ga('send', 'pageview');
John Passant

Site menu:

September 2012
M T W T F S S
« Aug   Oct »
 12
3456789
10111213141516
17181920212223
24252627282930

Tags

Archives

RSS Oz House

Share

Authors

Subscribe to us

Get new blog posts delivered to your inbox.


RSS Blog RSS

Site search

Miniposts

Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
(0)

Sick kids and paying upfront

(0)

Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

Advertisement

Links:

Cubbie Station, xenophobia and tax

I have no truck with Senator Barnaby Joyce’s foreign ownership xenophobia and populism. The idea that little Aussie battler and $2 a day woman Gina Rinehart would be a better owner of Cubbie Station than foreigners merely because she is Australian is nonsensical.

However, now that Senator Bill Heffernan has raised tax as an issue, (David Crowe, ‘Coalition split as Heffernan cites ATO to bar Cubbie-style deals’  The Australian, 6 September page 7) let me paint a broader argument about taxing foreign residents that hopefully avoids xenophobia.

In 2006 both Heffernan and Joyce voted for a Howard Government Tax Bill which exempts foreign residents from capital gains tax on their Australian assets.

This CGT exemption does not apply to land.

However it means that every non-resident with shares is exempt from tax on the gains made on the sale of those shares assuming the company is not land rich but is, for example, an active and productive non-land related business.

It is this exemption that foreign private equity fund Texas Pacific Group (TPG) proffered as the rationale for it to seemingly avoid tax on the sale of its shares in the Myer float in November 2009. The profit it made on the sale was $1.58 billion, and the amount of tax, interest and penalties that the ATO claimed was owed in August 2011 was $739 million.

Australia is a capital importing nation and depends for its continued economic well being on foreign investment. That does not mean however the country should give up its taxing rights over capital gains which non-residents make on Australian assets.

The arguments for the exemption were that it would be taxed anyway in the country of residence of the foreign resident and the exemption would attract investment to Australia.

The answer is that it is not clear, as TPG shows, that the amounts are taxed in comparable tax jurisdictions rather than squirreled away in tax havens. Second, even if the amount is taxed in a foreign country, why surrender our taxing rights to other nations? Let  foreign residents pay capital gains tax on Australian assets and receive a tax credit for the tax paid here in their home jurisdiction.

In my view taxing foreign residents on their currently exempt capital gains will have little or no impact on foreign investment given that the gains are supposedly taxed in comparable tax jurisdictions. It will however bring revenue onshore that is currently going into the coffers of, for example, the US and European Treasuries, or being hidden in places like the Cayman Islands.

What about it Barnaby and Bill?

Advertisement