Friday, August 23, 2013

Election 2013 : ALP - Cutting the Red Tape?

For those of you that have been reading my blog over the last couple of weeks, it has been concetrating mainly on our current sitting member for Indi, Sophie Mirabella, and the Liberal Party. But a few things have happened on the other side, that I think deserve a closer look.

This morning the Labor Party made some announcements, aimed at "cutting red tape" for small and medium businesses. 

Cutting Red Tape: Paid Parental Leave Payments
The first was to transfer the burden of dealing with Paid Parental Leave payments away from small businesses with less than 20 employees to Centrelink. Now, I think this is not a bad move. It will save some time for employers dealing with parental leave. Not significant time, but some. Which is why I think they may have over-egged the announcement with this statement:
The Rudd Labor Government has listened to business, and understands that in the current economic environment small businesses need to be able to devote their scarce time on adapting to thrive as our economy transitions away from the China mining boom.
Adapting to thrive. As our economy transitions away from the China mining boom. Do they actually read what they are putting out there?

It's also weird that whilst this will "slash red tape", the bottom of the page states that:
The recent evaluation of the scheme found that most employers have found their role straightforward and easy.
So is it hard to deal with, or easy to deal with, at the moment?

Cutting Red Tape: Superannuation Clearing House
This is one of those initiatives where you wonder why it hadn't been brought in earlier.

The Howard Government introduced super choice, allowing employees choice of where their superannuation accounts are held. Since that time,  the employers' compliance costs of dealing with registrations and payments to a multitude of funds has been burdensome. As someone dealing with them on behalf of clients, I know that this area can be a pain in the arse.

The Superannuation Clearing House is designed to allow employers the ability to make a payment to one place, and to have them deal with the distribution of payments to the different funds. It has already been set up for use by businesses with fewer than 20 employees. See here for further information. The Labor Party are now proposing to extend this to businesses with up to 99 employees.

This is a good move.

Cutting Red Tape: Reducing the Burden of GST
The third initiative announed was for an extension of the current regime for annual GST statements for business with up to $20 million p.a. in revenue. Up until now, some (not all) businesses with turnover under $2 million p.a. had the option of paying GST in quarterly instalments (based on last year's lodged returns) and then completing an Annual GST return with either a balance of GST payable or refundable (much like an income tax return).

$20 million p.a. in turnover is just under $385,000 per week. We are not talking small businesses here. You may be surprised to know that there are a few dozen companies listed on the Australian Stock Exchange with turnover under $20 million p.a.

My fundamental question with companies of this size is this: Why don't you already have accounting systems in place to calculate your GST for you?

I feel that the policy announcement was made in an alternate universe, where computers don't exist and businesses were using the abacus, parchment and quill to assist them with their GST calculations.

The modern abacus
I cannot think of any organisation of that sort of size that is unable to properly track their income and expenses. Think computer software. Think accountants and bookeepers, necessary for businesses of that size. There are already calculations that need to be made for PAYG withholding, PAYG instalments, FBT, and a whole raft of other taxes and rebates that included in a quarterly BAS.

And forgetting about taxes for one second, why aren't businesses of this size keeping track of their revenue and expenses, assets and liabilities, for management purposes? The short answer is, all businesses of this size have good systems in place to deal with accounting and taxes.

I am not sure who this policy announcement is designed for. Is it for the public, without much knowledge of all things bookkeeping, think - It sounds like a good move. Is it for the government, who can tick the "slash red tape" section of their "An Idiot's Guide to Election Policies" and move on to the next area. It's not for businesses, that's for sure.

I think the real reason for this policy is actually indicated at the bottom of the policy summary (my emphasis):
This aligns GST more closely with the Pay As You Go income tax system and means businesses will no longer have to make complex GST calculations throughout the year.
This is the Labor party's concession to try and make it look that the GST is being made easier for businesses. Which is a bit of bullshit, because all it is doing is delaying these "complex GST calculations" until the end of the year. So where is the time being saved? And what complex calculations are these? 95% of GST transactions are pretty simple. And if you are having issues in that 5% range where it's not pretty simple, the policy announcement today will do nothing to ease that.

I think the type of "cutting the red tape" that businesses are looking for are to simplify the manner in which the GST liability needs to be assessed. Not the timing of the calculations.

My score for these three policy initiatives: 1 1/3 out of 3 (plus GST)

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