Hot Issues
spacer
Resources to help understand and implement Single Touch Payroll (STP)
spacer
Big fines, prison on the cards as new SG penalties introduced
spacer
Extra website resources and tools is one way we offer you and your family more.
spacer
FBT Exemption for Various Work Vehicles
spacer
Tax payable on expenditure recoupments
spacer
ATO identifies SMSF contravention red flags
spacer
Who wins dispute about taxable income?
spacer
Australia - facts & figures March 2019
spacer
Strategies to handle scam phone calls and problem e-mails.
spacer
Instant asset write-off threshold upped to $25k
spacer
Jail time for GST fraud
spacer
Correcting GST Errors
spacer
Fuel tax credit rates raised
spacer
ATO set to contact clients for overdue TPAR
spacer
Reminder on Victoria Property Duties
spacer
How Australia is performing.
spacer
Global outlook summary: Down but not out
spacer
Bookkeepers remind on incoming TPRS obligations
spacer
Golden Rules for Deductions
spacer
How's Australia going - vital statistics?
spacer
Tax, SMEs set to be ‘political football’ in 2019 as election nears
spacer
Cap lifted on popular financing option for clients
spacer
Expiry of 900,000 interest-only loans set for January
spacer
Australian Taxation Office (ATO) Scam Alert: Fake Demands for Tax Payments
spacer
Tax Office sounds alarm on popular property strategy
spacer
Our Advent calendar for 2018
spacer
‘Please do not panic’: ATO boss addresses STP concerns
Article archive
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Treasury finds Australia 'increasingly uncompetitive' as US moves on tax plans

Treasury has released a research paper detailing the implications of the US corporate tax reforms, highlighting its real potential to quash Australia’s competitiveness and stifle local wages.  

       

 

The US recently released a framework for US tax reform, including a reduction in the federal corporate tax rate from 35 to 20 per cent, sparking concerns that it might attract an investment boom, leaving Australia behind.

The research paper, US Corporate Tax Reform: Implications for the rest of the world, raises the concern that an increased investment in the US will result in a permanent reduction in the level of GDP and real wages in Australia.

“The US reforms have the potential to accelerate tax competition between jurisdictions, making Australia’s current corporate tax rate increasingly uncompetitive internationally,” stated the report.

“While the US would experience higher GDP and real wages, other countries, including Australia, could experience a permanent reduction in the level of GDP and real wages unless they take steps to maintain their competitiveness.”

The paper also examined how countries such as the UK, Singapore, and Canada have cut their rates over the past decade in a bid to spur investment and drive economic growth, with the current OECD average at 24 per cent, down from 32 per cent in 2000.

However, Treasurer Scott Morrison believes the Enterprise Tax Plan, which aims to reduce the tax rate to 25 per cent for entities with turnover of up to $50 million, will “shore up our competitiveness on investment”.

“This is why the Turnbull government’s fully-funded Enterprise Tax Plan currently before the Parliament, will act to ensure Australia remains an attractive destination for investment,” said Mr Morrison.

According to Treasury modelling however, the size of the Australian economy will permanently increase by just over 1 per cent in the long term following the 5 per cent reduction in the corporate tax rate.

BDO national tax director Lance Cunningham believes that while tax reforms in Australia will now be a necessity, it has called for rational decision making, while cautioning against “knee jerk reactionary responses”.

“If the government is not careful, the US tax rate cut may result in Australia implementing protectionist counter measures rather than well thought-out tax reform driven by a need to boost the Australian economy,” Mr Cunningham said.

“Whatever the outcome, Australia should refrain from embracing unilateralism which is a path of incoherence and ultimately lower growth.”

 

By: Jotham Lian
​09 NOVEMBER 2017
accountantsdaily.com.au