Consumer Sentiment Hits 3 Year Low: WBC

Australian consumers are the gloomiest they have been in three years.

The Westpac-Melbourne Institute measure of sentiment fell by 5.7 per cent in December.

The index reading of 91.1 points was the lowest score since August 2011.

Westpac’s chief economist, Bill Evans, said it was a very disturbing result.

"The index is now at its lowest level since August 2011 when it briefly fell below 90," Mr Evans said. "Prior to that you have to go all the way back May 2009 to see a period when the Index printed consistently below today’s level."

"Respondents may have been particularly unnerved by media references to an ‘income recession’" Mr Evans said, as national incomes declined and overall economic activity contracting in the quarter in every state apart from NSW.

The Australian economy grew at a much slower-than-expected pace in the third quarter as the slump in capital spending dragged on growth, according to official data.

The weak reading in the September quarter national accounts also dragged down the index, said Mr Evans, which showed the economy had "been limping along" at a 1.6 per cent annualised growth pace for the last six months.

“Respondents are clearly concerned about the outlook for the economy and job security. In addition there is ongoing disillusionment about the May Budget, six months after it was announced."

The survey also recorded the most negative responses on news recall in decades, with respondents assessing news items to be extremely unfavourable on topics such as economic conditions, budget and taxation and employment.

Mr Evans said they received the most negative responses on news recall since March 2001 on economic conditions, September 1986 on budget and taxation, and December 1975 -- the beginning of the survey -- for employment.

“These readings are almost certainly an overreaction but do highlight significant risks to spending, particularly over the course of the next few months," Mr Evans said.

This news story is reprinted from www.businessspectator.com.au

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GDP: Australia Enters Income Recession, Dollar Dives As Economy Stalls

The Australian dollar plummeted to fresh 4½-year lows on Wednesday as the country entered a technical income recession and gross domestic product expanded just 0.3 per cent in the September quarter.

At midday, the Aussie was trading at US84.07¢, having earlier dropped about half a US cent to US83.92¢. The sharp decline reflected market surprise at the weakness of Wednesday's national accounts. 

The Australian Bureau of Statistics said the value of goods and services produced in the quarter expanded 0.3 per cent in seasonally-adjusted terms, translating to year-on-year growth of 2.7 per cent.

This compares with an average 2.9 per cent over the past decade and a 15-year average of 3.1 per cent. Wednesday's data was well below economists' forecasts of about 0.7 per cent for the month and 3.1 per cent for the year.

Growth was led by the contribution from export volumes but was held back by weak business inventories and public and private sector investment.

The figures follow GDP growth of 0.5 per cent in the previous quarter, which translated to growth of 3.1 per cent year on year.

Real net national disposable income, which measures what Australian governments, businesses and households receive in exchange for goods and services, contracted for the second quarter in succession, which is the normal definition of a recession.

It shrank 0.3 per cent, after falling 0.2 per cent in the June quarter. The contraction largely reflects sliding commodity prices, which has led to a sharp fall in the country's terms of trade. 

The ABS said the terms of trade fell 3.5 per cent in the quarter, for a year-on-year decline of 8.9 per cent.

What Australia earns in exports buys a decreasing amount of imports. This weakening exchange also shows up in falling government tax receipts, weaker corporate profits and declining or stagnant real wages.

ANZ chief economist Felicity Emmett described the slowing growth as a "disappointing result". She said that, when measured in income terms, nominal GDP contracted 0.1 per cent in the quarter.

"Soft income growth will weigh on profits, wages and public revenues, and flow through to softer consumer spending, business investment and public demand," Ms Emmett said.

She said the data revealed that non-resources industries had been slow to pick up the slack left by the end of the mining infrastructure boom.

"Moreover, the drag from the wind-back in mining investment still has a long way to run and is likely to be much sharper over coming quarters as large-scale LNG projects approach completion."

This news story is reprinted from www.smh.com.au

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ExyFlix Fights Back Against The Australia Tax

Australians are all too used to paying a premium for movies downloaded with iTunes or Google, and one local retailer has had enough.

Online entertainment provider EzyFlix.tv, which sells new release movies individually online, has launched a loss leading Christmas offer, selling movies like Guardians of the Galaxy and Transformers Age of Extinction for $16.99.

This represents a saving of up to 33 per cent compared with iTunes and Google Play.

Craig White, CEO of Access Digital Entertainment, the company behind EzyFlix.tv, told Business Spectator the pricing model of online titles in Australia was non-sensical.

"It's just not right that somehow Australian consumers are being asked to pay more than consumers in the US. I think all of the usual reasons why one markets pricing would be different to another - GST, company tax, wages, rent - none of that stuff holds true in regards to the supply from studios of digital content and therefore retail price," he told Business Spectator.

"It is a bit of a stunt? Yes, but there'll be more stunts needed in order to fix the pricing structure in Australia, it's just not right."

Mr White said that though he'll be losing money on the promotion, EzyFlix.tv hopes to demonstrate to studios that consumers will choose to pay for the content they love if they can access it conveniently and are not ask to pay what he describes as an unfair market premium. 

Ezyflix.tv allows consumers to stream or download content anywhere on up to five devices linked to their account, including iOS and Android devices as well as big screens via the Samsung SmartTV application or Google Chromecast.

"I was lucky enough to go the premiere of The Water Diviner the other day," Mr White said. "And it's starring Russell Crowe, it's directed by Russell Crowe, it was made in Australia, it's full of Australians, and it's a great Australian story. Why should we pay more to watch it then people overseas?

"We've got to take some sort of responsibility to say let's address this issue," Mr White said. 

"And it's not a retail issue, it's a wholesale pricing issue. I hope to really raise awareness about the issue and hopefully studios get the message."

Mr White confirmed subscription services Netflix and Stan won't represent strategic threats when they launch in Australia next year as they instead offer an opportunity for increased consumer awareness about video streaming, which he says "isn't there yet."

This news story is reprinted from www.theaustralian.com.au

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Elite Tax office Team Targets Crime Gangs

THEY are the new "Untouchables", hitting modern-day Al Capones not with guns but multi-million-dollar tax bills. 

Just like Eliot Ness and his fearless squad from the 1920s Prohibition era in the US, Tax Commissioner Michael d'Ascenzo is believed to be the driving force behind an elite team of 100 hand-picked enforcers from the Australian Tax Office taking on organised crime. 

The ATO is on the way to taking the profit out of crime - targeting bikie gangs, drug importers and other crime cartels. Its own statistics reveal it has confiscated $335 million from crime groups in the past three years. 

ATO deputy commissioner for serious non-compliance Greg Williams said the group was working closely with other crime-fighting agencies. 

"(Police) will come to us and say, 'We've got this group of people that we believe are organised criminals', maybe an outlaw motorcycle gang," he said. "We're able to analyse that as a systemic group, and give a strategic analysis back to law enforcement." Former ATO audit manager Chris Seage said overseas experience vindicated the approach. 

"Just as with Al Capone, you can catch criminals by following the money," he said. 

The ATO is increasingly involved in criminal investigations by federal and state police forces. It works on five national taskforces and 24 joint-agency operations, including investigations of the waterfront, bikie gangs and Victoria's underbelly. 

The Australian Crime Commission estimates organised crime costs Australia $10-15 billion a year. 

"Just because your business happens to be illegal, doesn't mean you shouldn't pay your taxes," Mr Williams said.ATO can give its officers assumed names though it was not using that power, Mr Williams said. 

Mr Seage said some ATO officers were protected in "fortress-like accommodation" while secret files on organised crime were stored in safes. He said the image of tax officers as desk jockeys was outdated. 

"They have the power to conduct static, foot and mobile covert surveillance of suspected criminals," he said. 
This news story is reprinted from www.theaustralian.com.au. 

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Australia Needs Higher Taxes, Not Spending Cuts

The federal budget balance is expected to deteriorate. The reasons are numerous but, in a lengthy statement, the government sums it up in terms of two key factors. These are: the softer economic outlook; and unresolved issues inherited from the former government.

The economy is going through a transition. A decline in resources investment will be offset by a recovery in the non-resources sector. It seems the decline in resources investment may be sharper than previously forecast while the recovery in the non-resources sector may be more gradual.

Thus, with real gross domestic product growing at a slower rate, hence “a softer economic outlook”, revenue from taxation will also be less. The result is a higher budget deficit.

The previous Labor government can apparently be blamed for many “legacy” items, but one is rather curious. Our central bank, the Reserve Bank of Australia, has to receive A$8.8 billion to compensate it for losses incurred to its foreign currency reserves during the period when the Australian dollar appreciated.

This news story is reprinted from theconversation.com

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Australian Tax Industry Calls For Voluntary Bitcoin Register

Australian taxation professionals' association The Tax Institute has proposed the establishment of a voluntary bitcoin register on which individuals and companies could register a bitcoin public address, with the aim of de-anonymising ownership of the digital currency in Australia.

The Tax Institute suggested the move in its submission to the Senate Economics References Committee inquiry into an appropriate framework for digital currencies in Australia.

"This register would assist in proving that the entity owns the bitcoin held at those addresses," the organisation said in its submission, dated December 1. "This register could be administered by an existing government agency (for example, ASIC or the ATO), which could serve as the regulator/licensing authority for businesses dealing with bitcoin."

The Tax Institute also recommended in its submission that the government may need to develop, or support the development of, systems designed to track the bitcoin blockchain in order for the Australian Taxation Office (ATO) to monitor transactions for taxation purposes.

"We recommend that the committee examine the ability of the ATO to enforce the tax outcomes intended for digital currencies, and the resources required to do so," it said. "In particular, resources may need to be allocated to developing systems to effectively read and monitor the blockchain (the record of all bitcoin transactions), in combination with traditional cash-economy tax auditing techniques."

The institute's suggestions follow the ATO's guidance, released in August, that it would treat bitcoin and other virtual currencies as a commodity for business or high-value transactions over AU$10,000.

The Tax Institute suggested that an alternative interpretation of the existing tax law is that bitcoin is treated as foreign currency.

"Earlier this year, the ATO issued a draft GST Ruling ... which treats transactions involving bitcoin as barter transactions, resulting in payments of bitcoin being taxable supplies in their own right, and subject to GST," it said. "It is our view that this alternative interpretation is desirable from a tax policy perspective.

"For certainty and consistency of treatment, we recommend that the committee consider the merits of a legislative change to confirm that bitcoin is currency for tax purposes," it said. "This approach causes an unnecessary red-tape compliance burden for businesses, including the need to issue two tax invoices for a single transaction, and anomalous outcomes for unregistered parties such as consumers transacting in bitcoin."

In its own submission to the inquiry, the ATO said that bitcoin's taxation treatment is dependent on policy.

"Whether bitcoin or other crypto-currencies should be treated as 'money' or 'currency' is a question of policy," said the ATO in its submission, dated November 26. "The key elements of the ATO’s preliminary views are that bitcoin is a form of intangible property, is not money or currency, and its supply is not a financial supply for GST purposes. Its use is akin to barter."

Meanwhile, the Reserve Bank of Australia (RBA) said in its submission that bitcoin is not widely used enough currently to warrant its oversight and regulation of the virtual currency.

This news story is reprinted from www.zdnet.com

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Building Approvals Jump 11.4 Per Cent For October

APPROVALS for the construction of new homes rose 11.4 per cent across Australia in October, official figures show.

Local councils approved the construction of 17,062 new homes, including houses, townhouses and apartments in multi-unit buildings, in October.

The stronger-than-expected building approvals figures gave the Australian dollar a boost.

The local currency hit US85.01c as the data was released at 11:30am (AEDT), up from US84.88c just before. Over the 12 months to October, building approvals were up 2.5 per cent, the Australian Bureau of Statistics said today.

Economists expected approvals to have risen 5 per cent in October.

Approvals for private sector houses fell 0.2 per cent in the month, and the “other dwellings” category, which includes apartment blocks and townhouses, was up 31.3 per cent.

The supply of housing would continue to rise, which will slow house price rises, St George senior economist Hans Kunnen said.

“The basic story is that building approvals are well above their 10-year average, that tells us that construction work going into 2015 will remain firm,” he said.

“It adds to the supply of housing so for those who are worried about house prices it is helpful.” Mr Kunnen also expects national housing price rises to slow in the short term.

“If you’re looking at it from a Sydney perspective they are not likely to decline in the near term, but on a national perspective, possibly,” he said.

“Because of the low interest rates, the population growth and the overall undersupply of housing, actual declines in housing prices on a year-on-year basis will be harder to achieve.”

This news story is reprinted from www.theaustralian.com.au

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