The Government’s efforts will be constrained by their stated imperative of bringing the Federal budget back to surplus over a period of time. This budget balancing process will necessitate business taking both good and bad medicine, like the yin and the yang in the Asian culture.
The Government’s announcement to repeal of the carbon tax and minerals resource rent tax (MRRT) are key symbolic policies which send a clear signal that Australia is 'open for business'. Another encouraging message is that the new Government has announced its intention to reduce the headline corporate tax rate from 30 percent to 28.5 percent effective from 1 July 2015.
However, to ensure the budget numbers add up, a 1.5 percent levy on companies earning more than $5 million taxable income is proposed to fund the parental leave scheme. This will offset the corporate tax rate reduction for many large investors.
There is now greater focus by the Australian Taxation Office (ATO) on tax governance and transparency to ensure foreign companies with investment and trading activities in Australia have the systems and resources in place to ensure compliance. In addition, new laws commenced from 1 July 2013 requiring the ATO to publish limited tax payment information of large and multinational businesses to 'name and shame' those with low effective tax rates. It will be important for investors from Asia, like all foreign investors, to be on top of Australia’s very high tax regulatory standards as good corporate citizens of Australia.