Monday, 29 August 2011

What did we learn at the Noosa Tax Intensive?

Last week I had the pleasure of being in Noosa for the National Tax Intensive Retreat. Noosa failed to turn on the sunshine, but that didn’t worry the delegates who realise that tax is strictly an indoor sport! The focus of the retreat was “Trusts: A Brave New World” and 143 delegates gathered to nut out the issues over the course of 7 plenary sessions and 3 workshops.
The plenary presentations were excellent. Tony Slater QC FTIA’s opening address on “Why we draft trust deeds the way we do” was a highlight for me – the hour passes very quickly when you are listening to one of the finest orators in the tax field. We all laughed when he gave the advice along the lines of “if you trust deed precedent is older than you are, then perhaps you shouldn’t be using it” but the message was very clear.  You need to understand your clients’ circumstances and how they can be addressed in the deed. Don’t assume that the off-the-shelf product will suffice. Reading the trust deed is essential when giving advice to a client or preparing a trust resolution. You can’t just assume you know what the trust deed says. It is tried and true advice that prudent tax practitioners follow every day.
The workshop sessions were focussed on practical problems which delegates received prior to the conference. For example, in workshop 1, we were presented with extracts of a trust deed, and then asked how distributions could be made under a variety of circumstances. At the end of the workshops, delegates received a copy of a model answer, which should prove to be a valuable resource.
Another highlight of the retreat was engaging with Graeme Cuxson and Haydn Daw from Treasury on the re-write and reform of Division 6. Whilst Graeme was unable to share precisely what will be contained in the Discussion Paper, it is very clear that Treasury are open to ideas on how the law could be reformed. I know many delegates took the time to speak to Graeme and Haydn during the session breaks, and no doubt many more intend to follow up ideas by email. The Tax Institute will be drafting a submission on the Discussion Paper, and we will welcome contributions from members. 
Finally, I should add that if you missed out this time round, the National Tax Intensive Retreat will be repeated in November 2011. The program will be the same, but the venue will move to the Sheraton Noosa Resort & Spa (and hopefully the weather will be better next time round, but that is one thing the events team can't control!). Click here to find out more.   It goes without saying that I highly recommend it.

Tamera Lang
Tax Counsel, The Tax Institute

Great weather for a tax conference. Morning swim plan was aborted.

Noosa Beach in the "sunshine" state.

Friday, 5 August 2011

Will GST kill the internet star?

If your online purchases of up to $1,000 suddenly had the 10% GST added to them, would that make you shop at a traditional 'bricks and mortar' retail store?

The Productivity Commission this week released its draft inquiry report titled Economic Structure and Performance of the Australian Retail Industry. It examines the implications of globalisation for the retail industry and the appropriateness of current policy settings and finds that regulatory reforms are required for the industry to adapt to the global market.

With regards to tax, the current exemption from GST and duty for imports valued below $1,000 has been found to be only a minor contributing factor to online offshore purchases. However, for reasons of tax neutrality, the Commission recommends that the $1,000 threshold should be reduced, but only when this can be done cost-effectively. This is because where the costs of collecting a tax exceed the benefits of the revenue, that tax should not be collected. Without the $1,000 threshold, the report estimates that $578 million of revenue would be collected at a cost of over $2 billion to the taxpayer.

Let's look at State Government trading hour restrictions that fail to make much sense. The work practices and high labour costs in our workplace relations system are set to be examined. Retail zoning is another area for investigation, as are the parcel handling processes of Customs and Australia Post.

It is quite clear that our floating exchange rate and the business practices of the retail industry should not determine the formulation of tax policy. The fact that online shopping from overseas does not attract the GST up to $1,000 is not the reason that people are flocking away from the traditional retail stores at home.

Please feel free to share your thoughts. Have you caught the online shopping bug? Any stark examples come to mind about the price differential on the same item here versus overseas? What are your suggestions for the Australian retail industry?

Robert Jeremenko
Senior Tax Counsel