Business Links Australia Pty. Ltd. is a CPA Practice
CPA Australia Logo
Liability limited by a scheme approved under Professional Standards Legislation
Hot Issues
spacer
$20m boost for SME clients looking to exporting
spacer
Work-Related Expenses
spacer
ATO updates crypto guidance
spacer
ATO zones in on hundreds of newly created reserves
spacer
Senate passes $20,000 instant asset write-off extension
spacer
Victorian Vacant Property Tax
spacer
Director Penalty Notices
spacer
ATO set to pounce on undisclosed income streams
spacer
In case you missed it – The company tax Bill that did pass Parliament.
spacer
GST spotlight headed to smaller end of town
spacer
Superannuation Amnesty – Maybe! Maybe Not!
spacer
ATO drills in car-sharing focus this tax time
spacer
What is Bankruptcy?
spacer
Update of Australia's vital statistics
spacer
ATO speaks on risk factors, surveillance triggers for FY19
spacer
ATO’s corporate residency guidance cops backlash
spacer
ATO dispels top tax time myths to clients as clampdown rolls out
spacer
Tools for budgeting, cash flow, Super and more ….
spacer
Guidance for SMSFs on transfer balance reporting
spacer
ATO issues alert on super, tax scams
spacer
Salary sacrifice integrity
spacer
Understanding the evolution of blockchain and cryptocurrencies
spacer
Update to Australia's vital statistics
spacer
Tax Time Checklists- Individual, Company, Trust, Partnership and Super Funds
spacer
SMSFs - Our 'hardest' jobs
spacer
Tax Office reveals adventurous, dubious claims ahead of tax time
Article archive
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