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Business News NSW Northern Rivers

Corporate Tax Transparency report highlights trend towards willing compliance

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NOTICE OF MEMBERS EXTRAORINDARY LAND DEALING MEETING

Corporate Tax Transparency report highlights trend towards willing compliance

The Australian Taxation Office’s (ATO’s) publication of the seventh annual report on corporate tax transparency showcases the trend towards improved voluntary tax compliance among large corporates.

Deputy Commissioner Rebecca Saint explained that the report reflects the ATO’s intensive engagement with the top end of town in recent years.
“While the tax paid by this population may fluctuate year on year, the overall trend couldn’t be clearer. Corporates are placing a higher value on tax compliance, driving consistent and willing voluntary participation,” Ms Saint said.

The Tax Avoidance Taskforce (the Taskforce) has had a significant impact on corporate tax collections. Since its inception in 2016, the Taskforce has proven very successful. In addition to contributing to the ATO collecting over $10 billion in additional tax from public and multinational businesses it has driven improved tax compliance.

The resources of the Taskforce have allowed the ATO to establish the Justified Trust program, which requires the largest businesses to assure us they are paying the right amount of tax by having regard to objective evidence.

“This is a significantly higher level of scrutiny than the previous approach of investigating identified risks,” Ms Saint said.

“Our reports on the Top 100 shows that the number of taxpayers achieving a high assurance rating increased from 6% in 2019 to 49% in 2021. We attribute this to a combination of businesses recognising that investing in their tax governance has tangible real-world benefits – as well as a significant investment of time and resources by the ATO in scrutinising structures, transactions and tax governance frameworks.”

“The health of the tax system is underpinned by willing participation, which is shown by four out of five of the largest businesses in Australia having obtained either a high or medium assurance rating.”

“Low assurance ratings prompt the ATO to conduct comprehensive and intensive reviews where we are more likely to use audits to resolve issues.”

“Although we cannot disclose the assurance ratings of individual taxpayers, we note that many are using a justified trust rating as a key performance indicator. We are seeing businesses with “high assurance” tax ratings informing their shareholders, employees and other stakeholders.”

The corporate tax transparency report also shows that the proportion of companies that have paid no income tax remains steady at 33% in 2019-20. This reflects a decline from 36% since the first report in 2013-14.

It is important to note that data in the report is taken directly from tax returns and does not reflect any intervention or compliance work after lodgment of the returns.

There are many reasons why companies pay no income tax. Income tax is paid on profits not revenue and legitimate business or economic factors may see companies pay no income tax due to operating losses, utilising losses from prior years, or projects operating in a start-up phase.

Many single entities that did not pay tax are members of a tax paying corporate group. At the economic group level, a total of 2,061 economic groups or standalone entities were to some degree in scope for the transparency report. Of these, 78% had a tax liability through one or more member entities.

“The ATO actively verifies that losses in the large market are not created through contrived schemes, but can be traced back to commercial operations. We subject companies that report sustained year-on-year losses to additional scrutiny,” Ms Saint said.

Corporate Tax Transparency Report

  • The ATO is required under law to publish tax information reported to us by certain large companies each year. This year’s tax transparency report covers 2,370 corporate entities, of which:
  • 1,378 are foreign-owned companies with an income of $100 million or more
  • 513 are Australian public entities with an income of $100 million or more
  • 479 are Australian-owned resident private companies with an income of $200 million or more.

The companies in the report paid a combined total of $57.2 billion, or around 65% of all corporate income tax in 2019-20.

Since the first report in 2013-14, there has been growth in total income, taxable income, and income tax payable. In 2019-20, the growth in these amounts has been largely driven by the mining sector, which accounted for around 44% of tax payable.

While the report reflects the impact of the early stages of the COVID-19 pandemic (particularly on the wholesale, retail and services sector), it does not provide additional detail on recipients of JobKeeper or other stimulus payments.

Oil and gas sector

The highly concentrated taxpayer base of the Petroleum Resources Rent Tax (PRRT) allows a high level of ATO scrutiny.12 corporate entities paid $881 million in 2019-20, this is a slight decrease from the $1.06 billion paid by 11 corporate entities 2018–19. The decline in PRRT is primarily due to a fall in oil prices.

Large corporate groups income tax performance

Most large businesses do the right thing and are paying the right amount of tax, as reflected in our estimate of the large corporate group income tax gap.

For 2018–19, we estimate a net gap of 4.3% or $2.6 billion after ATO engagement, meaning large corporate groups paid over 95% of the theoretical total amount of income tax payable in 2018–19.

“Very few other revenue authorities calculate and publish tax gaps. This makes international comparisons difficult, but Australians can be reassured that large corporate groups are held to account more than any other sector of the economy,” Ms Saint said.

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Australian Energy Commission Signals Major Overhaul of Complex Electricity Pricing Amid Consumer Concerns

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Australian Energy Commission Signals Major Overhaul of Complex Electricity Pricing Amid Consumer Concerns

 

The Australian Energy Market Commission (AEMC) has announced plans to overhaul electricity pricing rules in response to growing concerns about complex and often punitive tariffs affecting many households.

Key Points:

  • Revamp Announcement: Anna Collyer, Chair of the AEMC, will address these issues in her keynote speech at the Australian Energy Week conference in Melbourne, highlighting the need for new consumer protections amid the rollout of smart meters and changing tariff structures.
  • Consumer Protections: The AEMC will introduce measures to protect consumers from unexpected tariff changes. This includes requiring greater notification and detailed information from retailers about how changes will impact users.

Background:

The AEMC, which sets the rules for retailers in the national electricity market covering about 10 million customers along the eastern seaboard, is addressing concerns about the rapid and radical changes to electricity pricing. Traditionally, households paid a flat rate for electricity, but the introduction of smart meters has enabled more complex tariffs such as time-of-use rates and demand charges. These changes, however, have left many consumers facing higher bills without understanding why.

Collyer’s Perspective:

Ms. Collyer emphasised the critical role of smart meters in transitioning Australia to renewable energy. She noted that these devices allow consumers to better manage their energy use, particularly in homes with rooftop solar systems. However, she acknowledged that not all consumers are willing or able to adjust their energy consumption habits significantly.

“We need to account for all types of consumers, not just those who thrive on more complexity,” Ms. Collyer will say. She also highlighted the importance of smart meters in the broader context of reducing peak demand and infrastructure costs.

Proposed Changes:

  • Greater Transparency and Notification: New rules will ensure that consumers are adequately informed about tariff changes, including more detailed explanations and the elimination of up-front costs for smart meter installations.
  • Review of Tariff Appropriateness: The AEMC will launch a review to assess whether current power charges are fair and effective in reducing peak demand and overall costs.
  • Innovative Approaches: Collyer urged energy companies to innovate with the advent of smart technology, such as electric vehicles and internet-enabled appliances, which can adjust their energy use based on real-time pricing.

Industry Impact:

Collyer’s speech will also include a challenge to power companies to be more like “Uber, not the taxi; Apple, not Kodak,” encouraging them to embrace innovation rather than sticking to outdated practices.

Conclusion:

The AEMC’s proposed overhaul of electricity pricing rules aims to balance the transition to a greener grid with the need for consumer protections and transparency. By addressing the complexities and unexpected costs associated with new tariff structures, the commission hopes to ensure that all consumers benefit from the move towards smarter energy management.

 

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Apple Reaches Record High with New AI Features: ‘AI for the Rest of Us’

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Apple Reaches Record High with New AI Features: ‘AI for the Rest of Us’

 

Apple Inc. shares soared to a record high after unveiling its much-anticipated artificial intelligence (AI) platform, Apple Intelligence, during the Worldwide Developers Conference on Monday. The new technology, designed to offer a personalised and subtle AI experience, aims to enhance user engagement by summarising text, creating original images, and retrieving relevant data.

Key Highlights from the Presentation:

  • Apple Intelligence: The centrepiece of the event, this new AI platform will integrate seamlessly with Apple’s ecosystem, providing users with advanced features such as text summarisation, original image creation, and intelligent data retrieval. A revamped version of Siri will also be included, promising more precise control within apps and better overall functionality.
  • Stock Performance: Apple’s stock surged 7.3% to $207.15, achieving its first record high of the year despite a lukewarm premarket reaction.
  • AI Market Push: Apple is positioning itself to catch up with tech giants like Google and Microsoft in the competitive AI market, leveraging its streamlined interface and dedicated customer base.

Partnership with OpenAI:

Apple formally announced a partnership with OpenAI, allowing users to access ChatGPT via Siri at no extra cost. This collaboration aims to enhance Siri’s capabilities, with additional features available for OpenAI’s paid subscribers. The AI platform will start rolling out later this year, with some features, including multi-language support, expected next year.

New Operating System Features:

  • iOS 18 and iPadOS Enhancements: The latest updates will introduce an upgraded home screen, a new Control Centre, satellite text messaging support, and enriched communication features in the Messages app. Other notable additions include a Passwords app for secure logins and a redesigned Photos app with AI-enhanced editing.
  • MacOS Sequoia: This update will bring the same Apple Intelligence features to Macs, along with new capabilities like interacting with iPhone notifications and organizing application windows as tiles.
  • VisionOS 2: The Vision Pro headset’s new software will include 3D spatial photos, advanced hand gestures, and the ability to AirPlay content from other Apple devices.

Additional Announcements:

  • International Launch of Vision Pro: Preorders for the Vision Pro will begin in China, Hong Kong, Japan, and Singapore on June 13, with sales starting June 28. The rollout will extend to Australia, Canada, France, Germany, and the UK shortly after.
  • AirPods and Apple Watch Updates: New software for AirPods will enhance call clarity by reducing background noise, while the Apple Watch will feature improved health tracking capabilities.

Apple CEO Tim Cook emphasised the transformative potential of AI for the company, stating, “AI will be the next big step for Apple.” Despite recent revenue declines, Apple aims to bolster user loyalty and encourage more frequent upgrades with these new AI-driven features.

 

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How Australian Women Entrepreneurs are Defying the Odds to Build Successful Businesses

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How Australian Women Entrepreneurs are Defying the Odds to Build Successful Businesses

 

One-third of Australian businesses are led by women, and this number is steadily increasing. Women entrepreneurs in Australia are not only more educated than their male counterparts but are also pioneering innovations in social impact and environmental sustainability. However, significant barriers persist, including gaps in opportunities, networks, resources, and investment.

Key Findings from the Women’s Agenda Report

A new report from Women’s Agenda, in partnership with Commonwealth Bank and CommBank Women in Focus, sheds light on the challenges and opportunities for women entrepreneurs in Australia. The report, which surveyed over 1,000 women business owners and startup founders in April 2024, highlights the following:

  1. Optimism and Determination: Despite the challenges, 75% of respondents are focused on expansion, and over half plan to hire new talent within the next year.
  2. Social Impact: A significant 56% of women-led businesses are dedicated to making a positive impact in areas such as care, health, social justice, and combating family violence.
  3. Economic Challenges: Inflation and the cost of living are major hurdles, with 74% citing these as primary challenges to growth. Additionally, over a third of respondents feel that current government policies negatively impact their businesses.
  4. Talent Shortages: More than one in five women entrepreneurs are struggling with finding and retaining talent.
  5. Gender-Based Barriers: Bias from prospective investors and unpaid care obligations are additional burdens for women founders.

Expert Insights and Strategies

Julie Mathers, CEO of Snuggle Hunny, sees current economic challenges as opportunities for entrepreneurs to become more focused on their businesses. She believes that surviving the current “storm” will make businesses stronger and more resilient.

Dr. Elaine Stead, a venture capitalist with Main Sequence, emphasizes the importance of networks. She advises women entrepreneurs to leverage their networks for support and survival during tough economic times. She underscores that the first priority for small business owners should be to survive the immediate challenges before focusing on growth.

Opportunities and Support Networks

The report highlights that access to networks is the top driver of success for female founders. Over 80% of respondents identified their biggest support as a network that includes other women entrepreneurs, stakeholders invested in their success, and supportive personal connections. This finding underscores the importance of relationship-building in business.

Conclusion

Despite facing numerous challenges, Australian women entrepreneurs are demonstrating resilience and optimism. Their commitment to innovation and social impact, combined with their determination to overcome barriers, is driving their businesses forward. The findings from the Women’s Agenda report reveal that with the right support, networks, and resources, women-led businesses can thrive even in challenging economic climates.

 

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