It’s been a long night for the executives at Australia’s industry groups, who have been pouring over the 1,000-page Henry Tax Review and the Rudd Government’s much slimmer response to try and work out whether their members are winners or losers.
For many industry groups the Review was a real mixed bag – actual Government policy changes were fairly thin on the ground, so many groups will need to wade through Henry’s Review to find out what’s been missed and what could be lobbied for.
Here is SmartCompany’s run-down of how the review will impact your sector.
Advertising and marketing
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Nothing specific for this industry, although the changes around small business investment write-offs is likely to create plenty of interest in B2B selling when it kicks in mid-2012 – particularly in the lead up to tax time. The focus on superannuation could also create opportunities as funds try to reach out to their members.
A few wins here in what wasn’t introduced, including higher alcohol taxes, which could have had a devastating effect on the already struggling wine industry. Henry also recommended capital allowance concessions given to the agriculture sector be reviewed, although the Government didn’t respond.
Construction and engineering
The creation of a new $700 million infrastructure fund is great news for the construction and engineering sector, which should enjoy the benefits of a steady stream of infrastructure work for the next decade and beyond.
However, the tax on super profits from the resources sector is a real concern. Mining has really fuelled the boom in construction and engineering over the last decade and any threat to projects getting off the ground will be felt.
Financial services and insurance
It’s really all good news for this sector. The decision to increase the superannuation guarantee from 9% to 12% will result in a flood of new money into the sector, creating opportunities for super funds, asset managers and financial planners – all of whom will be able to take fees along the line.
Moves to increase the amount of money going into the super accounts of low income earners should also create opportunities for the financial services sector to win new customers.
The only disappointment for the sector was the decision not to pursue a tax cut for deposits.
Health and pharmaceuticals
The sector will be pleased the Government didn’t move on one Henry recommendation: a proposal to remove the medical expenses tax offset. Otherwise, little focus on this sector.
The new investment write-offs rules for small business should provide a little boost for the tech sector, as SMEs invest in technology to kick-start business growth.
Any move towards simplified tax returns – which the Government has promised to look at down the track – is also likely to be beneficial for the sector, as this would probably mean a big upgrade is needed for the ATO’s technology systems.
Little specific for this sector, although the cut to the company tax rate and the small business investment write-off rules will be welcomed. Heather Ridout, chief of the manufacturing sector lobby group the Australian Industry Group, called the reforms a step in the long path to tax reform, which is perhaps not a ringing endorsement.
Nothing specific for this industry, but like the advertising and marketing sector our media companies will look forward to some extra advertising in two years time when the investment write-off rules come into force.
While accounting bodies are looking at the bigger picture this morning – and particularly the way the Government has missed the chance for bold tax reform – there are probably more than a few accountants pleased to see that the Government has not decided to introduce simplified tax returns for small business and individuals.
Given more than 60% of us visit a tax adviser for help with our annual tax return, simplified tax returns could have resulted in a huge dip in revenue for suburban accountants. However, the Government has promised to review this idea in the future, so it may only be off the agenda for now.
Another sector that appears to have dodged some bullets, with no reforms to capital gains tax or negative gearing, both of which are seen as important in driving the growth of the residential property sector.
However, some in the property sector will be unimpressed the Government hasn’t heard Henry’s proposal for a broad 1% land tax, which would have replaced the complex set of state-based land taxes we currently have.
Resources and energy
Without question, the biggest loser from the Henry Review. The 40% tax on super profits made by big miners has been painted by the Government as a way for the taxpayer to get a fair slice of the nation’s natural resources, although the minerals industry is warning it will slam the profitability of our mining company, cost jobs and result in reduced investment.
However, there were two sweeteners for the sector – a tax offset for exploration conducted in Australia and the infrastructure funding, which should help reduce the bottlenecks that plague the sector and add to its cost base.
While retailers will benefit from the cut in the company tax rate and, at the small end of the sector at least, the new investment write-off rules, the Australian Retailers Association wasn’t happy with the Government’s response to the Henry Review. Executive director Russell Zimmerman says payroll tax relief and a change in the definition of a small business (Henry recommended this should have been increased from $2 million of turnover to $5 million of turnover) should have been looked at more closely.
Nothing specific for this sector.
Tourism and leisure
Another sector to have dodged a few bullets, including increased alcohol taxes and recommended changes to gambling taxes. Specifically, Henry recommended that gambling tax concessions for clubs be scrapped, which would have had a huge impact on that sector.
Transport and logistics
Henry’s Review made several recommended in the area of road user taxes and while the Government will not introduce such measures in the short-term, it has promised to revisit this concept down the track.
One win for the transport sector was the new money for infrastructure – and improvements to road, rail or ports will be welcomed by the sector.