Regulatory Roundup April 2014
Tax Office may add business tax debt to credit ratings
The Tax Office is considering adding tax debt to credit ratings in its effort to chase small business debt, as it found around $190 million in unpaid superannuation was lost when businesses went insolvent or entered into administration. Second commissioner Geoff Leeper said the Tax Office was low on the priority of business’s debt repayment because of secrecy provisions that mean Tax Office debt holds no credit reference implications. Leeper said: “You certainly would get failure to lodge or general interest charge consequences, but being in debt to us does not affect your credit rating. The only way around it that we can think of is to propose that the Commonwealth as an entity has the ability to advise a credit market ‘Geoff owes $41,000’ without disclosing the nature of the debt.”
New privacy laws could leave many businesses vulnerable
Changes to Australia’s privacy laws kicked in on March 12 in what were the biggest reforms to the privacy regime in 25 years. A risk partner at Ernst & Young, Charlie Offer, said many businesses will be caught short by the increased powers of the Office of the Australian Information Commissioner, who now has ACCC-like powers to launch investigations that will potentially result in fines of up to $1.7 million. Offer said changes mean an investigation can now be initiated without a complaint being received or even any suspicion of wrongdoing. This is in contrast with the present situation where a complaint must be filed and the resulting investigation is then limited to that complaint only.
ACCC to target 400 businesses in carbon tax repeal crackdown
From March 1 onwards, consumer watchdog the ACCC will adopt a formal monitoring role and target 400 businesses in preparation for the repeal of the carbon tax come July 1, 2014. The new role will give the ACCC the power to take action against businesses that charge unreasonably high prices and that make false or misleading claims about the effect of the carbon tax repeal or carbon tax scheme on the price for the supply of goods and services. The focus will be on suppliers of regulated goods – namely natural gas, electricity and synthetic greenhouse gases.
You can help the Tax Office shape and inform its small business expertise
The Tax Office has invited Australia’s small business owners to apply to join its new small business consultation panel. The Tax Office said the panel has been built with an aim to help cut the red tape small businesses are saddled with and boost its efficacy when dealing with small business owners. The Tax Office is looking for small business operators with at least two years experience running a business which has up to $2 million annual turnover, and stressed that taxation, consulting or accounting experience is not necessary. Interested small business operators should email email@example.com to request an information and application pack. Seethis government tenders webpage for more details.
Business groups urge Senate to allow for carbon tax repeal
The Australian Chamber of Commerce and Industry (ACCI), the Australian Industry Group (AIG), the Business Council of Australia (BCA) and the Minerals Council of Australia have issued a joint statement calling on the Senate to repeal the carbon tax, after Parliament rejected the first of the Abbott government’s bills to scrap it. “Most businesses have been unable to pass their carbon-tax related costs on to customers. For small businesses especially, this has been a major burden that has reduced profitability, suppressed employment and added to already difficult conditions,” the statement said.
ASIC warns businesses about overseas lending scams
ASIC has warned Australian businesses to be wary of overseas lending scams, which have already cost victims up to tens of thousands of dollars. The scammers, believed to be operating offshore, appear to have hacked the legitimate websites of small lenders to target consumers, although ASIC has yet to specify which small lenders this may be. They have also set up fake websites and internet banner advertisements offering fake loans. The fake loans look like legitimate contracts, but are often made in the name of an unregistered business or a company the scammers do not represent. Victims are often misled by the inclusion of authentic identifiers, such as Australian credit license numbers and Australian company numbers belonging to genuine licensees. Businesses have been advised to refrain from dealing with anyone they cannot reach through publicly available contact details and to not respond to any requests to send money before receiving the loan.
BAS mistakes can prove unnecessarily costly for smaller businesses
The Small Business Barometer from bookkeeping franchise First Class Accounts found that one in 10 small businesses lost money through unnecessary fines and penalties over 2013. Around 11% of smaller enterprises had missed a BAS deadline and around 75% of these said they had simply overlooked the submission date. However, the poor financial management practices extended beyond BAS paperwork. Around 77% admitted they did not set an annual budget, and a further 70% said they checked their profit and losses just once a month or less.
Australian financial advising businesses beleaguered by red tape
Australian financial advisers are spending 10% more of their time on general administration and compliance than their international counterparts, in yet another indicator of the red tape strain local businesses have to face. Market research firm CoreData’s Business Efficiency Reportrevealed that reducing time spent on administration and compliance to international averages could earn Australian financial advisers up to $15,284 per year. Further, Australian advisers could save nearly 205 hours each year that could be spent on more profitable tasks and growing their business.
Retiring baby boomer business owners may be forced to shut shop: PwC
A surge in business exits sparked by retiring baby boomers could cause a ripple effect throughout the economy and have serious consequences on business owners’ wealth, new research from PwC has found. According to the report, an oversupply of businesses for sale will create downward pressure on prices and force owners to either sell their business for less if they cannot find a suitable successor, or shut shop. Given the scale of those planning to exit, multiple failed business transitions are expected to have a knock-on effect in the wider economy – including increased job displacements and dampening innovation.
Corporate misdemeanours get the kid glove treatment in Australia
Australia has a softer approach than other countries to corporate wrongdoing, a report released by ASIC found. The report found that even if Australia’s maximum criminal penalties (jail and fines) were broadly consistent with the international average, it still has significantly lower custodial sentencing terms and fines than countries such as the US. Even when compared with other regulators in Australia, ASIC found it had lower civil penalties than those available to other local regulatory authorities. For example, there are differences between maximum civil penalties that ASIC can pursue (a maximum $1.7 million for corporate bodies) and the civil penalties available to other Australian regulators (up to $17 million).