What were they thinking?

The  Sydney Morning Herald, 15 February 2017:

What were they thinking? On Monday three members of cabinet called a press conference to pressure the Senate to cut the dole. That's right, to cut the dole. At just $13,750 per year plus an $8.80 per fortnight energy allowance, it's already so low the Business Council believes it "presents a barrier to employment and risks entrenching poverty." The Organisation for Economic Co-operation and Development, the research arm of the world's richest economies, says Australia's unemployment benefit has reached the point where it may no longer be effective in "enabling someone to look for a suitable job".

Even a Coalition-dominated inquiry found a "compelling case" for boosting it.

But the three ministers wanted to deny the energy supplement to new entrants on the spurious ground that this would merely remove "carbon tax compensation for a carbon tax that no longer exists". It wouldn't. The Newstart cost of living increase was cut 0.7 per cent when the energy supplement came in to avoid double counting. If the energy supplement went but the cut remained, new entrants to Newstart would be worse off than if the whole thing had never happened.

And they wanted to withhold Newstart from newly-unemployed Australians aged 22 to 25, paying them instead the lower $11,375 Youth Allowance. The under 25s would have to wait longer too – five weeks instead of the present one.

Rather than spend time arguing the merits of cutting a benefit already so low it can barely be lived on, Treasurer Scott Morrison, Social Services Minister Christian Porter and Education Minister Simon Birmingham delivered instead what amounted to a threat: if the Senate didn't cut the unemployment benefit, they might not fully fund the National Disability Insurance Scheme.

But not at first. In a burlesque twist, they opened the press conference spruiking the case for an unfunded massive company tax cut.

* Images found at Google Images

There would be a particularly nervous class of Australian investors right now - perhaps even Mr. Harbourside Mansion himself

The Guardian, 11 February 2017:

The founders of Mossack Fonseca, the law firm at the centre of the Panama Papers scandal, were arrested in Panama City on Thursday as the country’s attorney general launched a probe into their alleged connections with Brazil’s sprawling Lava Jato corruption scandal.

Juergen Mossack and his colleague Ramon Fonseca, a former adviser to Panama’s president Juan Carlos Varela, were taken into custody and transferred to police cells in the capital overnight for further questioning on Friday, their defence attorney Elías Solano was quoted telling reporters.

Panamanian prosecutors raided the offices of Mossack Fonseca on Thursday. In a press conference on Kenia Porcell, Panama’s attorney general, said she had information that identified Mossack Fonseca “allegedly as a criminal organisation that is dedicated to hiding money assets from suspicious origins”. 

She said the firm’s Brazilian representative had allegedly been instructed to conceal documents and to remove evidence of illegal activities related to the Lava Jato case.

“Put simply, the money comes from bribes, circulated via certain corporate entities to return bleached or washed to Panama,” said Porcell. She explained charges had been formulated against four individuals, including the Mossack Fonseca partners. 

Porcell thanked the authorities in Brazil, Ecuador, Colombia, Peru, Switzerland and the United States for their part in a collaboration which she said began over a year ago.

The Panama Papers, which consist of millions of documents belonging to Mossack Fonseca and leaked in April 2016, provoked a global scandal after showing how the rich and powerful used offshore corporations to avoid paying taxes.

Australian Financial Review, 14 June 2016:

Prime Minister Malcolm Turnbull's merchant bank Turnbull & Partners received an estimated $3 million in 1995 and 1996 from the sales of shares held through offshore companies administered by notorious Panama law firm Mossack Fonseca.

Turnbull & Partners received up to $7 million from share sales and advisory fees from Mr Turnbull's time as a director of a listed mining company, Star Mining, which had an interest in a Siberian gold deposit.

Documents obtained by The Australian Financial Review, which first revealed Mr Turnbull's link to a Mossack Fonseca company last month, show heavy selling of Star Mining shares by offshore companies in 1995 after a series of favourable decisions by Russian politicians and bureaucrats boosted the Star Mining share price.

One of the key figures who helped obtain Star's Siberian  mining leases, Ludmila Melnikoff, accuses Star director Ian MacNee, who died in 2008, of paying bribes of more than $US2 million to secure these decisions.

Australia still losing full-time employment positions and the Turnbull Government still denying reality of the job market

Media Release

20 October 2016

Shift to part-time employment continues

Monthly trend employment in Australia increased slightly in September 2016, according to figures released by the Australian Bureau of Statistics (ABS) today.

In September 2016, trend employment increased by 3,900 persons to 11,959,500 persons - a monthly growth rate of 0.03 per cent. This is down from the monthly employment growth peak of 0.28 per cent in September 2015. Trend part-time employment growth continued, with an increase of 11,800 persons, while full-time employment decreased by 7,900 persons.

”The latest Labour Force release shows further increases in part-time employment. There are now 130,000 more persons working part-time than in December 2015, while the number working full-time has decreased by 54,100 persons," said the Program Manager of ABS' Labour and Income Branch, Jacqui Jones.

The trend monthly hours worked increased by 2.2 million hours (0.1 per cent), though it is still below the high in December 2015.

The trend unemployment rate decreased slightly (by less than 0.1 percentage points) to 5.6 per cent, and the participation rate decreased 0.1 percentage points but remained steady at 64.7 per cent in rounded terms.

Trend series smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

The seasonally adjusted number of persons employed decreased by 9,800 in September 2016. The seasonally adjusted unemployment rate for September 2016 decreased by 0.1 percentage points to 5.6 per cent, and the seasonally adjusted labour force participation rate decreased by 0.2 percentage points to 64.5 per cent.

More details are in the September 2016 issue of Labour Force, Australia (cat. no. 6202.0). In addition, further information, including regional labour market information, can be found in the upcoming September 2016 issue of Labour Force, Australia, Detailed - Electronic Delivery(cat. no. 6291.0.55.001), due for release on 27 October 2016. 

In August 2016 there were an est. total of 179,000 full-time and part-time job vacancies in Australia, according to the Australian Bureau of Statistics. By September 2016 this figure had dropped to est. 161,1000 job vacancies, according to the Australian Government Dept. of Employment.

In September 2016 there were est. 690,900 unemployed people in Australia. An est. 20 per cent of these people were under 25 years of age.

An est. 480,400 unemployed people were looking for full-time work (est. 39 per cent of this number were females) and on average they each spent 47.1 months doing so.

An additional est. 209,900 unemployed people were looking for part-time work and, as est. 59 per cent of this number were females one could suspect that many were only seeking part-time rather than full-time work because of competing child raising/carer obligations.

Despite these figures indicating that a high number of unemployed people are competing for jobs in a shrinking pool of employment opportunities, the Turnbull Government through the Minister for Social Services and Liberal MP for Pearce Christian “inequality is a measure of difference not a measure of comparative wellbeing”  Porter insists on demonising those applying for unemployment benefits while they search for work, as well as those women who seek to lawfully access government paid parental leave payments in additional to their employer schemes so that they may return to work at an appropriate time and, single parents receiving parenting payments.

The Turnbull Government’s new policy approach based on the June 2016 Baseline Valuation Report allegedly providing a baseline analysis of lifetime welfare costs and highlighting areas of interest is not worth the paper it was printed on – as has been pointed out elsewhere.

And the example of the stay-at-home single parent of four earning more than a similar parent working full-time is nothing but a pile of political manure, as was shown it this report in The Sydney Morning Herald on 29 October 2016:

The claim, published in The Australian on Friday and backed up by Social Services Minister Christian Porter, is that single parents with four children can get payments totalling $52,523 per year if they don't work but only $49,831 after tax if they work and receive the median full-time wage…..

Former Department of Social Security analyst David Plunkett said the calculation excluded $30,916 in family tax benefits that the parent working full-time would also receive, meaning that when "apples are compared with apples", the parent would receive $80,747 if working and $52,523 per year if not working.

The parent would be almost $30,000 per year better off working than not working, rather than than $2692 worse off as claimed.

Ben Stiller writing in The Sydney Morning Herald on 26 September 2016 gave a telling response to this blinkered federal government’s approach to jobs ‘n’ growth:

I've now spent most of my life working with people the minister has declared there is a "moral imperative" to get off welfare, many of them living lives impacted by profound disadvantages to participation in employment. All of them people who, like me, just want an opportunity to make their life better.

Unlike me, though, they are often trying to manage multiple disadvantages associated with physical health, mental health, family breakdown, lack of education, high local unemployment rates, discrimination and stigmas.

We can choose to apply moral judgment to people so easily attributed to a budget line and described as having a "lifetime of welfare dependence". After all, almost everyone reading this is a success. We made a go of things, overcame our challenges. We pay our taxes. These people are scientifically calculated to spend their lives without bothering to get a job.

Except there aren't any new low-skilled jobs for a 19-year-old single mother with a year 10 education that structure flexible working arrangements around caring responsibilities, childcare pick-ups, court appearances to renew AVOs and night-time community centre literacy/numeracy classes. Even the "welfare dependant" strive to help their children with homework.

As for the old unskilled jobs, they've all been undermined, underpaid and offshored. The new skills needed to get a job cost tens of thousands of dollars and if you happen to pick a dodgy private provider then all that debt has gone into a worthless piece of paper.

When there are no jobs, when there are no opportunities and there is no hope for improvement we have created poverty. As St Vincent de Paul Society CEO Dr John Falzon said, "Poverty is not a personal choice." In poverty there are no choices. People do what they need to do in the world in which they live in order to survive.

I've seen people line up like cattle for hours in the rain to receive a basket of tinned food or a $20 supermarket voucher (Don't worry, Minister, they were always marked "No tobacco. No alcohol"). I've seen people pretend to be someone else to try to get an extra basket because family have come from interstate on the bus and they have nothing to feed them.

Those aren't choices made by people with options and opportunities, they are attempts to survive in a system that confuses, abuses and punishes.

I would like to take this opportunity to make one thing very clear to every politician and print or television journalist who may be tempted to continue to demonise people receiving Centrelink or Dept. of Veterans’ Affairs pensions, benefits or allowances.

They are not the only people in Australia receiving in kind or cash welfare from the federal government.

By way of example*:

* Every person or business receiving a tax concession or tax refund is receiving government welfare. 

* Everyone taking advantage of low taxing components in their superannuation arrangements is receiving government welfare. 

* Every individual who received a primary and high school education received government welfare through state/federal subsidies to schools and/or tax concession to peak religious organisations running them. 

* Every student who took advantage of deferred fee payment options during their university education years received government welfare. 

* Everyone turning up at A&E at a public hospital is receiving government welfare.
* Every parent who took their children to be immunized under the national immunization scheme received government welfare.
* Everyone with or without a a concession card who reached the annual PBS Safety Net threshold and was subsequently supplied with reduced cost/free medication received government welfare.

* Every person receiving non-income tested assistance from any government health or social program is receiving government welfare.

In other words, every single person in Australia receives government welfare – sometimes for years!

* This is not an exhaustive list of examples

Using tax offsets as a principal funding device to encourage self-assessing corporations to conduct research and development. What could possibly go wrong?

Providing a tax incentive for industry to conduct, in a scientific way, experimental activities for the purpose of generating new knowledge or information in either a general or applied form. [C’wealth Income Tax Assessment Act 1997 - SECT 355.5]

What could possibly go wrong when a federal government primarily funds business research and development (R&D) by offering private corporations tax offsets for conducting such activities, while at the same time allowing them to self-assess whether they are eligible for these tax incentives and whether their research is genuine?

Well for a start, the companies involved tend to employ less science, technology, engineering and mathematics graduates to conduct their R&D.

Given that on 15 June 2016 The Australian reported that; the Productivity Commission says STEM graduates fare poorly in the job market, apart from those who have studied healthcare, mining engineering and surveying. The outlook for mathematics and computer science qualifications are only slightly below average, however there are big gaps for graduates in life sciences, chemistry and the physical sciences. Employment outcomes improve three years after graduation, but 20 per cent of people with bachelor degrees in natural and physical sciences have still not got a job. Of those who do get work, many are in an unrelated field. About a quarter of people with science degrees say their qualifications are not relevant to their employment, one has to wonder why business and industry in Australia are not availing themselves of these qualified graduates.

Then there is the fact that it appears that this government program is not always well targeted.

Another flaw in this system is that voters have no way of knowing which companies are receiving these tax incentives and how much they are receiving, or of assessing what government foregoing so much tax income annually actually achieves as outcomes for the economy.

If science actually matters to the Turnbull Government it should matter not just in universities and identified research institutes but in all its aspects – including allegedly market-driven R&D.

One has to suspect that a little more academic discipline in business research and development might lead to better outcomes.

BACKGROUND

Dept. of Industry, Innovation and Science, Review of the R&D Tax Incentive (Ferris, Finkel and Frasier) 4 April 2016:

The R&D Tax Incentive (the Incentive) is the largest component of Australian government support for innovation, with around 13,700 entities performing $19.5 billion of R&D at an estimated cost to government of $2.95 billion in 2013-14. The Government commissioned this review to:

‘identify opportunities to improve the effectiveness and integrity of the R&D Tax Incentive, including by sharpening its focus on encouraging additional R&D spending.’

Reviewing the programme against these terms of reference involves the evaluation of the programme against its objectives, weighed against the costs, to measure the net social benefit.

The objectives, as stated in the programme’s legislation, are to ‘encourage industry to conduct research and development activities that might otherwise not be conducted…to benefit the wider Australian economy’. In other words, the Incentive seeks to encourage additional R&D (additionality) that benefits others (spillovers).

Most OECD countries have incentive schemes for R&D. Australia and most other countries use tax incentives as part of their public support, but Australia, Canada and the Netherlands are unusual in having tax measures as the principal form of support for business R&D. Countries such as Finland, Germany and Sweden are examples at the other end of the spectrum, in that they do not use tax incentives at all but rather support business R&D through direct measures such as competitive grants.

Overall assessment

The review panel finds that the programme falls short of meeting its stated objectives of additionality and spillovers. There are a number of areas where improvements could be sought in order to improve the effectiveness and integrity of the programme and achieve a stronger focus on additionality.

Based on the best estimates of additionality and spillovers, the panel found that the programme could be better targeted. The areas of improvement identified in this review would be likely to generate greater benefit from the programme for the Australian economy.….

The panel notes that there is a modest amount of collaboration with publicly-funded research organisations (PFROs) within the programme, but it is not an explicit focus. The panel also notes the low employment level of Science, Technology, Engineering and Mathematics (STEM) PhD graduates in Australian industry relative to other OECD countries. This represents a lost opportunity for greater spillovers of knowledge between larger companies, PFROs and the broader marketplace…..

The panel notes that despite the level of coordination between AusIndustry and the ATO, the significant growth in the scale of the programme is placing increasing strain on the administrative and compliance model for the programme. The Government should consider options to improve administration. These could include: adopting a single application process rather than the current separation of registration and claims, introducing a single database for the entire programme, reviewing whether both AusIndustry and the ATO should continue to administer the programme jointly and closer collaboration and streamlining around review and findings. Either or both agencies may require additional resourcing to enable such improvements.

To place the programme into alignment with modern expectations and to allow public visibility of companies receiving public support for their activities, tax secrecy provisions should be adjusted to allow the publication of the names of companies claiming the Incentive and the amounts of R&D they have claimed…..

Australian and foreign-owned companies who are laughing all the way to the bank

QANTAS AIRWAYS LIMITED with an income of $14.90 billion stated it had no taxable income in in 2013-14 so paid no tax. Hmmmm…..

ENERGYAUSTRALIA HOLDINGS LTD earning 8.84 billion and EXXONMOBIL AUSTRALIA PTY LTD bringing in $9.94 billion in that same financial year also had no tax to pay.

News Corp’s APN NEWS & MEDIA (owner of most of the regional newspapers in Northern NSW ) with a taxable income of $21.29 million in 2013-14 also paid no tax.

They are among the hundreds of Australian and foreign-owned companies with incomes of over $100 million a year which the Australian Tax Office (ATO) lists as paying no tax.

ATO Corporate Tax Transparency - 2013-14 Report of Entity Tax Information

Corporate tax transparency – further contextual background

Oxfam calls on major parties to address the fact that multinational tax dodging is costing Australia billions

Medianet Release
Multinational tax dodging costs us billions Nearly $AU9 billion that could be spent on schools, hospitals and critical infrastructure in Australia and in poor countries is instead being hidden by Australian-based multinationals in tax havens, according to an Oxfam report released today. According to The Hidden Billions – How tax havens impact lives at home and abroad, and based on the latest available data, tax haven use by Australian-based multinationals cost Australia around USD $5 billion (AUD $6 billion) in lost tax revenue annually, and cost developing countries an estimated USD $2.3 billion (AUD $2.8 billion) every year. The report is being launched with an online poll that shows 90 per cent of Australians polled think the Government should do more to stop multinational corporations avoiding paying tax in Australia and in every country in which they operate. Oxfam Australia Chief Executive Dr Helen Szoke said the report showed how much the public lose out when big companies do the wrong thing and governments don't step in and stop them. "The Oxfam report, for the first time, puts dollar figures on what Australians and poor people in our region are missing out on because Australian-based multinational companies aren't paying their fair share of tax like the rest of us," Dr Szoke said. The Oxfam-commissioned poll also found: ·         60 per cent of Australians polled believe the main thing the Federal Government should do to raise revenue is crackdown on tax avoidance by multinationals; ·         90 per cent of Australians polled believe the Federal Government should legislate to prevent all multinationals operating in this country from moving their profits to tax havens to avoid paying tax here; ·         87 per cent think that those Australian companies who operate in developing countries and in Australia should publicly report their earnings and how much tax they pay everywhere. Globally, tax-dodging is rampant in developing countries, with big companies ripping USD $172 billion (AUD $209 billion) of tax revenue out of their economies in 2014, money that could have been used to fight poverty and generate equality and prosperity. Dr Szoke also said The Hidden Billions report found that use of tax havens overseas by big businesses based in Australia would cost developing countries USD $4.1 billion (AUD $5.6 billion) in desperately needed revenue for essential public services over the next five years, including many of Australia's poorest neighbours. "Over the next five years, it's estimated that Indonesia will be deprived of around USD $360 million (AUD $493 million) that could have gone towards education, and PNG stands to lose around USD $17 million (AUD $23 million) in expenditure on essential services such as hospitals, schools and sanitation," Dr Szoke said. "This is shocking, given in PNG, 60 per cent of the population don't have access to clean water. "In Ghana, funding lost due to the use of tax havens by Australian-based multinationals could pay for an estimated additional 1,400 primary school teachers, and nearly 600 nurses, a year.  In The Philippines, an estimated 1,700 new classrooms per year could be built. "It doesn't have to be this way. Australia should show that it's tackling this issue by making the tax affairs of Australian-based multinationals public – not only for their operations in Australia, but for every country in which they operate. "Our research relies on IMF data, which shows the flow of money from Australian-based multinationals.  Unfortunately, there is no way to find out which individual companies are dodging tax, as they're not required to publish their tax affairs on a country-by-country basis."  Dr Szoke said this lack of public reporting enabled big companies to hide billions of dollars they should be paying in tax. "Other countries, including the US, France and Canada, have made tax reporting public for high-risk sectors in big business, such as for mining companies and big banks; it's time Australia caught up," she said. Dr Szoke said the report showed that Australia was a major part of this global problem that affected so many lives here and overseas. "With inequality worsening around the world, making the fight against poverty even harder, companies must pay their fair share of taxes, so that the revenue can be used to improve people's lives, both here and for the world's poorest people," Dr Szoke said. Oxfam is calling on all political parties to commit to: ·         Make tax transparent at home and abroad; ·         Curb irresponsible use of tax havens; ·         Make multinational ownership information public; ·         Support developing countries with tax infrastructure, and, ·         Support global action to end tax dodging. Notes to editors: Research Now conducted the online poll of a nationally representative sample of 1009 Australians, from 25-27 May.
	© Australian Associated Press, 2016

Oh, it's hard to be a pollie now that tax time is near

Herald Sun on the subject of Australian federal politicians and the tax they don't pay, 29 May 2016:

THE NUMBERS

■ Average tax deduction for MPs: $49,058*

■ Average salary: $264,305

■ Number of MPs: 845

Source: Australian Taxation Office 2013-14

Last year, the average taxable income was $180,507 for 722 MPs who had lodged claims to date.

By reducing the taxable income to $180,000 they are not paying the deficit levy, the top tax rate of 45 cents in the dollar or the higher Medicare Levy which would apply to their actual salary of $221,828.

By bringing their taxable income under $180,000 they are reducing their tax by around $20,000-a-year when the deficit levy, Medicare levy and the top tax rate is taken into account.

Source: Australian Taxation Office 2014-15

WHAT MPS CAN CLAIM

■ Federal and state MPs can claim all the normal deductions available to workers including negative gearing of investment properties, car leases and work related deductions.

There are also some added extras only politicians can claim including election expenses, electorate allowances and buying a second property to live in when in Canberra.

■ Election expenses

You can claim a deduction for election expenses but if you claim a deduction for any election expense you must include the reimbursement as income on your tax return.

Deductions include:

— advertising and promotional expenses incurred during the election period;

costs of election-related opinion polls or other research undertaken during the election period;

— travel and accommodation costs associated with the campaign;

— wages paid to persons employed for campaign purposes; costs of campaign novelty items — car stickers, T-shirts, lapel buttons or badges, pens, pencils or balloons;

■ Electorate Allowance

Federal MPs get an “Electorate allowance” of $32,000 as part of their salary. MPs need receipts and any cash is treated as taxable income. Allowable include the cost of presentations at school speech days, buying raffle tickets, gifts to sporting clubs and community groups and senior citizens awards and other donations. For example, an MP who spent $20,000 would secure an effective tax deduction of $20,000.

■ Second property not used as a Member’s residence

MPs can choose to rent or buy a property rather than stay in a hotel or other commercial establishment when travelling. A deduction is allowable for expenses including lease payments; rent; interest on borrowings used for the acquisition of the property; rates; taxes; insurance; general maintenance of the building, plant and grounds. The ATO argues the same rules apply to other taxpayers but not many other workers would fly to Canberra for 20 weeks a year and get a $271 allowance to sleep in their own investment property. MPs can choose to take the allowance tax-free and not claim a tax deduction. MPs who believe the costs of the investment property are more than the travel allowance of around $1,000 a week when Parliament is sitting can claim a deduction but must declare the allowance as income. MPs only do that if they know their costs would reduce their taxable income by the same amount or more.

Former Australian Treasurer Joe Hockey's 'gift' to all property owners across the nation

Australian Financial Review, 13 August 2015

The Australian, 19 May 2016:

The current mess was created when former treasurer Joe Hockey caved into pressures to curb Chinese investment in Australian residential property in 2015. In the process, the treasurer was convinced by the Australian Taxation Office to widen the net to cover local residents.

Parliament was being bombarded with tax legislation at the time and the Canberra politicians did not pick up what the ATO had done.

So, fasten your seats belts for a horror commentary.

I was alerted to the position by one of Australia’s top commercial/tax barristers, John Fickling of WA. I am using many of Fickling’s words in describing what is about to happen.

If you purchase a property worth $2m or more on or after July 1 2016, you will be required to withhold 10 per cent of the purchase price and remit it to the ATO UNLESS the vendor is able to provide a special purpose tax resident’s “clearance certificate” from the ATO. It does not matter if the vendors were born in Australia and have lived all their lives in Australia — unless they have that clearance certificate, they are classed as a foreigner and the buyer must send 10 per cent of the purchase price to the tax office.

In case you think I’m kidding, read the ATO’s exact words: “A vendor who sells the following assets is also a relevant foreign resident, even if they are an Australian resident for other tax purposes.

The definition of property is very wide and includes leaseholds but does not include stock exchange investments. A purchaser who does not receive a “clearance certificate” from the vendor and does not send 10 per cent of the purchase price off to the ATO will still be liable to pay that 10 per cent to the ATO plus, almost certainly, will have to pay severe additional penalties and interest. The economics of buying the property will be severely damaged.

Fickling says all real estate agents selling $2m plus properties should be considering how this new regime will impact on their business and what will be the contractual consequences under the different scenarios that could play out.

For example, banks and other financiers may be affected where their secured debt exceeds 90 per cent of the value of the selling price. In a situation where the owner is being forced to sell, the banks will be better to take possession and sell themselves rather than being caught in the “tax clearance” delays.

To be fair, in the vast majority of cases local resident vendors will have no problem obtaining a “clearance certificate”.

However, for locals it might increase their risk of a tax audit and there are clear hazards for property sellers who:

Have not filed tax returns for many years;

Have filed tax returns, which would indicate they could not afford such a property;

Are selling their residential house at the same time as their neighbours to a single developer, which may give rise to a profit making scheme (such that the principal residence capital gains tax exemption may not apply to the value uplift generated by selling the properties together); or

Where the ATO has gathered information that indicates the vendor is in the business of developing property, which means that the principal residence capital gains tax exemption may not apply.

Fickling says in extreme cases action could potentially be taken by the ATO prior to the sale, to freeze the transaction.

Those who see any of the above as dangers might consider selling in a hurry (before July 1), so there might be some property bargains for buyers in coming weeks.

It’s also important to note that the $2m is “hard-coded” into the legislation, so, as property prices increase, more vendors will be caught. Over time, the ATO may shift their audit target identification processes to $2m-plus property vendors and away from other areas.

Additionally, if the vendor has a tax debt, the application for a “clearance certificate” may in some circumstances involve the ATO seeking to recover some or all of that tax debt from the purchaser by way of a garnishee notice.

At this point, it is worth noting that we are giving the Australian Taxation Office another weapon to recover tax legitimately owed and that is a good thing for society.

The great danger is the complexity created and that currently the tax office is badly run and is operating outside the law in key small business areas. It knows it can’t be challenged because of the cost of court cases.

Meanwhile, the legislation is yet another blow being aimed at Chinese and other Asian investors in property. These blows have come separately and each one has had reasonable motivations. But, in combination, they could inflict severe damage to the apartment and other parts of the residential property market.

Chinese and other Asian investors face a Hobson’s choice. They will not enjoy getting a tax clearance but nor will they appreciate the buyer of their property taking 10 per cent off the purchase price.

And if the tax office treats locals illegally, what might they do to foreigners?

Australia desperately needs greater independent supervision of the tax office.

In case readers imagine that high property prices are confined to large metropolitan areas a quick look at realestate.com.au will dispel that view – within the NSW Northern Rivers there are currently 7 properties in Yamba and environs with a sale value of $2 million and over, 4 in the Grafton area, 6 in Kyogle, 9 in the Lismore region, 35 in the Ballina district, 78 in the Byron Bay greater region and 46 in the Tweed local government area.

Federal Election 2016: looking at the ICIJ Panama Papers searchable database

Some observations after an initial look at the ICIJ Panama Papers searchable database* (which includes Offshore Leaks data), with regard to listings of companies and individuals associated with Australia……

For some who are listed it appears to be a bit of a family affair, for others a lone foray into off-shore company registration.

Some associated with registered companies are investors, while others are active players in the mining, smelting, construction, manufacturing, banking, finance, risk management, insurance and marketing sectors.

There’s the odd investment manager or two, at least one specialist in fine art, some professional property directors and company secretaries, self-employed consultants and a media type.

One of Australia’s rich listers and a National Party politician (appointed not elected) also make appearances on this database.

As does a company which had as directors one multimillionaire former Labor premier of NSW and another multimillionaire who who went on to be a Liberal prime minister – for reasons unknown full details of this company have not been included in the searchable section of the ICIJ database to date.

What there doesn’t appear to be any indication of is that ordinary workers on the average wage went to Mossack Fonceca or other financial advisors to set up a companies in a low taxing jurisdiction such as Panama, the British Virgin Islands, Singapore or Hong Kong.

Off-shore registration appears to be something indulged in primarily by business and industry in this country as well as those with above average to high levels of personal wealth.

The very groups that Turnbull & Co have given company and income tax cuts in the 2016-17 Budget.

Inevitably there are 2014-15 political donors among those listed on the databases and, just as inevitably, there are some who give more to the Liberals and their Coalition partner than they do to Labor.

Before voting on 2 July 2016 readers might consider clicking on the search link at the beginning of this post and typing in a few individual and company names, to see how these might compare with the known interests of election candidates and those political donors included in documents held at the Australian Electoral Commission Annual Returns Locator Service.  

Where people spend, invest or gift their money says something about their personal and professional ethics.  

* It is not asserted by the creators of these databases that every individual or corporation identified has been involved in unlawful tax evasion or any other form of wrongdoing.

Australian Federal Election 2016: the pain that awaits under a second Abbott-Turnbull Government

If there is a second term for this Abbott-Turnbull federal government it will be one characterized by high public debt and increased borrowings.

With a taxation revenue stream that has been deliberately limited by a $4 billion dollar giveaway to people whose level of earned income already cushions them from the realities experienced by average and low income households and, a further $48.4 billion hit to the revenue bottom line so that government can cut the company tax rate of an est. 2.121 million businesses - 70 per cent of whom don't paid the full rate anyway.

To keep their ship afloat Turnbull & Co would need to implement all those punitive Abbott-era cuts that were predominately aimed at working class households.

Which means among other things, an extension of the 2013-14 indexation freeze on Medicare rebates paid to specialist doctors, GPs and allied health professionals in an attempt to force them to pass on the shortfall to patients as a co-payment. As well as the introduction on 1 July 2016 of upfront payments for x-ray, imaging and pathology services.

Eligibility for Family Tax Benefits will be tightened and government paid parental leave payment rules will be changed to exclude more mothers.

The regressive Good & Services Tax (GST) has also been broaden so that from 1 July 2016 goods purchased overseas via the Internet will attract this tax.

From September this year anyone 22 years and over applying for Newstart Allowance will receive payment at a lower rate - each fortnightly cash transfer for a single unemployed person (with no children) will be $8.80 less and for unemployed couples (with no children) it will be $15.80 less. 

This means that a single person eligible to receive Newstart who applies in September will only have an est. $259.40 per week on which to live and look for work, while couples will only receive an est. $468.50 each week. With average rents in the Sydney metropolitan area ranging between $500-$530 at the beginning of this year, rental stress is likely to increase in unemployed households.

Liberal and Nationals federal politicians are denying that they are conducting "class warfare" yet large tax cuts are going to the top 25 per cent of income earners and will eventually will be extended to businesses with annual turnovers in the billions of dollars, while the economically and socially vulnerable are told they deserve less.

Indeed spatial demographics demonstrate the Coalition's further widening of social and economic division in this country.

On 6 May 2016 The Age revealed that the biggest proportion of income earners who will benefit fully from these personal income tax cuts are in Prime Minister Turnbull's high socio-economic status electorate of Wentworth, where more than a third will have more in their pockets after tax. With the western Sydney electorate of Fowler having the nation's lowest proportion of taxpayers who qualify for the tax cut. In its suburbs of Liverpool, Cabramatta and Green Valley, just one in 20 earners have a taxable income higher than the new tax threshold.

While The Guardian on 7 May reported that, in the relatively lower socio-economic status regional electorate of Page on the NSW Far North Coast, 94.2% of taxpayers would miss out on that same cut in the tax rate because their taxable income was below $80,000 a year. Similarly, neighbouring Richmond and Cowper electorates would see 92.3% and 94.0% respectively missing out on the tax cut.

A brief look at what to expect..........

Parliamentary Budget Office, 10 March 2016:

Unlegislated measures carried forward in the budget estimates—February 2016 update. Date issued: 3 February 2016. Date revised: 12: 30pm, 10 March 2016

The Sydney Morning Herald, 2 May 2016:

The first Turnbull budget will be propped up by about $13 billion of so-called "zombie measures", which are still on the books from the first and second Abbott budgets but have not yet been passed by the Senate.

A parliamentary budget office count for the coming financial year puts the "ghost" measures at $1.7 billion. The biggest are the $600 million from planned cuts to access to Family Tax Benefits, $258 million from the outlawing of alleged double-dipping of maternity leave schemes, and $139 million from increasing co-payments and changing the safety net for the Pharmaceutical Benefits Scheme.

2016-17 Budget Papers, Statement 6: Debt Statement, Assets and Liabilities, 3 May 2016:

Net debt is expected to be $326.0 billion (18.9 per cent of GDP) in 2016‑17. Net debt is projected to peak at 19.2 per cent of GDP in 2017‑18, before declining over the medium term to a projected 9.1 per cent of GDP ($264 billion) in 2026-27.The end-of-year face value of Commonwealth Government Securities (CGS) on issue subject to the Treasurer's Direction [government borrowing] is expected to be $497 billion in 2016‑17 and is expected to increase to $581 billion in 2019-20. By the end of the medium term (2026‑27) the total face value of CGS on issue is projected to rise to $640 billion.

2016-17 Budget Papers, Statement 4: Revenue, 3 May 2016:

The 2016-17 Budget forecasts for tax receipts, excluding new policy, have been revised down since the 2015-16 MYEFO by $4.6 billion in 2016-17 and $13.5 billion over the four years to 2018-19. Excluding GST, tax receipts are forecast to be $4.6 billion lower in 2016-17 and $14.2 billion lower over the four years to 2018-19…..

the forecast for nominal GDP has been revised down by $27.5 billion over the four years to 2018-19….

In 2016-17, tax receipts as a share of GDP are expected to be 22.2 per cent, lower than the 2015-16 MYEFO estimate of 22.5 per cent.

Financial Review, 3 May 2016:

The government will spend almost $4 billion over the next four years to stop 500,000 taxpayers moving into the second-highest tax bracket…..

2016-17 Budget Papers Part 1: Revenue Measures, 3 May 2016:

The GST will be extended to low value goods imported by consumers from 1 July 2017….

The intent of this measure is that low value goods imported by consumers will face the same tax regime as goods that are sourced domestically.

Overseas suppliers that have an Australian turnover of $75,000 or more will be required to register for, collect and remit GST for low value goods supplied to consumers in Australia, using a vendor registration model.

The Guardian, 4 May 2016:

Asked about the plan to increase the threshold at which the 37% tax bracket kicks in from $80,000 to $87,000 – a tax cut of a bit over $300 a year for the top 25% of earners – the prime minister, Malcolm Turnbull, told ABC radio that even if it was not legislated when he called the federal election at the end of the week it would be implemented "administratively".

The Sydney Morning Herald, 4 May 2016:

On Tuesday the federal government announced it will increase the tobacco excise by 12.5 per cent a year for the next four years.

The plan will cause the price of a packet of 25 cigarettes to rise to about $40, up from $25 today.

ABC News, 5 May 2016:

Prime Minister Malcolm Turnbull has refused to confirm the 10-year cost of the proposal to cut tax for all firms to 25 per cent over a decade.

The Parliamentary Budget Office (PBO) has estimated the proposal, which will be phased in over time and benefit small and medium-sized businesses first, will cost $16.5 billion a year in 2026-27. However, during an interview with Sky News, Mr Turnbull would not confirm that figure, despite being asked more than a dozen times for an explanation.

The Australian, 6 May 2016:

Treasury has revealed a hit to revenue of $48.2 billion over 10 years from the Coalition’s plan to cut company taxes….

The government policy starts by cutting the company tax rate to 27.5 per cent to all companies with a turnover of up to $10 million, taking effect from July….

will be extended to bigger companies year by year, followed by several years of cutting the overall rate to 25 per cent for all companies.

The Sydney Morning Herald, 7 May 2016:

Anyone who signs up for welfare from September 20 will get less than those already on it, creating a two-tiered payments system…..

The government is removing an "energy supplement" 
Newstart Allowance payments have steadily decreased in relative terms over the past two decades to less than 40 per cent of the minimum wage……

The cut comes as national youth unemployment is nearly 13 per cent.

Centrelink, 7 May 2016:

Payment rates for Newstart Allowance…..

single, no children $527.60 [per fortnight]

[couple] $952.80 [per fortnight]

The “Your Guide To” Series: Newstart Allowance, July 2015:

[Newstart non-indexed] Rates include Energy Supplement of $8.80 (single, no children), $7.90 (each member of a couple) and $9.50 (single with children or over 60 after 9 months) per fortnight.

ABC News, 14 January 2016:

The typical Sydney unit rent was $500 a week, while a house was $530 in December 2015.

Royal Australian College of General Practitioners, May 2016:

14 May 2013 Suspension of MBS rebate indexation until 1 July 2014 to align indexation with financial year, announced in 2013-2014 Federal Budget.

13 May 2014 Indexation freeze for specialists, allied health professionals, nurse practitioners, midwives and dental surgeons MBS and DVA rebates until 30 June 2016, announced in 2014-2015 budget.

1 July 2015 Rebate indexation freeze commences…..

The Federal Government is reducing its investment in your healthcare by freezing your Medicare rebates. This means your Medicare rebates will remain the same until 1 July 2018, despite the cost of services increasing. The freeze is a co-payment by stealth and the Government has implemented this measure to reduce the amount it spends on all Medicare subsidised services, including general practice services. ….

Practices where a large proportion or all services are bulk billed will be significantly affected. The rebate freeze will have a detrimental impact on the viability of the practice. These practices may need to consider introducing or increasing out-of-pocket expenses to ensure the sustainability of the practice.

Individual GPs employed by a practice may be asked by their practice to pay a larger service fee to cover increasing practice costs.

Patients will experience a reduction in the value of their MBS patient rebate over time. 

The impacts will be magnified for GPs and practices providing patient services in lower socio-economic areas, where a majority of patients are from vulnerable groups (such as pensioners, Aboriginal and Torres Strait Islander peoples and people on very low incomes.). Many people in these areas cannot afford to meet out-of-pocket costs for care.