and Ben Sorensen from PwC (PricewaterhouseCoopers) to discuss how small business can evolve to meet new demands.

Ms Stuckey also invited the Roma business community to pledge their support for small business by sharing the “I’m celebrating Queensland Small Week” badge which is available for download on www.business.qld.gov.au/smallbusinessweek, and to take part in Buy Locally Saturday on 6 September.

“Buy locally Saturday is about supporting local small businesses and boosting the local economy,” she said.

“I encourage all business owners to display the Buy locally Saturday material in their businesses.”

“2014 Queensland Small Business Week recognises the contribution of small business to creating a positive impact on local communities and their economy. You get great customer service and unique products when shopping at a small business.”

2014 Queensland Small Business Week runs from 1-6 September and celebrates the role small business plays in the Queensland economy. 

www.business.qld.gov.au/smallbusinessweek

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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.

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THE Victoria Tourism Industry Council (VTIC) has applauded the state’s tourism industry for the significant growth achieved in visitor numbers and expenditure over the past year.

The recently released Tourism Research Australia “International Visitor Survey” shows that for the year ended June 2014 Victoria performed well overall: 

“International visitor expenditure” grew by 8.1 percent to $4.9 billion, outperforming growth for New South Wales (+6.1 percent to $6.9 billion), Queensland (unchanged at $4.0 billion) and the national average (+3.5 percent).

“International overnight visitors” grew (+10.9 percent to 2.05 million) to exceed 2 million for the first time.

VTIC chief executive Dianne Smith said although China continues to be the leading source market, it is pleasing to see growth from traditional markets such as the United Kingdom and the United States, in terms of both visitor numbers and expenditure.

Importantly, expenditure in regional Victoria showed strong growth (+23.8 percent to $368 million), exceeding the previous high recorded for June 2012. There was also strong growth in visitors to (+17.5 percent year-on-year to 375,400) and nights in (+7.5 percent to 6.0 million) regional Victoria, with both at record levels. Visitors to regional Victoria increased from both Eastern (+28.5 percent) and Western (+14.2 percent) markets.

Ms Smith said continued efforts are needed to ensure regional Victoria reaps tourism’s benefits.

“It’s positive to see improvement in expenditure, visitor numbers and nights in regional Victoria, but compared to the state totals, the proportion of international visitors travelling to, and spending in, regional Victoria is modest,” said Ms Smith.

“More work is required to develop high quality products and experiences in regional Victoria, with a culturally appropriate interpretation, that will entice more international visitors. This is one of VTIC’s key recommendations for the major parties in the 2014 state election.”

The results of the National Visitor Survey for the year ended June 2014 will be released on 10 September and Ms Smith said the industry looks forward to seeing how Victoria fares in regard to domestic travel.

The Victoria Tourism Industry Council (VTIC) is the peak body for Victoria’s tourism and events industry, providing one united industry voice.

Tourism and events are growth industries for Victoria and contribute $19.6 billion to the state economy each year and employ more than 200,000 people.

www.vtic.com.au

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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

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Peak retail industry body the Australian Retailers Association (ARA) said the seasonally adjusted rise (0.4 percent increase) in monthly retail trade figures (month-on-month) reported today by the ABS followed a 0.6 percent rise in June 2014.

Year on year retail growth also rose 5.8 percent in July 2014, seasonally adjusted, compared to July 2013.

ARA Executive Director Russell Zimmerman said that after an unseasonably warm start to winter and post-Federal Budget drop in consumer confidence, retailers saw only a slight upswing in sales in July - largely thanks to the change in weather and last-minute EOFY sales.

“Winter had well and truly arrived in July and it’s no surprise department stores experienced an increase in sales (1.9%), with many consumers heading to their local department store to stock up on much-needed items to get through the cooler months. 

“It’s interesting to note that cafes, restaurants and takeaway food services also benefitted from the change the season (1.4% increase) as well as food retailing (0.5% increase). As we all know, during winter consumers often choose to keep warm at their local restaurant or order takeaways with their friends and family. Food retailing often enjoys a boost in sales at this time of year as the outside weather can deter consumers from other activities.

“Some other categories including clothing, footwear and personal accessory retailing (0.1%) and household good retailing (-0.2%) remained relatively flat in July, and according to the Australian Retail Index (delivered by BDO and Retail Express), stagnant retail sales in July mirrored similar results seen this time last year.

“Overall, turnover rose in New South Wales (0.7%), Victoria (0.6%), the Australian Capital Territory (2.6%), South Australia (0.4%) and Queensland (0.1%). These rises were partially offset by falls in the Northern Territory (-2.3%), Western Australia (-0.1%) and Tasmania (-0.4%).

“With the festive season right around the corner, the ARA is urging the Federal Government and RBA to do all that they can to ensure that retail trade is fully supported as we gear up toward the spring/summer racing season and the Christmas trading period,” Mr Zimmerman said. 

MONTHLY RETAIL GROWTH (June 2014 – July 2014 seasonally adjusted)

Department stores (1.9%), Cafes, restaurants and takeaway food services (1.4%), Food retailing (0.5%),  Clothing, footwear and personal accessory retailing (0.1%), Household goods retailing (-0.2%) and Other retailing (-0.6%). Total sales (0.4%).

Australian Capital Territory (2.6%). New South Wales (0.7%), Victoria (0.6%), South Australia (0.4%), Queensland (0.1%), Western Australia (-0.1%), Tasmania (-0.4) and Northern Territory (-2.3%). Total sales (0.4%).

YEAR-ON-YEAR RETAIL GROWTH (July  2013 – July 2014 seasonally adjusted)

Cafes, restaurants and takeaway food services (10.8%), Department stores (8.2%), Food retailing (5.5%), Household goods retailing (5.3%), Other retailing (3.6%) and Clothing, footwear and personal accessory retailing (2.1%) .Total sales (5.8%).

New South Wales (9.7%), Tasmania (7.9%), Victoria (6.4%), Queensland (3.4%), South Australia (2.1%), Northern Territory (2.0%), Western Australia (1.8%) and Australian Capital Territory (0.6%). Total sales (5.8%).

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.