Coming back to the actual topic … an alternative to a global minimum corporate tax rate would be a multinational corporate tax rate. That is inherently more flexible (because it allows a country to continue to decide how to tax its corporations that are not multinationals) and it may lead more naturally to a fair division of the tax collected to the countries where the revenue was earned (which is what Australia was mostly interested in).
To be honest I thought that’s what the OECD was working towards, so I am suspicious of the US suddenly floating its own idea.
Yes (except on capital gains). However that is not relevant. For the purposes of the franking credit system, a super fund in the accumulation phase just looks like a low-income earner whose marginal tax rate is 15%. So if the company pays 30% tax then 15% is rebated to the super fund (too much paid) - and if the company pays 0% tax (e.g. income earned overseas, unfranked dividend) then the super fund has to cough up 15% (nothing paid by the company) - and all possibilities in between.
So the “flat 15% rate” tells you what the tax payable on the taxable income is - but it doesn’t tell you how much actually has to be stumped up, because that depends on how much tax has already been paid (in this case by the company that is paying the dividend).
The majority of share holders in Australia’s big companies, and indeed many investors are foreign. The USA is number one.
Should we be looking at these groups who collect up to 75% of company dividends or earnings from Australian enterprise?
I suspect the outcome can only favour the USA at the expense of others. This assumes that globally the size of the tax pie is a constant. For one to win another must loose.
Minor nitpick: It’s not the majority of shareholders. It’s the majority of shares. At least that is my impression from reading that rather imprecise article. (Whether that is actually true, we cannot verify.)
Also, it’s a rather small and selective sample (just the top 20 companies by market cap) and surely the picture would become less favourable to the argument being put if the entire ASX were considered or indeed if the entire corporate sector were considered (i.e. taking into account unlisted public companies, and proprietary companies).
(I don’t think it matters whether the foreign shareholder is US-based or something else, not least because it is extremely hard to see where a US-based shareholder is really based i.e. who the ultimate beneficiary is - and the same for any other foreign country.)
Nevertheless the overall points are reasonable:
Should Australian (listed) companies be required to be more transparent about foreign ownership?
More controversially, should we look at limits on foreign ownership? (as some companies do by law)
Should we look at the effect of franking credits when the shareholder is not an Australian taxpayer?
Australian listed companies currently typically publish information regarding the top 20 beneficial holders (by size of holding), for each class of share. However that information is not always fully transparent about who really owns the shares (and I would question what methodology was used in your linked article).
I believe that if we want to limit foreign ownership then it will require a cultural change within Australia itself i.e. we would have to make up the shortfall.
As an example, Transurban is identified as about 35% foreign money in that article. If we want new motorways (please, no arguments about whether we actually do) and we don’t allow foreign money or we limit the amount of foreign money used for that purpose then that money ultimately has to come from Australians.
Are we prepared to save and invest more ourselves?
Australians have large amounts of money to invest as demonstrated by Super and over inflated property valuations.
Whether we are lazy investors, or do not invest wisely might be another question?
That governments of all flavours and levels throw money at property development and home ownership suggests it is about more than ourselves (the wider community). Although those with the means and ability seem to think it’s the way to go.
It’s The Conversation! I was only hoping to add some additional content to the point, the precision of which is less important. There are many foreign investors in Australia. How the suggested changes might affect future investment in Australia, foreign or domestic sources, is also a consideration.
Yes, exactly. It would likely involve redirecting investment away from property into the areas left vacant by departing foreign investors. That would be a difficult transition and would be disastrous unless undertaken in a measured way, which probably implies bipartisan support, so that it can be a gradual process over multiple terms of parliament. The most likely outcome is limited change - risk averse politicians whose main concern is their own future electoral prospects - and mishandled. [This post is just opinion. I guess we will see what actually happens.]
Where to add this? Here under banking, somewhere under humour? Reading this reminds one of the slapstick comedy we call the ACCC.
Imagine a bank CEO having a think about potential profits (and dividends and his bonuses) on one hand, and Rod Simms thinking about ‘investigate and could consider blocking a deal.’ Stepping back is government more inclined to side with stronger bank profits, or consumers? No need to answer - there are sometimes surprises, but.
The other side of the coin is … if the result is that noone buys Citi’s retail operations then those customers are left in the lurch, which is not an ideal outcome either. Probably then many of those customers would end up being customers of … the big four.
No responsible CEO would fail to consider the possibility that the acquisition does get opposed or even blocked, and the resulting cost. A lot of time and money goes into such an acquisition so it is sensible to consider the opinion of the ACCC even when informally expressed.
Cutting across both those points then is whether there is an interested buyer outside the big four.
Based on recent history, when millions or billions of dollars are at stake, an army of lawyers will face off against the ACCC and the ACCC will often lose in court. The ACCC would no doubt argue that the law should be changed to lower the barrier to proof of the ACCC’s case.
It’s a sign of an increasingly cashless society, with all electronic payment methods.
As your linked article says, that leaves (some) older people out, if they don’t have internet / mobile phone. (It also leaves stores out when there is an outage.)
A decade or so ago, branch closures were all the rage. Then there was a small retreat when some new branches actually opened. Now, it would seem, the long term trend has resumed.
An article regarding insurance bundled into super.
There must be some money in it as it seems that everytime I walk past the TV my wife is listening to, there are ambulance chasing lawyer ads on, especially Shine lawyers.
The Insurance is a good thing in the early stages of a Super policy. Typically the payouts if Terminally Ill or TPI (Total & Permanently Injured) while the policy is relatively young are quite small. The Insurance then kicks in to increase the payout to around levels you would get if you retired at normal retirement age. If adequately insured elsewhere of course the Super Insurance payout may just be an added extra and not necessarily required. Some policies also have a loss of income insurance that pays some part of lost income while recovering from injuries.
The difficulty in these cases however is getting the Insurance to come to the party and for the claimant’s circumstances to meet the rules the Insurance sets. The Loss of Income also require some time off without payment before they will start to pay and this is often 3 months and then every payment after this period is in arrears (eg after the 3 month wait the 4th month’s payment comes at the end of the 4th month).
So people should check their policies, they should ensure they understand the rules, and if the Insurance is extra to their already existing cover they can choose to end or continue as they want. If the Super is mature enough then cancelling the Insurance is a good step as the extra money will then go into the Super account increasing it’s value faster than the Insurance would benefit them.
) and we don’t allow foreign money or we limit the amount of foreign money used for that purpose then that money ultimately has to come from Australians.
