Wednesday, 5 May 2010

Scott Andrews: Far North Queensland ignored in tax review

Managing Director of TaxSmart in Cairns and the FNQ regional chair of CPA Australia, Scott Andrews, discusses the release of the long-awaited Henry tax report with CairnsBlog.

There has been criticism for a more broader, comprehensive approach, with a clearer and more immediate plan of implementation to give business urgently needed certainty.

Scott Andrews founded Taxsmart in 2000. He holds a degree in Commerce and is a Certified Practising Accountant with a specialisation in taxation. Scott has particular interests in business advisory services, property investment and audit of not-for-profit associations. He is a supporter of the Cairns Youth Mentoring Scheme.

In December, Scott was elected as the chair for the LNP's Cairns State Electorate Council.

CPA Australia says the Government's response to the Henry report is lacking a plan to eliminate inefficiencies and duplication which currently plague the Commonwealth and State tax regime. They say that eliminating inefficiency would be the key to achieving maximum economic productivity, benefits that would flow on to everyone.

CairnsBlog talks with Scott Andrews.

Everyone in the tax industry has been looking forward to the release of the Henry Review that was looking at changes to our tax system.

The recommendations were really good, it's just unfortunate that the government have changed the recommendations, and not to the favour of the people of Australia.

The Henry review suggested 25% company tax, and the government has agreed to a tax rate of 29%, to be reduced to 28%. They're promoting a 12% superannuation contribution; however this doesn't kick in until another 10 years in 2020, which in my opinion is too far away. This is of course a cheaper option for the government. The reality is that they're bringing in the tax on mining profits a lot quicker than what the average Australian will see in their superannuation contributions jump to 12%. So they're getting paid much quicker than what the average Australian's superannuation will increase.

There's an idea floating around that perhaps Far North Queensland, in particular Cairns, they could increase a Zone rebate, or some type of rebate specific just to the North. At present there's a rebate that applies only North of Bloomfield, $1,173. Residents south of there, all the way down to Mackay, are only eligible for a rebate of $57 a year, that's around a $1 a week.

I would like to see the existing rebate to include Cairns and perhaps everything North of Townsville. This would include Babina and Ingham, all those areas affected by flooding last year. Rural areas like Mt Isa are already included in the rebate, but this would capture the greater Cairns region. Whether this is the existing Zone rebate or a completely new rebate introduced, that takes into account the struggling local economy.

The point is that this would effectively give a cash injection without it being an actual handout. It can also look good on the [government's] books, because it can be tied into someone's earnings as apposed to a simple cash handout.

One of the other areas in the Henry report that has not been picked up on, is the mining exploration rebate. The benefits of this rebate, which hasn't been talked about a lot, but for the Far North Queensland community, there's an opportunity there to encourage companies to kick start new mines on the basis that the losses won't just be accumulated, they'll actually get a refundable rebate for costs of exploration for new mining.

It's my belief that Cairns could be the number one fly in, fly out centre for Australia. My company Taxsmart does hundreds of tax returns for those that fly in and fly out, so this is a significant part of the Cairns economy. It's this industry that has most probably held together the Cairns property market. In a recession like this, normally you would see a collapsed housing market, but it's my feeling that we've got so many miners living here on good incomes, that is has kept this area float.

Under this Mining Exploration Rebate, if a company spends a $1 million and the company tax rate is 30%, they will effectively get a refund of $300,000, and they'll get a deduction for all their exploration costs.

The positives that have come out of this Henry Tax review, the Government have confirmed that they won't be changing the tax-free status of your personal home. This is great for home-owners. They also won't be changing the rules around negative gearing.

This is really important for Cairns, where around 50% of the population rent, therefore around half the properties are owned by investors. Traditionally investors use negative gearing as a way to expand their property portfolio, and if this is ever jeopardised, it could potentially cause serious damage to the local property market.

The government has also agreed to leave capital gains exemptions where they are, which is again another positive that has come out of the Henry review.

1 comment:

radarz said...

This bloke truly has a clue about the future of FNQ and Cairns. Beer, Traille and Bates all have not got a clue by comparison to Scott.

Why doesnt the LNP pick a live one and make Scott the next LNP Member for Cairns?