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Chairman’s Report
Henry Tax Review
The Henry Tax Review (Henry) is a 1,000+ page blue print for our tax
system. With an election just around the corner, it is not surprising
that the Government would put politics above good policy. One would
have thought good policy = good politics, but sadly, recent Governments
have become more concerned about being re-elected than good policy.
Henry contained 138 recommendations, the Government ruled out 25 as
politically unacceptable and adopted only a few, and often only in
part. With an election coming up we were only ever going to get popular
measures.
It is good politics (but not necessarily good policy) to tax those
big resource companies making a fortune selling our resources to China
and India, and pass on some benefits to the voters by way of increased
compulsory super from 9% - 12% by 2020 and increasing the contributions
age from 70-75 years. The Government has also delivered increased benefits
to small businesses (lots of voters) as well as reduced company tax
rates in 2012 for small business.
Whilst Henry recommended a general reduction in company tax rate to
25%, because the Government has not adopted other Henry recommendations,
they can only reduce it from 30% to 28% by 2015.
The handling of the Henry Review is a classic case of politics before
policy – both sides of Government do it.
Changes to the Financial Planning Industry
The Government recently announced changes to the financial planning
industry from 1 July 2012. These changes will have little impact on
Count Advisers who are accounting based, working in a fee based environment.
These changes are largely the result of the collapse of Westpoint,
Storm and more recently, agri business investments.
The cause of the losses was poor advice from advisers licensed by the
Government in structures approved by the Government and in the case
of agri investments, a tax structure that encouraged such investments.
I have no issue with the commission changes (good politics). It would
have been good policy for Government to have a good look at its involvement,
rather than simply blaming everything on commissions, advisers and
margin loans.
Some of the announcements will seriously impact small licensees in
our industry and will result in the Banks and Bank owned financial
services companies getting bigger and stronger at the expense of smaller
companies. This is a total contrast to the generous tax concession
to small businesses in the Henry Review.
Yet another case of politics over policy!
Barry Lambert
Executive Chairman and Founder
Count Financial Limited