Category: Rant

Cutting Red Tape and Improving Australia’s Corporate Reporting Framework

I have always been extremely skeptical when ever a politician promises to cut red tape. I met with the former NSW premier John Fahey about this way back before he even became premier, and he has been retired for ages now. And little has really changed.

However, I do think that a lot of what The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP released for discussion are very worthwhile reforms. I how they can successfully pull it off.

“The reforms will reduce unnecessary reporting obligations on companies and implement a number of other important refinements to our corporate regulatory framework.” Mr Bowen said

The key measures to reduce red-tape include:

  • significantly reducing the regulatory burden on companies limited by guarantee (which typically have a not-for-profit purpose), by introducing a three tiered differential reporting framework;
  • streamlining parent-entity reporting;
  • providing greater flexibility for companies to pay dividends, by replacing the profits test with a solvency-type test; and
  • allowing companies to more easily change their year-end date to minimise the burden on companies and their auditors during peak reporting periods.

The reforms will also implement refinements to the regulatory framework, including:

  • improving disclosure of non-financial information in the directors’ report;
  • protecting solicitors’ representation letters from disclosure to enable auditors to properly verify a company’s contingent liabilities;
  • refining the statement of compliance with International Financial Reporting Standards contained in the directors’ declaration; and
  • clarifying the circumstances in which a company can cancel its share capital.

Copies of draft amendments, the explanatory material and the regulation impact statement can be obtained from the Treasury website: www.treasury.gov.au.

The closing date for submissions is 3 February 2010.

Henry review leaks point to abolition of tax refunds

Nick Connell, Taxation Manager of the National Tax & Accountants Association has expressed concerns about recent reports pre-empting what may be in the Henry Review of Australia’s taxation system.

Is not convinced that those aspects of the Henry proposal that have been leaked will simplify the tax system for the benefit of Australian taxpayers.
Softening up taxpayers
He says that the NTAA is concerned that, rather than having an open and robust public discussion, the Henry
Review of the taxation system seems to have entered the phase of softening up the Australian
taxpayer.
It’s an old tactic. Leak a part of the story, wait for a response then pounce. Dr Henry
has already started flexing his muscles by saying that he is fully prepared for “scare campaigns”.
So, presumably, any unfavourable response will be labeled a scare campaign. A little harsh given the
fact that he has chosen to only release a tidbit and not release the whole document.
That said, the Henry proposal, to be released in December, is expected to recommend that taxpayers
will receive a one-page summary “income tax return” which will include a “standard” deduction for work
related expenses. Taxpayers will be able to ‘tick’ a 1 page document issued by the ATO and sit back
and wait for their refund.
The refund will be based on a ‘standard’ deduction for work related expenses and a figure of $500 has
been floated. (
Now taxpayers have a right to be scared!

Nick Connell, spokesperson for the NTAA said that “Treasury has for years been concerned at the
blow-out in work-related deductions and we believe that the concept of a ‘standard’ deduction may
well be the first step in controlling deductions for work-related expenditure.”
“We are concerned, and we believe justifiably concerned, that if taxpayers allow their claims for
work-related expenses to be “standardised” in any form at all, that they may end up losing them.”
“Millions of taxpayers are entitled to legitimately claim hundreds or thousands of dollars in
deductions that they incur in earning their income. This right is written into the law.”
“Most of us make claims for car expenses, travel and accommodation, home office, uniform,
protective clothing, laundry, telephone, computer, power, etc. The list goes on.”
“How long will these claims last,” he asked, “once we allow them to be standardised?”

Is the end-game the abolition of tax refunds?
“Australians love their income tax refunds. They rely on them as a, sort of, forced way of saving.
They are an institution and it is our right to be able to claim work-related deductions and receive
income tax refunds.
We urge taxpayers to not allow the government to standardise deductions that they are legally
entitled to. Make no mistake about it. Let them get their foot in the door and the refunds we love
to get will one day be wiped out.”
Leaking a tidbit from the proposals raises more questions than answers and the NTAA calls on Dr Henry
to have an open dialogue with the Australian people and not seemingly engage in a surreptitious
campaign to gauge public reaction.

From NTAA

To put the $500 standard deduction in perspective , most union members pay more than this in annual fees. The average amount of work related deductions claimed is $1,920. –SH

NAB Fee cuts – there’s more to it

National Australia Bank’s recent fee cuts have received much positive media attention yet the moves mask a deeper strategy by the bank to access cheaper funding lines.
The media has generally portrayed the move as having the aim of keeping existing customers happy whereas it was more likely done as a move to attract new deposit customers.
NAB has performed the worst of the Big Four in attracting retail deposits throughout the rush into deposits sparked by the financial crisis. Even though NAB increased retail deposits by $13 billion to $56 billion from mid-2007 to August 2009 this was well below the  performance of its peers.

NAB’s banking rivals attracted somewhere in the range of $11 billion and $22 billion more of cheaper funding during the recent crisis, leaving NAB now scrambling for market share.It is easly to conclude that NAB’s latest round of fee cuts appear more like a desperate attempt to claw back some of the ground it has lost recently.

The move by NAB is set to cost the bank over $100 million a year.

But if it succeeds in boosting deposit levels, it will prove a cunning move.

If NAB can increase deposits quickly, it will provide a funding source for a potential spike in residential lending, as the newly acquired mortgage broker army from Challenger begins writing the bank’s loans.

The strategy at NAB seems to be a case of giving with one hand and while taking back with the other.

Thanks to www.burning-pants.com/ for the bringing this to our attention