Concern is growing over a hidden bomb of death tax that could affect many children of baby boomers. New superannuation rules which take effect from July 1, 2007, means a tax of 16.5% will apply to the value of inherited property held in a self managed super fund.
This will result in children facing an immediate tax bill of up to 16.5% of the property’s value when their parent, who owns property through the super fund, dies.
The tax office will put small super funds under the microscope this year, despite expectations that there might be a period of grace ahead of government changes in July.
Deputy tax commissioner, Raelene Vivian, says in The Australian Financial Review this morning that the new rules do not change the role of fund trustees and there would be no period of grace to allow the trustees of self managed funds to get used to the new rules.
The tax office plans to double the number of staff in its audit compliance area, which handles audits of small superannuation funds. It also plans 6500 audits or reviews over the next year and to check 7% of all auditors each year.
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First-home buyers are fleeing big prices in capital cities for more affordable property in regional centres, according to a report released by the Housing Industry Association today.
The Population and Residential Building Hotspots report shows strong population growth in non-metropolitan centres is driving above-average building activity in those areas.
HIA economist Simon Tennent says the report shows that both first home buyers and people building homes are choosing more affordable regional centres over cities.
“The most obvious areas are in Queensland and Victoria and to some degree in New South Wales — the regions in those states are growing in excess of national average and with that comes solid levels of building activity.”
Eight of the 10 biggest building and population hotspots in Queensland were outside of Brisbane, making it the stand-out regional growth performer. Strong population growth in Hope Island, Thuringowa and Hervey Bay resulted in building activity growth around 20% in those areas.
In NSW, Maitland (56% activity growth) and parts of the Richmond-Tweed area (22.5% activity growth) experienced population and strong building activity growth, while in Victoria population growth in the Barwon district drove building activity growth of between 7% and 10%.
In other property news, housing finance approvals increased by 2.3% seasonally adjusted in January according to Australian Bureau of Statistics figures released today.
A 4.6% increase in finance approvals for house purchases for investment purposes was the primary reason for the strong growth result.
— Mike Preston
NSW premier, Morris Iemma, has promised TAFE positions for every student who drops out of school as part of a four-year $67-million program if he wins the election later this month.
The NSW Government will also boost funding by $3.5 million for group training companies, which allows costs to be shared among a number of small businesses.
He also pledged 15 new trade schools to add to the existing 10, which allow students to study vocational courses while finishing school.
The NSW apprenticeship completion rate has averaged about 45% over the last five years and is the lowest in the country.
— Amanda Gome
A wave of small law firm consolidations could be on the cards as investors seek to take advantage of recent legislative changes allowing legal practices to incorporate and list as public companies.
National plaintiff firm Slater & Gordon is considering floating later this year, a move that, if successful, could trigger a shift from partnership to more common commercial arrangements within the legal industry.
Law firm investment companies are beginning to appear to take advantage of the changes. One early mover, Perth-based Integrated Legal Holdings, has announced plans to raise $14 million to buy small law firms around the country.
— Mike Preston
Tax fraudsters are increasingly being sent to jail for their crimes, the tax office’s deputy commissioner Michael Monaghan says. He says a record 60% of those convicted for tax crimes are likely to go to jail this year, according to a report in today’s The Australian Financial Review. Judges are also making stronger statements about the seriousness of white collar crime.
— Mike Preston
We don’t know. The Federal Government is refusing to release its major Australian venture capital industry review, infuriating industry pundits. The review, headed by Pooled Development Fund Registration Board chairman Brian Watson, and looking at the state of venture capital in Australia, was expected to be released last year.
The Australian Venture Capital Journal points out that the decision not to release the report means the opportunity to publicly discuss matters of mutual or long-term interest will be lost.
“When governments do not release reports, it is either because they do not like the conclusions, there is something that could embarrass the government or logically or illogically they fear negative publicity,” the March journal says.
— Amanda Gome
It is looking more likely that Australia will have a Labor government before the end of the year. In the ACNielsen/Age poll taken from Thursday to Saturday, Labor has taken a huge lead over the Federal Government, moving to a 61-39 two-party lead.
Rudd’s approval rating as Opposition leader is now at 67%, another record high, while Howard’s disapproval exceeds his approval for the first time since late 2005. This is the 11th successive month Labor has been ahead on a two-party basis.
— Amanda Gome
The S&P/ASX 200 gained 37.4 points (0.64%) to 5867.6 at noon today as the local market responds to a 1.3% price rebound on the Dow Jones Industrial Index and positive jobs figures in the US last week.
Friday’s US Labor Department figures showed unemployment down 0.1% to 4.5%, slightly better than market expectations, with 97,000 jobs created in February.
The Australian dollar is also showing signs of life this morning, breaking back through the US78 cents barrier to be selling at US78.18 cents at 11am.
And the Chinese Government has announced that it will create a government-owned investment company to manage its $US1 trillion in foreign exchange reserves. The company will be based on Singapore’s Temasek Holdings, which holds a vast global portfolio, including significant Australian interests.
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