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Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
In this edition we report the tightening of Chinese money supply (see Could China’s tight money crash Australian mines?) and the potential impact on coal and iron ore exports. Is there a real risk to the Australian economy from Chinese contraction?
In a report first published in Business Spectator, Karen Maley argues that a rebalancing of the Chinese economy away from exports (and associated significant investment) and towards domestic consumption will also have significant risks for our mineral exports. Maley argues that Chinese exports will inevitably decline with the slowing world economy and further depreciation of the US dollar. She quotes Michael Pettis a professor of management in China,
… Weak foreign demand and anger on trade will prevent China’s trade surplus from driving growth, and excessive domestic debt will prevent investment from driving growth … Building bridges and apartment complexes is likely to use far more steel, cement, and copper then buying haircuts, clothing, and medical services. So even if Chinese growth rates remain elevated, rebalancing will nonetheless cause a huge shift in Chinese demand for various products and commodities. I can’t imagine that it won’t have an impact on commodity prices.
Household consumption comprises less than 35% of Chinese Gross Domestic Product (GDP) whereas it comprises 70% of GDP in the USA.
The argument is that if there is even a small re-weighting of Chinese GDP makeup towards household consumption (just a few percent) there will be significant impacts on investment and consequently, demand for mineral resource commodities.
There may be some near-term concerns about reduced demand for mineral commodities from China for the Australian mining industry. The long-term is a somewhat different matter.
The following table shows the projected growth of Chinese population, Chinese GDP and also in per capita terms (based on 2006 US$).
Chinese investment, production and services will increase from only US$4k per person in 2010 to US$55k by 2050. This places the Chinese economy at US$70 trillion in 2050 (almost twice the size of the US economy then). By comparison here are some of the US projections.
Undoubtedly, the Chinese economy will continue to be a powerhouse this century and offer huge opportunities for the export of Australian resources. It will be a powerhouse like the US economy was during the 20th century. Don’t forget, however, there was a slight interruption to US growth in the 20th century due to the worldwide depression in the 1930s!
Andrew and Tony Lovett
