Professional advisors may be guided by a variety of factors when recommending a business structure for their small and medium enterprise (SME) clients. This includes tax, exposure to personal liability, asset protection, access to equity capital, and costs of compliance. A mixed-method study The survey findings reported in this article are part of a mixed-method study of SME advisors in relation to business structures. During the qualitative phase of the research, 48 professional advisors were provided with one of 12 SME business scenarios, with each business scenario having different circumst ..read more

Negative gearing allows households that incur losses on rental income to deduct these losses from other sources of income. The Greens are currently advocating for the abolishment of negative gearing, as did the Australian Labor Party during their unsuccessful 2019 election campaign. The standard arguments surrounding negative gearing are two-fold. First, it provides a potential subsidy to housing investors, thereby increasing the supply of housing in the rental market. This directly benefits housing investors by reducing their tax burden and indirectly benefits renters by lowering housing rent ..read more

Globally, tax authorities have recognised that the use of tax haven has contributed to a reduction in taxes payable by firms as evidenced by a decline in effective tax rates and an increase in the difference between accounting and taxable income. Tax havens are typified by a lack of information exchange, secrecy in disclosures and regulatory, legal and financial arbitrage, and a nil or very low corporate tax rate. Oxfam (2016) reports that Australian investments in tax havens were estimated at US$56.4 billion in 2009. This increased to US$79.1 billion in 2014. Some of the more well-known tax h ..read more

Indonesia, with tax revenue accounting for 65.37% of total government revenues, grapples with a low tax ratio. According to the Organisation for Economic Co-operation and Development (OECD), in 2023, Indonesia’s tax ratio only reached 10.21% of GDP. This places Indonesia’s tax ratio among the lowest in the Asia-Pacific region, far below the average tax ratio of 19.1% for Asia-Pacific countries and 33.5% for OECD countries. Boosting tax compliance has become a pressing issue for the Indonesian Government. While traditional methods such as monitoring and enforcement are commonly employed, limite ..read more

If just one state of Australia, New South Wales, scrapped its stamp duty on real-estate transactions, about 100,000 more Australians would move homes each year, according to our best estimates. Stamp duty is an unquestioned part of buying a home in Australia – you put your details in an online mortgage calculator, and stamp duty is automatically deducted from the amount you have to contribute. It’s easy to overlook how much more affordable a home would be without it. That means it’s also easy to overlook how much more Australians would buy and move if stamp duty wasn’t there. The 2010 Henry Ta ..read more

Around 45% of Australians have private hospital insurance, despite access to free public hospital care through Medicare. One reason so many Australians are privately insured is because the government encourages them to be through rebates (carrots) and penalties for the uninsured (sticks). In two new research papers, we set out to learn just how effective these ‘carrots’ and ‘sticks’ are. Study 1 – lifetime health cover loading Our first paper looked at lifetime health cover loading (LHC), implemented by the Australian government in 2000. This ‘stick’ applies to people who purchase private hosp ..read more

Australia’s carbon markets will soon have a new asset category: the Safeguard Mechanism Credit unit (SMC). Under the reformed Safeguard Mechanism which took effect on 1 July 2023, these new units will come onto the market from as early as January 2025. Limits on emissions from industrial facilities will be tightened and this will increase demand for Australia’s other carbon unit, the Australian Carbon Credit Unit (ACCU). To what extent the Safeguard Mechanism is effective and cost efficient in achieving the emissions reduction targets will be influenced, at least to some degree, by the income ..read more

In Australia, business structures are often discussed in isolation, as sole traders, partnerships, companies, or trusts. In practice, however, there is a tendency for advisors to recommend a combination of business structures for the one small and medium enterprise (SME). It has been argued that it is naïve to consider business structures in isolation, as it is common for a business to use multiple structures. This combination could have many variations – a company could hold the shares in a subsidiary company, or a company could be used as the trustee and/or a beneficiary of a trust, or there ..read more

After weeks of confected outrage from many parts of the media and Coalition, the Albanese government has moved on its proposed Stage 3 tax cuts through the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024. According to the Treasurer, the Bill will provide tax relief to all 13.6 million taxpayers from 1 July 2024 through a combination of changes to the income tax rates and thresholds. As its name suggests, this Bill is fundamentally a cost-of-living measure, something which the Prime Minister and Treasurer have been at pains to point out. The changes under this Bill are not tax refor ..read more

The distribution of GST revenues among the states and territories is, by a wide margin, the largest single expenditure item in the federal budget. Its long-standing purpose is to ensure that each state and territory has the capacity to provide their citizens with a similar range and quality of public services, while also placing similar burdens of state taxation upon them. However, this principle of horizontal equity has been thoroughly undermined by the changes legislated by the Morrison Government in 2018, with the support of the then Labor Opposition, at the request of Western Australia. Th ..read more