1. Long-Awaited Australian Payroll and Tax Application Now Freely Available
Rodney Gedda, The Australian, February 2007
Lack of a business-grade accounting system tailored for Australia’s onerous taxation system has long kept even the most die-hard Linux fans tied to Windows, but all that is set to change with the open source SYMBOL Accounting.
The brainchild of Perth accountant Edward Metcalfe, Surf Your Money Books Online, or SYMBOL, is a Web-based accounting and payroll system developed on the Linux, Apache, PostgreSQL, and Perl (LAPP) platform.
Metcalfe first looked at another open source accounting application called SQL-Ledger but deemed it unsatisfactory for local businesses.
“As good as it is, SQL-Ledger is not written with the Australian taxation system in mind,” Metcalfe told Computerworld, adding the last thing any accountant wants to do is to trawl through individual transactions for compliance reporting to the Australian Taxation Office.
“When I was working with Bega Garnbirringu Health Services [Western Australia] I had developed another accounting system using Filemaker Pro 4. It was then that I realized the huge benefit of customizing an accounting system to my own needs.”
Three years later SYMBOL, developed from scratch, is now freely available under the FreeBSD licence.
While not a developer by trade, Metcalfe introduced himself to Perl while looking for a way to do comprehensive loan calculations, and PostgreSQL was chosen for its reliability.
“Most apps can tolerate some data loss; for example you probably don’t need last month’s entries in your calendar; however, if you lose last month’s entries in your accounting system you have to go back and enter them all in again,” he said.
In comparing the functionality of SYMBOL with the popular Windows-only applications like MYOB and Quicken, Metcalfe says all the usual reports such as trial balance, profit and loss, balance sheet, aged debtors, and aged creditors are there, along with various payroll reports.
Metcalfe is confident SYMBOL is ready for production use and claims at least five small businesses are already using it to do their books. And with PostgreSQL behind it, Metcalfe said there is no reason why SYMBOL won’t scale to organizations with thousands of employees.
In addition to the standard features, SYMBOL allows each user to define the ageing of debtors and creditors independently and its multi-dimensional querying has been designed from the ground up.
“For example in MYOB you have the chart of account, job and categories, which represent three dimensions. Within SYMBOL you can have as many dimensions as you like. This greatly increases SYMBOL’s reporting capabilities,” he said.
Other features include vlookup friendly reports across any one selected dimension to produce special purpose financial reporting, account header totals based on a custom query, and the ability to query whole transactions.
“Suppose you want a summary of all transactions that went through bank account number one,” Metcalfe said. “You query for bank account number one and then you apply the Whole Transactions function and SYMBOL will find the other side of those transactions. You can then run a profit and loss statement based on all those transactions.”
“This may be trivial to many but if you’re an organization relying on funding bodies and some want you to report using ex-GST figures and others want you to report with inc-GST figures then SYMBOL can take this in its stride,” Metcalfe said.
When asked if SYMBOL can be modified to suit international markets, Metcalfe said it is best to keep it for Australia only.
“SAP is internationalized, but to achieve that they chose not to have a payroll system in it,” he said. “Also BAS [Business Activity Statement] information is captured by SYMBOL and in a country with no BAS you have all this redundancy in the reports, not to mention the fact that SYMBOL would not be able to handle the overseas tax regime.”
Metcalfe has not yet explored to possibility of integrating SYMBOL into another open source accounting or CRM system but said it does have the ability to provide a hyperlink from its transactions, which could feed into other Web-enabled databases.
Summary
This article discusses of a business-grade accounting system in Australian taxation system. Therefore, it is suggested to look for open source accounting applications such as, for example, SYMBOL. SYMBOL is now freely available under the FreeBSD license. The article provides comparison between SYMBOL and Windows functionality and the author notes that SYMBOL offers more benefits in accounting trial balance, profit and loss, balance sheet, aged debtors, and aged creditors are there, along with various payroll reports. SYMBOL allows each user to define the ageing of debtors and creditors independently. SYMBOL can also produce reports in values either excluding or including GST. Nevertheless, it is noted that the main disadvantage is that SYMBOL would not be able to handle the overseas tax regime.
Relationship to the Course
Information provided in this article refers to material studied in the course. Firstly, the article provides recommendations how to improve accounting methods and techniques. Secondly, SYMBOL is said to be alternative strategy to respond to accounting needs and demands to control all transactions. Finally, this article discusses SYMBOL application as economic phenomenon aimed at improving overall accounting systems at banks and related financial establishments.
2. Australia Abolishes Inefficient State Taxes
Mary Swire, Alice Spring News, April 2007
Australian Treasurer Peter Costello has announced that a number of “inefficient” State tax have been abolished by the government as a result of its ongoing tax reforms.
According to Costello, the reforms have led to the abolition of accommodation tax, financial institutions duty, marketable securities duty and debits tax. In addition, he said that agreement has been reached on a timetable for the abolition of the following: mortgage duty, rental duty, lease duty, stamp duty on unquoted marketable securities, cheque duty and stamp duty on conveyances of non-real non-residential property.
Despite this progress, Costello said that stamp duty on non-residential conveyances of real property is the last State tax listed for abolition in the Intergovernmental Agreement for which the States have yet to agree to an abolition schedule.
“I again called on the States and Territories to develop an abolition schedule for this remaining tax,” he stated. “I indicated that the Australian government would be willing to be flexible as to the timing and phasing of the abolition timetables. In particular, I said that the Australian government would be willing to consider an abolition schedule that did not commence until 2010-11, when the bulk of the existing Intergovernmental Agreement taxes will have been abolished.”
“I also indicated, in response to a request from one of the States, that the Australian Government would be willing to consider alternative tax reform reductions of equivalent value,” the Treasurer added. “The Australian government will continue to pursue this matter until it is resolved satisfactorily. The onus is now on individual States to provide an indication of how each intends to implement its commitment.”
Last month, Minister for Revenue and Assistant Treasurer, Peter Dutton, introduced new tax legislation aimed at improving the country’s taxation system by reducing compliance costs, improving certainty for taxpayers, supporting philanthropy and ensuring the integrity of the tax base.
The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 affects taxation in a number of areas, including mining and prospecting rights, research and development, donations of listed shares to deductible gift recipients, deductions for contributions to fund-raising events, and measures affecting venture capital activities.
Summary
The article provides discussion of insufficient state taxes in Australia and the author agues that the state government has to abolish them in order to improve and to support ongoing tax reforms. The article provides list of taxes to be abolished: debits tax, financial institutions duty, accommodation tax, and marketable securities duty. Nevertheless, such taxes as mortgage duty, rental duty, lease duty, stamp duty, cheque duty and stamp duty are also under discussion. The author suggests that alternative tax reform should be introduced to reduce equivalent value. The Australian government is able to resolve the matter satisfactory. The article also discusses new tax legislation stating that it aims at improving taxation and accounting system.
Relationship to the Course
The article highlights a number of issues covered in the course. Firstly, the article deals with main types of taxes (debits tax, financial institutions duty, accommodation tax, marketable securities duty, mortgage duty, rental duty, lease duty, stamp duty, cheque duty and stamp duty). Secondly, this article discusses economic phenomena such as abolishing of insufficient taxes and introducing new legislation to improve accounting and taxation in the country.
3. Australia Makes Improvements To Tax System
Mary Swire, Alice Spring News, April 2007
Australia’s Minister for Revenue and Assistant Treasurer, Peter Dutton, last week introduced new tax legislation which aims to improve the country’s taxation system by reducing compliance costs, improving certainty for taxpayers, supporting philanthropy and ensuring the integrity of the tax base.
The Tax Laws Amendment (2007 Measures No. 2) Bill 2007 affects taxation in a number of areas, including mining and prospecting rights, research and development, donations of listed shares to deductible gift recipients, deductions for contributions to fund-raising events, and measures affecting venture capital activities.
The changes are as follows:
Effective life provisions
This legislation will more closely align the decline in value deductions for mining, quarrying and prospecting rights with other depreciating assets. As a result of this measure, holders of these rights will be able to write-off their right over the remaining life of the mine, petroleum field or quarry. Also, they will not be required to make an annual estimate of their asset’s economic life. This will ensure that the provisions will operate as the government originally intended.
Research and development
This measure ensures that the original policy intent of the refundable research and development (R;D) tax offset and the 175% premium incremental concession is reflected in the law.
Amendments to the R;D tax offset will extend the timeframe that companies have to choose the offset and allow companies to object to the amount of offset that is allowed. An exception to the A$20,000 minimum expenditure threshold for contracted expenditure to a registered research agency will apply to the R;D tax offset and all companies in a group will be covered by the R;D tax offset provisions.
Amendments to the 175% premium incremental concession will ensure that a premium deduction amount can be allocated to all companies in a group that have contributed to that amount. Group eligibility will now be based upon expenditure incurred during a company’s group membership period and eligibility can now be established using Commercial Ready program payments.
Donations of listed shares to deductible gift recipients
To promote philanthropic giving, the government announced in the 2006-07 Budget that it will allow a tax deduction for the donation of certain publicly listed shares to deductible gift recipients, extending the current gift provisions.
The amendments allow a tax deduction for donations of shares, in listed public companies, which were acquired at least 12 months before the donation, and have a market value of $5,000 or less. Donors can claim a deduction for the market value of the shares on the day they make the gift.
Deductible gift recipient extensions
The legislation will update the list of deductible gift recipients (DGR) to include two new entities:
American Australian Association Limited from 14 November 2006; and
· Bunbury Diocese Cathedral Rebuilding Fund from 19 December 2006 until 18 December 2008.
· In addition, the legislation will extend the DGR listing of The Finding Sydney Foundation to 27 August 2007.
Deductions for contributions relating to fund-rising events
The legislation also extends the thresholds for deductions for contributions relating to fund-raising events. A tax deduction is available where the value of the taxpayer’s contribution is more than A$150 (previously A$250), and the minor benefit received by the taxpayer is no more than the lesser of A$150 (previously A$100), and 20% (previously 10%) of the value of the contribution.
Relaxing the minor benefits thresholds improves the ability of deductible gift recipients (DGRs) to attract donors for specific one-off fundraising events and provides greater accessibility for more DGRs to benefit from the measure.
Technical correction
This bill will make technical amendments and corrections to the way the income tax law applies to exempt entities. It will ensure that Public Ancillary Funds or Prescribed Private Funds do not lose their income tax exempt status if they distribute money to Commonwealth, State or Territory bodies which are exempt from tax and also deductible gift recipients. Examples of such bodies are the National Gallery of Victoria, the Sydney Opera House and the National Portrait Gallery.
Venture capital
This legislation introduces a package of measures aimed at increasing activity in the Australian venture capital sector. These measures reinforce the government’s ongoing support for new business ventures.
The government has introduced amendments to the taxation laws to relax the eligibility requirements for foreign residents investing in venture capital limited partnerships and Australian venture capital funds of funds. The government has also introduced a new set of taxation concessions for Australian residents and foreign residents investing in early stage venture capital activities through a new investment vehicle called an early stage venture capital limited partnership.
These amendments implement the changes to the venture capital regime that were announced in the 2006-07 Budget. The package addresses key findings of a review into Australia’s venture capital industry.
Summary
The article deals with improvements in accounting sphere. Actually, the author discusses improvements in mining and prospecting rights, research and development, donations of listed shares, and measures affecting venture capital activities. The article highlights effective life provisions stating that legislation has to more closely align the decline in the mentioned spheres to ensure better results. The author speaks about technical corrections and venture capital as well. For example, she notes that amendments should be introduced to taxation laws in order to relax the eligibility requirements for foreign residents investing in venture capital limited partnerships and Australian venture capital funds of funds.
Relationship to the Course
This article highlights several issues covered by studying course. Firstly, the article discusses regulation and improvement of taxation and accounting systems. Secondly, political economy of taxation is applied because new improvements and strategies are needed to meet demands. Thirdly, the article highlights several economic phenomena such as, for example, prospecting rights, research and development, donations of listed shares, etc.
4. Australia Reducing Regulatory Burden On Business
Mary Swire, Alice Spring News, 17 April 2007
The Australian government has made significant progress over the past nine months in reducing regulatory burdens imposed on business in response to the Taskforce on Reducing Regulatory Burdens on Business (the Banks Taskforce), according to Treasurer Peter Costello.
The Banks Taskforce, chaired by Gary Banks (Chairman of the Productivity Commission), was established on 12 October 2005, to identify practical options for alleviating the compliance burden on business from Commonwealth Government regulation. The Banks Taskforce presented its final report to Government on 31 January 2006.
The Government accepted, in full or in part, 158 of the Banks Taskforce’s 178 recommendations across a broad range of regulation, including: health-related regulation; labour market regulation; consumer-related regulation; environmental and building regulation; financial and corporate regulation; tax regulation; superannuation regulation; and trade-related regulation.
The recommendations have led to broad-ranging superannuation reforms announced in the 2006-07 Budget which have now been enacted. These are the most wide-ranging reforms of the superannuation laws in decades.
Also as a result of the review, the Government is developing legislation to align the eligibility criteria for small business tax concessions for GST, the simplified tax system, capital gains tax, fringe benefits tax and pay-as-you-go. The Board of Taxation also will soon report on the results of its scoping study on small business tax compliance costs. Further, the Board of Taxation has commenced a study into the scope for applying consistent self-assessment principles across all federally administered taxes.
According to Costello, Parliamentary Secretary, Chris Pearce has made significant progress in reducing the burdens associated with corporate and financial services regulation. Pearce has undertaken extensive consultation through the Corporate and Financial Services Regulation Review Consultation Paper, and implementation of the proposals in that paper has begun — draft regulations to reduce duplication and simplify Product Disclosure Statements, Financial Services Guides and Statements of Advice were exposed for comment during March and April 2007, and drafts of the Simpler Regulatory System Bill and the Simplifying Regulation and Review Bill will be released soon.
Pearce is also consulting on reforms to the insider trading provisions of the Corporations Act 2001 through the Insider Trading Position and Consultation Paper, and will bring forward separate reforms to auditor independence following completion of consultations on Australian Auditor Independence — A Comparative Review.
The Banks Taskforce also made recommendations to strengthen the Government’s regulation-making and review framework. Regulation-making processes have been enhanced within Government to ensure that the compliance and competition impacts of regulatory measures are considered by government at an early stage in their development, and to ensure that the cumulative effects of regulations are monitored effectively over time.
“The Government’s commitment to tackle red tape is ongoing. Accordingly, I have commissioned the Productivity Commission to commence an annual review process to identify regulation that is unnecessarily burdensome, complex or redundant, or duplicates regulation in other jurisdictions,” stated Costello.
“This rolling programme of reviews will examine all sectors of the economy over a 5-year cycle, commencing with the primary sector this year. The Commission’s first review will be completed by the end of October 2007 and will form the basis of a rolling red tape reduction agenda, which will be considered by the Government each year,” he added.
The Government is also working actively through the Council of Australian Governments (COAG) to ensure that regulatory burdens, especially where jurisdictional overlaps add to compliance burdens, are addressed at all levels of government.
“To assist in monitoring regulatory performance at all levels of government, I announced on 11 August 2006 that the Productivity Commission would undertake a study to examine the feasibility of developing a common framework for benchmarking, measuring and reporting on regulatory burdens across jurisdictions. The first stage of the Commission’s study, released on 6 March 2007, found that benchmarking of Australian business regulation in areas of regulation that have similar objectives is feasible and could produce significant benefits,” Costello explained.
Summary
The article provides detailed overview of progress in reducing regulatory burdens imposed on business, whereas special attention is paid to establishing, development and missions of the Banks Taskforce. The author provides recommendations how to reduce regulatory burden and to improve accounting spheres, as well as health-related regulation, labor market regulation, environmental and building regulation. The article also sheds light on broad-ranging superannuation reforms offered by budget. Accounting department recommends simplifying tax system and capital gains tax. Corporate and financial service regulation are provided with less regulatory burdens, though it is recommended to the Government’s regulation-making and review framework.
Relationship to the Course
This article provides accounting-related information covered in the course. Firstly, the article highlights economic phenomenon such as improving and simplifying regulatory and accounting systems to increase commitment. Secondly, the article provides recommendations how to improve and strengthen regulation-making process and to reduce governmental red taping. Finally, this article examines the feasibility of developing a common framework for benchmarking, measuring and reporting on regulatory burdens across jurisdictions.
5. Australian Tax System Failing Business, Lobby Group Claims.
Mary Swire, Alice Spring News, April 2007
A new report on business taxation in Australia has argued that the country’s business sector is being increasingly weighed down by a tax system which is inefficient, overly complex and levies too many taxes for little return.
The report, ‘Tax Nation: Business Taxes and the Federal–State Divide,’ was compiled by the Business Council of Australia (BCA) and the Corporate Tax Association (CTA), and highlights numerous problems with the current system, arising from the division between federal and state tax systems. It calls for a major rethink on business tax across governments.
The report – which claims to be the first comprehensive examination of its kind of Australia’s entire business tax system – is based on a survey of the number, type and total amount of taxes paid by nearly 100 of Australia’s largest companies.
BCA President Michael Chaney announced that the BCA and CTA acknowledged the importance of tax changes in recent years, including the GST and the Ralph reforms that were designed to remove a number of serious impediments to tax competitiveness.
“However, we are concerned that agreements, particularly by the states, to streamline the business tax system following the GST’s introduction have changed, slowed or not been acted on. Instead, we continue to see the overall number of taxes growing, increasing the burden on business,” Mr Chaney stated.
“The overall issue of federal–state business tax arrangements needs to be reviewed again, which is why the BCA and CTA are now calling for a Productivity Commission review into the entire business tax system and to make recommendations for possible reforms,” he added.
The report found that:
· Governments impose 56 different taxes on business including 21 federal taxes, 33 state and territory taxes and 2 local government taxes.
· This compares to the United Kingdom, where a similar study found that in an economy three times the size of Australia’s, business paid only 22 different types of taxes – less than half the number of taxes facing Australian businesses.
· The 92 businesses surveyed as part of the report, which was carried out for the BCA and CTA by PricewaterhouseCoopers (PwC), paid Australian governments a total of A$27.5 billion in tax in 2006. This is the equivalent of all federal and state government spending on Australia’s schools system.
· For every A$1 paid by businesses in income tax they paid a further 50 cents in a range of other business taxes.
· A$18.1 billion of the A$27.5 billion in taxes directly borne by the 92 companies surveyed was paid to Canberra as part of corporate income tax – a total large enough to fund Australia’s current defence budget.
· The remaining A$9.4 billion was paid through 50 other separate business taxes. This includes 35 state and local taxes which raised just A$4.7 billion (or 17%) of all business tax revenue.
· In addition to the taxes they paid, the survey found the 92 businesses collected a further A$37 billion for governments from other taxpayers, through excises, personal income tax (PAYG) and the GST.
· One-third of respondents spent more than A$2 million per year on tax compliance, with some spending as much as A$10 million.
The survey highlights the reliance on fewer than 100 companies being able to continue to contribute a significant share of tax revenue to Australian governments.
“Recent moves by the states to harmonise their regimes represents a significant step in the right direction. However, much more needs to be done to eliminate unnecessary inconsistencies between tax regimes,” Corporate Tax Association Executive Director Frank Drenth observed.
The BCA, which has been leading calls for a major shake-up of federal–state relations, argued that Australia’s business tax system was a clear example of how confusing and conflicting roles between tiers of government was acting as a significant drag on business and the economy. “Tax reform can never be a one-off – the global business environment is moving too fast to allow us to play catch-up or worse, stand still. The next wave of genuine tax reform will occur only as a result of reforming all levels of tax – federal and state,” Chaney said. “Tax needs to be an integral part of any move to reform federal–state relations more broadly.” “Our survey confirms there are too many taxes being levied for comparatively little return, but at the same time, the system involves considerable paperwork and compliance costs for business, large and small.” He concluded: “The question we now ask is whether this is sustainable when many of the overseas companies that Australian businesses are now competing with operate under much more streamlined tax systems.”
Summary
The article provides evaluation of accounting and taxation system of Australia. It is stated that business sector in the country is, indeed, weighted down because of inefficient tax system. The author claims that the taxes are to complex and the government levies too many taxes for little return. Further, the article highlights numerous problems with the current system stating that those problems are likely to arise from the division between federal and state tax systems. Therefore, the author thinks it is necessary to re-think business tax across governments. Also this article sheds light on importance of tax changes in recent years and provides overview of major tax reform taken place recently. Finally, the article draws relevant conclusions admitting that overall issue of federal–state business tax arrangements needs to be reviewed.
Relationship to the Course
The article highlights a number of issues covered in the course. Firstly, the article deals with evaluation of taxation and accounting systems in Australia. Secondly, the article covers economic phenomena such as, for example, inefficient taxation systems accounting standards. Thirdly, the article deals with major terms involved in the course: accounting, taxation, government regulation, etc.
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