Latest news with #Chalmers
Sky News AU
8 hours ago
- Automotive
- Sky News AU
Labor mulling family trusts and electric vehicle rebates in major tax reform shakeup for second term economic agenda
Family trusts and electric vehicle rebates are likely to be in the Labor's sights as it looks to raise revenue while delivering income tax cuts and boost the nation's budget. The Albanese government has swept into its second term with a large majority and with it, the promise of tax reform. Treasurer Jim Chalmers on Wednesday hammered in this pledge during an address to the National Press Club where he put forward Labor's case in the productivity-boosting agenda. Sources told the Australian Financial Review Labor is likely to propose higher taxes on family trusts as Treasury ramps up scrutiny of the tax-friendly investment vehicles. Many Australian families and businesses use the trusts to protect their assets and split income between beneficiaries to reap the benefits from the lower tax rates. The individuals who are the beneficiaries of a trust pay their personal income tax rate on the distributions. This means the tax paid on a trust can vary from zero per cent to 47 per cent. Labor at the 2019 election proposed a minimum 30 per cent tax rate on trusts as part of its failed swath of tax reforms, including changes to franking credits, negative gearing and capital gains tax discounts. The possibility the Albanese government is considering changes to family trusts comes as Mr Chalmers on Wednesday flagged a new road-user charge for electric vehicle drivers that would replace the fuel excise. The typical household with a car running on petrol pay more than $1200 in fuel tax while EV drivers are exempt from the levy as they don't use traditional fuel sources. 'We will also continue to work with states and territories on the future of road-user charging,'' Mr Chalmers said. 'All of this represents a big agenda on the supply side of our economy. None of these reforms are simple.' The AFR in March reported the estimated $55m cost of the EV rebate for the 2024-25 financial year had ballooned out to $564m per year in missed tax revenue. Mr Chalmers was also questioned on possible changes to GST ahead of Labor's upcoming productivity roundtable - where Australia's economic agenda will come under the microscope. 'I suspect the states will have a view about the GST. It's not a view I've been attracted to historically, but I'm going to try not to get in the process of shooting ideas between now and the round table,' Mr Chalmers said. AMP's chief economist Shane Oliver urged Labor to hike the GST and apply it across the board to minimise income tax. 'In an ideal world you would have less reliance on income tax and reduce the disincentive effects associated with it and have more reliance on GST,' Mr Oliver told Labor is also embarking on making changes to large superannuation accounts, which includes taxing unrealised capital gains, and has met fierce opposition from business leaders and economists. The changes come as Labor faces a decade of deficits and ballooning costs of the NDIS and defence. Labor also faces reduced tax revenue from lower tobacco excise and falling fossil fuel exports as Australia continues on its renewables shift.
Perth Now
13 hours ago
- Business
- Perth Now
Treasurer's huge call on tax changes
Treasurer Jim Chalmers has announced his ambition for economic and tax reform, and while he remains tight lipped about what's on the table, he has ruled out two key changes. Speaking to the National Press Club on Wednesday, the Treasurer announced the government will hold a productivity roundtable from August 19 to 21 for the purpose of seeking ideas for reform from business, unions, civil society and experts. The gathering will be capped at 25 people and held in Parliament House's Cabinet room. 'Obviously there are some things that governments, sensible, middle of the road, centrist governments like ours don't consider,' Mr Chalmers told The Conversation's Michelle Grattan. 'We don't consider inheritance taxes, we don't consider changing the arrangements for the family home, those sorts of things.' Mr Chalmers said he believes limiting the narrative to 'ruling things in or ruling things out' has a 'corrosive impact' on policy debate, but conceded to ruling out the historically controversial taxes. Mr Chalmers has historically opposed a rise in GST. NewsWire / Martin Ollman Credit: NewsWire Inheritance tax is a tax you pay on assets inherited when you are the beneficiary of a will. While inheritance taxes used to be common in most states, by 1981 all Australian states had abolished them. The GST was another key tax eyed for the roundtable. Mr Chalmers has historically opposed lifting the GST but is facing increasing pressure from the states to do just that. The GST has remained at 10 per cent for 23 years. 'You know that historically I've had a view about the GST,' Mr Chalmers told the Press Club. 'I think it's hard to adequately compensate people. I think often an increase in the GST is spent 3 or 4 times over by the time people are finished with all of the things that they want to do with it.' Mr Chalmers said he hadn't changed his view on GST and he won't walk away from it but stressed he's open to hearing ideas on the issue at the roundtable. 'I've, for a decade or more, had a view about the GST,' he told The Conversation. 'I repeated that view at the Press Club because I thought that was the honest thing to do, but what I'm going to genuinely try and do, whether it's in this policy area or in other policy areas, is to not limit what people might bring to the table.' Mr Chalmers has ruled out changes to tax on inheritance and the family home in a wide ranging interview. NewsWire / Martin Ollman Credit: NewsWire Two years ago, Mr Chalmers warned that raising the GST would likely not fix federal budget issues since even though the tax was collected by the federal government before it was distributed back to the states. 'From my point of view, there are distributional issues with the GST in particular. Every cent goes to the state and territory governments, so it wouldn't be an opportunity necessarily, at least not directly, to repair the Commonwealth budget,' he said. One thing that will remain in play though is the government's pledged superannuation changes, that would increase tax on investment returns, including interest, dividends or capital gains, on balances above $3 million. 'What we're looking for here is not an opportunity at the roundtable to cancel policies that we've got a mandate for; we're looking for the next round of ideas,' he said. 'I suspect people will come either to the roundtable itself or to the big discussion that surrounds it with very strong views, and not unanimous views about superannuation. 'But our priority is to pass the changes that we announced, really some time ago, that we've taken to an election now, and that's how we intend to proceed.' Mr Chalmers said the idea of extending the capital gains tax on superannuation balances to other areas had not been considered 'even for a second'.
Sky News AU
16 hours ago
- Business
- Sky News AU
Treasurer Jim Chalmers 'pouring cold water on investment' with Labor's proposed unrealised gains tax, Geoff Wilson warns
Treasurer Jim Chalmers is 'pouring cold water on investment' and 'penalising' Australians taking on financial risk through Labor's proposed changes to superannuation accounts above $3m, a leading fund manager has warned. Mr Chalmers on Wednesday vowed a boost to Australia's productivity and deliver major tax reform in a speech to the National Press Club. His promise drew criticism from Wilson Asset Management founder Geoff Wilson, who lambasted Labor's plans to alter how large superannuation funds are taxed - which includes targeting unrealised capital gains. "You can't say the economy lacks dynamism and innovation, then introduce a tax that penalises long-term investment and risk-taking,' Mr Wilson told 'Taxing unrealised gains in superannuation does the opposite of what's needed — it punishes prudence, discourages capital formation and undermines confidence in the rules of the game. 'The Treasurer admits we need more innovation — while taxing the very gains that fund it. 'You can't light a fire under the economy by pouring cold water on investment." A common criticism of the plan to tax unrealised gains on assets – including properties and shares – above the threshold in super funds is the impact it will have on small businesses. Many small business owners put assets in their self-managed super funds (SMSF), but under Labor's plan those above the threshold would be forced to pay tax on paper gains. Similarly, some investors use their SMSF as a low tax investment vehicle for startup businesses. Wilson Asset Management sent a note to shareholders warning if the tax were applied to a company like US$40b design platform Canva, which achieved its massive valuation after 18 funding rounds, the company would have failed. 'Under taxing of unrealised gains every funding round would require tax to be paid on a hypothetical valuation,' the report reads. 'Most startups operate with negative cashflow and when capital is raised it is to fund growth, not to provide liquidity to investors. 'Therefore, there is no liquidity to pay tax on an unrealised gain.' Labor's changes to super accounts $3m will also not be indexed and capture more and more Australians over time. AMP's chief economist Shane Oliver said the lack of indexing across the tax system, including under Labor's proposed super tax changes, was something the government needed to change. 'We should be looking at removing areas where, as far as possible, we're not indexing,' Mr Oliver told 'The ideal should be indexing things, not leaving more parts of the tax system unindexed and at the behest of what future governments might do.' The government insists its super change affects only the top 0.5 per cent of accounts, however, modelling from AMP deputy chief economist Diana Mousina suggests otherwise. 'An average 22-year-old today, who's earning average full-time earnings, will hit the cap when they get to about 62 years old on my analysis,' Ms Mousina told Sky News. 'So that's before they actually reach retirement.' She warned the government's failure to index the $3 million cap means growing numbers of Australians will eventually be drawn into the tax net. 'My estimates were actually, I think, understating the amount of people that will hit the cap because I used quite low return assumptions,' Ms Mousina said. She also flagged broader economic distortions that may result from the policy as people try to find a way around the taxes. 'If people know that their super is going to be hit, then inheritances will go elsewhere,' she said. 'More people will probably go to purchase a home, which has implications for home prices in the future. 'So people will find a way around this system to try and reduce their taxable income as much as possible.'
The Age
16 hours ago
- Business
- The Age
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
Sydney Morning Herald
16 hours ago
- Business
- Sydney Morning Herald
Oil prices have jumped. Do you need to run to the petrol station?
Chalmers has spent the week spruiking his latest plans to boost our living standards – but oil prices have clearly trickled to the front of his mind. This might have consequences for Australians at the petrol bowser, he told ABC Radio on Thursday, but there's also a lot of concern about what it might mean for inflation, and it's a 'dangerous time' for the global economy. But how much of a worry should it really be? Well, first, it's important to remember just how much we rely on oil. In 2022-23, oil was our most important type of fuel, making up nearly 40 per cent of Australia's energy use. That's not even accounting for the other ways we use it: to produce plastics, chemicals, lubricants and the sticky stuff we use to pave roads. Petrol is the single biggest weekly expense for most households, and it affects transport and energy costs for nearly all our businesses. Basically, changes in the price of oil ripple through nearly every crevice of the country. Loading A shortage of oil makes business harder – and in some cases, impossible – to do, strangling the supply of many goods. If Iran decides to shut the Strait of Hormuz – a key shipping route that carries tens of millions of barrels of oil every day – the delays and additional costs of taking longer routes will drive up costs further. Those costs will probably be passed on through higher prices by businesses – and not just those directly dealing the stuff through petrol pumps. The price of oil itself is determined, like most things, by the forces of demand and supply. But it's also affected by expectations of supply and demand. Most of the time, the physical product doesn't even change hands. Instead, the market is largely made up of buyers and sellers who enter into 'futures' contracts, which are legal agreements to buy or sell something (in this case, oil) at a particular price and time in the future. It's a bet of sorts: buyers are hoping the price they lock themselves into will be lower than it will be in the future, and sellers are hoping it will be higher. When Brent Crude Oil and the US West Texas Intermediate (WTI) – two types of oil futures – surged 13 per cent last week, that reflected worries, not just about a short-term dip in supply, but concerns that the conflict could worsen. But even so, the oil market hasn't moved as crazily as we might have expected. As Dr Adi Imsirovic points out, Iran itself only accounts for about 2 per cent of the world's oil supply, shipping most of it to China, and while a sudden drop in Iranian oil exports would usually trigger stronger panic, there's a few factors keeping it in check – for now. Loading First, Iran is part of a big group of oil exporters known as the Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world's crude oil. OPEC, because of the huge share of oil it produces, tends to co-ordinate the amount of oil its members supply to the world to keep prices from falling through the floor (and profits from slipping too much). It just so happens that OPEC is in the middle of reversing production cuts it imposed early in the COVID-19 pandemic, leaving it with an unusually large spare capacity of roughly 4 million barrels a day – mostly held by Saudi Arabia and the United Arab Emirates. And although there are worries about the Strait of Hormuz being closed, Imsirovic says there are alternative supply routes. That's not to say we won't feel anything here in Australia. The increased risk of wider conflict in the Middle East means oil prices – and especially oil futures – have jumped. And shipping costs have sailed higher, including the cost of insurance for ships travelling through the Strait of Hormuz which has climbed 60 per cent since the start of the war. Loading We don't import our oil directly from Iran, buying most of it from countries such as South Korea, the United Arab Emirates and Singapore. But the cost of petrol in Australia will probably rise over the next few weeks because Australian fuel prices are pegged to international benchmarks. And because Australia doesn't exist in a vacuum, the slowdown in economies worldwide – from the uncertainty, higher costs and delays – will undoubtedly have a knock-on effect for our economy. Slower growth and higher inflation will challenge the Reserve Bank, which next month must decide which way to take the country's interest rates. If the US central bank's decision this week is anything to go by, the Reserve Bank will probably keep rates on hold to see how things play out. The panic in oil markets has seemed to wear off a little since Israel's attack on Iran, but it will only last so long as the conflict doesn't escalate. There's no crisis in oil markets yet, but your bill at the bowser might come in a little higher over the next few weeks. As long as the global economy is stuck in limbo, don't be surprised if our economy isn't running like a well-oiled machine.
