Chris Bowen
The Federal Assistant Treasurer has announced plans for an “Olympic-style bid” to attract foreign investment funds to the Australian market in an address to the Investment and Financial Services Association (IFSA) national conference on the Gold Coast.
Chris Bowen, Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, spoke of the ‘relentless drive’ and multiple policies that will be required to ensure Australia remains a competitive international marketplace, saying that the current reforms “are just the beginning”.
Bowen flagged the creation of permanent team of high profile individuals to liaise between the Government and the financial services industry to “drive the push for more foreign funds to come to Australia to be managed”.
This group would include participants from the Financial Services Advisory Council, IFSA and the Government and would drive reforms within Australia while marketing Australia to the world.
Bowen said the financial services industry and the Government had “made progress in understanding each other over the last eight months”, but that the industry must understand the fiscal and policy constraints the Government operates under.
Regarding the Henry Review, Bowen said effective personal marginal tax rates (MTRs) had the potential to be the biggest area of reform, with those moving from welfare into the workforce suffering an effective MTR of 150 per cent. The minister also said there is scope for reducing the top MTR.
But while tax rates are one of the elements that make a country an attractive (or otherwise) place to live and work, Bowen said Australians must forgo the world’s lowest tax rate in return for “a system that supports us and that encourages entrepreneurialism”.
The minister also reaffirmed the Government’s plans to proceed with the reform of taxation of financial arrangements (TOFA).
Bowen said the time for consultation will soon be over, and that TOFA will have a soft start date of July 1, 2009, and a hard start date of July 1, 2010.
As part of the review of TOFA, the Government will introduce new tax rules for accruals/realisation, fair value, re-translation, reliance on financial reports and hedging. The new rules will allow eligible taxpayers to make use of particular aspects of accounting standards to determine their taxable income from financial arrangements.
According to the Australian Taxation Office, these reforms will “increase certainty, improve efficiency, reduce compliance costs and provide greater neutrality to the tax treatment of gains and losses made on financial arrangements”.
