The profit margin of many smaller tax practices could be put under pressure by a new one-click online tax return lodgement system that was announced as part of the federal budget on Tuesday night.
Starting in the 2007-08 financial year, taxpayers will be able to access online tax returns pre-filled with information including salary and wages, interest, dividends, information on private health insurance and Federal Government benefits. If the information is correct, the taxpayer will be able to lodge the online return with a single click.
The ease with which completed tax returns will be able to be lodged under the new system represents a serious threat to small suburban and country tax practices for whom individual tax returns are a crucial revenue stream.
The member services manager of the National Tax Agents and Accountants Association, Peter McGinty, says there is no doubt that some of the association’s 7500 members will be affected.
“There will be serious impacts on tax agents who predominantly have individual clients. In particular it could hurt a lot of young people who, when they start out on their own, tend to rely heavily on individual tax returns.”
The NTAA has been received numerous calls from concerned members since the budget announcement by Treasurer Peter Costello that $20 million would be spent to introduce new system, McGinty says. But, he says, the change will have no affect on demand for higher value tax work such as involving rental properties, overseas income and finding deductions for work related expenses.
H&R Block regional director Frank Brass says tax agents will continue to perform an important function ensuring the accuracy of information contained in the pre-filled tax returns.
“People have to realise that they can’t rely on the Australian Taxation Office information and they still need to check that it’s correct; for example, last year Centrelink was unable to match data for 35,000 people. The taxpayer is still responsible if that kind of information is missing,” Brass says.
He says the tax agent market remains strong despite the gradual move to online lodgement over recent years. ” We believe we find deductions and add value. We have the advantage that we are up-to-date with all the changes to the tax system and that won’t change.”
– Mike Preston
It’s all right for some. Yes, we are in a booming economy but Treasurer Peter Costello’s comments yesterday that business should not complain about corporate taxes at a time they are making big profits is highly annoying.
Once again he is talking about the big end of town. Small and medium businesses could do a lot with a corporate tax cut: hire more staff (though then they have to pay more payroll tax), spend more on R&D and develop more export markets.
And consider this: 25% of the Government’s total tax revenue next financial year is coming from companies, up from 14.6% when the Coalition came to power in 1996.
But it doesn’t look like corporate tax breaks are coming any time soon. Costello said yesterday: “I have cut taxes from 36% to 30%, introduced full dividend imputation, which I don’t think any other country in the world has… I don’t think anybody in business would be complaining at the moment.”
– Amanda Gome
Want to complain to Costello? Think the tax rate is fair? Email feedback@smartcomapny.com.au
Here’s a funny turnaround. Labor, in its pitch to rebuild relations with business, is arguing that its industrial relations policy is not so different to WorkChoices. In a note to employer groups IR shadow minister Julia Gillard states that Labor would give no scope for industry-wide disputes; collective bargaining would occur at the enterprise level.
SmartCompany earlier this week pointed out that the differences between the two industrial relations policies are not far apart at all. And in today’s legal update, we look at what the changes to WorkChoices mean for employers.
Is it possible that we might see both Labor and the coalition realise that industrial relations is not a vote winner and seek to neutralise the whole debate even further?
– Amanda Gome
Australia’s unemployment dropped to 4.4% in April 2007, the lowest figure since 1974.
The drop in unemployment is largely attributable to an unusually large 49,600 new jobs created in April 2007, Australian Bureau of Statistics figures show. By comparison, just 5100 jobs were created in March 2007.
The result is particularly impressive considering that workforce participation increased by 0.2% in April. Of the new jobs created, 38,000 were part-time and 11,600 full-time.
ANZ economist Amber Rabinov says the strong job figures unambiguously support the view of ongoing tightness in the Australian labour market. “With the unemployment rate hitting a new record 30-year low, you really have to wonder how much longer wages growth can be contained,” she says.
Treasurer Peter Costello today welcomed the result, describing it as “the dividend of strong economic management”.
– Mike Preston
Queensland mining companies will be the first businesses in the country to pay a climate change tax, after Premier Peter Beattie announced that that he will increase mining royalties to pay for research into clean coal technology last night.
Beattie says he was forced to increase mining royalties because mining companies reneged on an agreement to put $300 million into clean coal research, the Australian Financial Review reports. The Queensland resources industry denies the claim.
Beattie says he has yet to decide what the royalty increase will be. The Queensland Government received $1.492 billion in mining royalties in 2005-06, much of it from the coal industry.
– Mike Preston
Victorian Planning Minister Justin Madden will today announce details of a review of controversial development planning rules for the bulky goods sector – whitegoods and homewares, the Australian Financial Review reports.
The review is expected to look at the kind of retail development that will be allowed outside of designated “activity centres”. The issue is of critical importance to bulky goods retailers because the large floor space they require means they prefer to be located outside of high-density areas where land is expensive.
Although the Government is expected to retain the focus on activity centres in its Melbourne 2030 planning blueprint, it is reported to be keen to find ways to introduce flexibility into the rules that will accommodate the needs of bulky goods retailers.
– Mike Preston
Production of beer, cement, concrete, bricks, gas and electricity all dropped in the March 2007 quarter, according to Australian Bureau of Statistics manufacturing production data released today.
The S&P ASX 200 dropped 0.1% on yesterday’s close to be 6336.8 at 12.47 pm. At the same time the Australian dollar is trading at US83.17¢, well up on yesterday’s US82.89¢ closing price.
– Mike Preston
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
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