Australian Marketwatch – Australian Stock Market
Australian Marketwatch The Henry Tax Review
Two years ago, the Australian government launched a study of the nations tax system with the intention of making it simpler.
The report was released and the Federal government handpicked a few changes which it will seek to turn into law. Some of the main changes are outlined below.
The report suggested increasing the compulsory super contributions from the current 9%, to 12% by 2019.
This came as good news for Australias financial industry, as it means fund managers will receive increased fund flows from investors.
More investment opportunities would be created for super funds and asset managers, and this would presumably translate to greater fees for financial companies.
The initial reaction was positive for the financial sector, with shares in most of the major banks rising today despite the markets fall.
Outside of the financial sector, however, the changes are generally seen as a negative as the added super will be worn by companies, big and small. Helping to offset this, the Treasurer did outline some good news for business (see below).
Reducing the company tax rate
The reports other major recommendation was the lowering of the company tax rate from 30% to 28% from 2014.
The reduction in the company tax rate would be incorporated alongside the resources super profits tax, in a move designed to use the mining boom in order to provide a leg up for other industries.
Companies in industries outside mining would benefit from increased foreign direct investment, greater innovation, and entrepreneurship, and as a result would experience greater profits.
Learn more about the impact on the Australian Stock Market.
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