Why are women architects, doctors and nurses still paid less than men? Who makes these decisions and what can be done about it?

Tax agents who deal with the ATO explain that tax investigating officers can look at clients in virtually the same situation and give one remission and the other none. Meanwhile, the OSR makes a decision one day, then changes it and kicks the business in the butt. What’s going on here?

Australians owe the Australian Tax Office (ATO) over $50 billion but the debt on overdue tax bills tops $9.4 billion. Behind this massive debt and interest bill is an ATO that’s behaving like the legendary character from the TV show, Seinfeld, who was known as the Soup Nazi.

Reportedly based on a real soup seller in New York, the Soup Nazi was famous for dishing out rough justice and then saying to customers who might ask questions about his product or ask for more bread: “No soup for you!”

Explaining these huge figures is an ATO team who increasingly saying: “No!” to taxpayers who ask for time to pay and remission from the general interest charge (GIC). And adding to the bill is a draconian penalty interest rate of 10%, which is double the mortgage rates and bigger than what banks charge for business loans, where the borrower secures the loan with say their property.

By the way, the NSW Office of State Revenue actually charges 12% for tax debts, many of which are made up on the spot by overzealous public servants who have no regard to the bankruptcy threats they impose on businesses.

Interestingly, tax agents and other experts who deal with the ATO on behalf of many clients explain that the investigating officers can look at clients in virtually the same situation and give one a remission from the GIC and others no relief!

The AFR’s Professional Services Editor, Edmund Tadros looked at this inconsistency. “Tax agents and tax lawyers have complained the agency’s processes are opaque and difficult to navigate, triggering an ATO review and a separate Tax Ombudsman review,” he wrote.

Talking to Clayton Taber, of law firm Mills Oakley, this expert on the ATO said the data reflects his own experience. “[The] ATO is currently remitting about half as much interest as it was four years ago,” he said. “It is now noticeably more challenging to have clients’ interest remission applications accepted by the ATO.”

Last year, the ATO said yes to remission requests to 76% taxpayers. In the previous year it was 88%. By the way, many of these remissions were because the tax office investigators took a long time but then they made the remission only temporary.

Lawyer Tania Waterhouse agrees that getting a remission has become harder and believes the ATO needs more people evaluating requests. “We now only succeed where there have been natural disasters or health issues including where a family member has passed away,” she told the AFR.

Regrettably, the attitude of the ATO and other tax offices in the states is becoming an unnatural disaster created by undoubtedly an under-resourced government agency, which is being pressured by politicians to collect as much money as possible, as soon as possible.

Tadros has found that the core of complaints is a lack of transparency. Tax Ombudsman Ruth Owen reinforces this observation. “They don’t understand how decisions are being made, and there’s a lack of consistency,” she said. “So, tax agents who appear for multiple people [report that] they get different results with what seems like similar circumstances.”

Right now, there’s a review into the practices of the ATO that’s open until October 2. But this is likely to be another waste of time and money until there’s a politician who rolls their sleeves up and understands how piling on interest on taxpayers who have cashflow problems only compounds the problem.

This is not lost on the Tax Ombudsman. “What I am seeing is a lot of taxpayers in debt who are trying to agree to a repayment,” Owen said. “They’re trying to do the right thing, but the ATO won’t agree to a remission of the [general interest charge], which means the debt gets bigger and bigger, and it gets away from them. My question is, is that the intent of the policy of interest charges?”

Sure, there are scam merchants who try to dodge their tax responsibilities but there are also businesses struggling post-Covid, after 13 interest rate rises, in a slowing economy, which has seen inflation at levels not seen in three decades and a workplace environment that is more employee-friendly than it is for bosses.

Who’s responsible for the ATO and its behaviour? Try Treasurer Jim Chalmers. Ultimately, it’s Chalmers who’s saying: “No remission for you! And cop 10% interest on top”.

The money-world we live in looks a little crazy right now, with house prices going through the roof and stock prices defying gravity, especially in the USA where they have arguably the most unusual president ever. To top it off, Elon Musk is no longer the richest person in the world!

That ‘honour’ now goes to Oracle’s founder, Larry Ellison, who overnight saw his wealth increase by US$110 billion as his company surprised the market with a better-than-expected report on earnings. Oracle produces everything from hardware to software in the tech space.

Did I say the money world looks a little crazy?

As of today, CNBC calculates that Musk’s wealth is US$391 billion, while Ellison is now worth $394 billion, so there’s a ‘mere’ US$3 billion in it in this battle of the billionaires.

How has this come about for Larry? Well, he still owns about 40% of Oracle, which means he’s an unusual tech billionaire, because a lot of his company rivals have sold down their shareholdings.

For example, Meta or Facebook chief, Mark Zuckerberg reportedly owns 13.5% of the company he founded, and Bill Gates of Microsoft has only 1.34% of his ‘baby’, in which he once held 45% of its shares!

Also helping Ellison’s wealth escalation is Oracle and how it’s benefitting from Artificial Intelligence, like a lot of tech companies in the US. One day the stock market will make a new assessment that investors or speculators have paid too much for AI-linked companies, but right now, it does look like we are at a party, it’s only 9pm and we’re all having fun.

By midnight, reality might bite. Tomorrow we might end up with a hip pocket hangover, but for now it’s party time and Larry Ellison is having a wow of a time.

The important lesson from Ellison is that he didn’t sell good assets but instead borrowed against his companies — he owns more than one and has a big property portfolio as well. These borrowings were tax deductible and while it was once thought his debt was a big risk, this legendary business builder and yachtie, whose boat Rising Sun cost $490 million, has used his quality assets brilliantly.

This story of wealth-building coincides with the AFR reporting a Domain story that house prices are so crazy that Sydney homes are “Grossly unaffordable” for millennials and are pushing these young people out of the NSW capital.

As Lucy Shade kicked off her story: “Education, hard work and sensible financial decisions in your 20s used to be a winning formula for home ownership in your 30s. That’s not the case for an increasing number of Millennials in Sydney anymore.”

The chart below shows that in the case of Victoria, 72% of 30-34 year olds born between 1947 and 1951 owned a home. Now it’s 52% for those born between 1987 and 1991 and who are now in their 30s.

In NSW, the percentage of 30-somethings owning a home is down to 45%, demonstrating how hard it is to buy a place in Sydney, in particular.

(Source: Domain)

Shade looked at the barriers to home ownership for millennials and they were:

1. It takes eight years to get a 20% deposit. It was six years in the early 2000’s.
2. A new loan consumes 54% of a borrowers disposable income.
3. Stamp duty is high.

I’d add other factors such as the higher cost of living for younger Australians compared to previous generations because of credit cards, telco-tech bills, the desire for mod cons and other new age lifestyle interests, such as eating out, travelling overseas, etc, which also make homes very unaffordable.

Older generations led a less expensive, albeit less interesting life, and this combined with a better supply of homes, made home ownership easier.

So, is there anything to learn from Larry Ellison’s wealth surge and the plight of our young people?

Often the cornerstone of wealth-building is to own quality assets, usually paid for by borrowings. As the value of these assets rise, you can borrow more, often with tax deductions, to buy more quality assets.

Older generations have been able to use their homes and their rising values to build wealth, but this is harder for younger generations. And our political leaders should be doing something about that.

One final point: superannuation will be a big help for millennials as they get older but again you have to be wary that politicians could greedily eye off these assets and make super rule changes and introduce tax slugs.

 

At a Business Council of Australia dinner tonight, PM Albanese will promise corporate tax reform if big companies recommit to Labor polices on emissions reduction and AI.

Prime Minister Anthony Albanese will go into a Business Council of Australia dinner tonight promising corporate tax reform, provided big Australian companies recommit to being green and supportive of Labor’s polices on emissions reduction and AI regulation.

The PM says this offering is a consequence of the productivity roundtable held last month in Canberra.

This comes at a time when The Australian’s Matthew Cranston reports that 54 of the 81 largest companies in the country have issued annual reports so far this year that eliminated mentions of environmental and social governance (ESG) and diversity, equity and inclusion (DEI).

This implies big business is less committed to these new age demands from governments and so-called progressive groups.

Holding up what he thinks was a successful economic reform roundtable, the PM is offering business:

1. Tax reform.
2. Australia being a global data destination centre.
3. Support for Artificial Intelligence (AI).
4. Consultation with business on deregulation.

While the PM says his government wants “fair and affordable” tax reform, the Treasurer is on the public record talking about intergenerational equity, which doesn’t sound like tax reform that will help businesses now.

Against that, Albanese is promoting the government’s interest in addressing the current uncompetitive tax regime facing Australian businesses.

What does that imply? The Roundtable put forward the following tax changes to help businesses compete with global rivals:

1. Cuts to the company tax rate.
2. The introduction of a cashflow tax that allows new capital added to a business to be a tax deduction. With this, cash put into a business and out of a business becomes a deduction (or taxable rather than simply taxing profit).

These dangling carrots for business are designed to get big business support for, as The Australian says, Labor’s “ambitious 2035 emissions-reduction target”.

These offerings from the PM might need to be more attractive to get business support for anything on emissions that add excessively to costs. Possibly that will come with the detail in tonight’s speech, but you can bet CEOs on companies will be looking at the real cost of signing up to the government’s plans on emissions reduction and green-based energy.

One of the great problems for the Albanese government (and others in the past) is that they haven’t done what Spain’s governments have done.

CNBC reports that “Spain’s booming economy is outpacing its European neighbours, as tourism, foreign investment and immigration helps fuel growth.”

But wait, there’s more to this story — this economy has lower energy costs. “Since investing in green energy in the 2000s, Spain has benefited from low energy costs and has seen less impact from the European energy crisis that followed Russia’s invasion of Ukraine in 2022,” CNBC’s Gaelle Legrand explains. “The increase in the renewable share in the electricity mix over the past five, six years has implied a drop of 40% in wholesale electricity prices.”

Until our government can link support for renewables with lower energy costs and not higher power bills, business and consumers will be suspicious of this brave new world that wants to sensibly protect the environment.

As the CNBC report said: “Low production costs are an attractive criterion for companies, particularly foreign investors, who also supply the sector.”

Until our governments get this, there will be half-hearted interest in investing in projects that will come with profit-killing costs.

Artificial Intelligence has now produced a real life case of the robot devouring its creator’s job!

It’s the brave new world on the information superhighway. Artificial Intelligence (AI) has now produced a real life case of the robot devouring its creator’s job!

This happened within our biggest and most successful bank in the form of the CBA.

Despite trade union efforts to keep the despised AI genie in its bottle, this is only the tip of the iceberg! Excuse my mixed metaphors but I think the need for dramatic effect outweighs quality literary expression.
In a very old TV show called Dobie Gillis, he had a cool, beatnik friend, Maynard G. Krebs, played by Bob Denver who later became Gilligan in the TV hit, Gilligan’s Island. By the way, Chat GPT – an AI product — helped me recall that info!

Anyway, Maynard was always going to see a mythical movie called The Monster that Devoured Cleveland, which reminds me of what this monster called AI is set to do with a lot of jobs. This CBA story gives us a glimpse of that future, which, unlike Maynard’s film, won’t be a myth.

At an AI symposium in Parliament House in Canberra put on by a worried ACTU, Kathryn Sullivan, who’d worked for the CBA for 25 years, explained how she trained the chatbot that ultimately, when fully equipped, replaced her.

This is how news.com.au reported the incident:

“Kathryn Sullivan was made redundant from the Commonwealth Bank of Australia (CBA) in July, alongside 44 others in what were the first job cuts directly attributed to an Australian company’s uptake of AI.”

Sullivan remains a fan of AI’s potential pluses but thinks regulation is required. “While I embrace the use of AI and I can see a purpose for it in the workplace and outside, I believe there needs to be some sort of regulation to prevent copyright (infringements)...or replacing humans — you still need the human touch.”

After Finance Sector Union protests and bad media publicity, the CBA reversed its decision and reinstated the workers. However, this is a sign of things to come.

While the ACTU accepts that the AI wave can’t be turned back, it does want ‘sea walls’ to minimise the potential damage. “What we don’t want is Australia following a United States style ‘let it rip’ approach, where the benefits of the new technology and productivity flow through to multinational tech companies, leaving workers without a say or a meaningful stake in the potential gains,” said ACTU Assistant Secretary Joseph Mitchell.
While the union movement has a role to make sure AI doesn’t rampantly kill jobs, demanding unions and governments, with excessive regulations and taxes, don’t make employers look to AI to reduce costs and help make enough profits to want to risk their assets and their peace of mind in being a creator of jobs and a payer of wages.

Most employers are good people who have a lot of curve balls thrown at them. So, if AI hits a few of those balls out of the park, then it will become an important part of future business. And yes, some jobs will be lost.

If you’re hanging out for a rate cut, there’s Buckley’s chance of one any time soon! Here’s why.

Given our super money is wrapped up in companies listed on local and global stock markets, investors are entitled to expect quality leadership from those who are paid to grow the company, not court staff.

Last year, leviathan property developer and builder Tim Gurner copped a media backlash when, according to Euan Black in the AFR he “claimed workers had taken their foot off the gas pedal since the pandemic”. And while manufacturing and mining bosses said he was on the money, the court of public opinion threw the book at Tim!
In support of Gurner’s view, the Minerals Council of Australia chairman Andrew Michelmore, who has more than 35 years’ experience in senior leadership roles in Australia, told The Australian Financial Review that office workers in certain parts of the economy were enjoying “a lifestyle that was not sustainable”.
However, the criticism from non-businessowners actually went global, with US politicians weighing into the argument over the expectations of new age workers.
With this in mind and at a time when old school business builders are worried that workers aren’t on the same page as their bosses, comes this story in today’s AFR with the headline: “Start-ups reject work-life balance ‘beast’.”

The newspaper’s Maxim Shanahan and Paul Smith at The AFR’s Entrepreneur Summit in Sydney yesterday tell us businessowners in start-ups argue that “workers must be prepared to ‘‘go to war’’, to help their companies succeed, rather than worrying about work-life balance.”
Anyone who has owned a business might understand this sentiment, but new laws are coming that will mean ‘warring’ entrepreneurs might have to go into battle with part-time fighters/employees!
Why? Well, the lawyers at claytonutz.com explain it this way: “The right to disconnect permits an employee to switch off and refuse to respond to contact or attempted contact from their employer (or a third party like a client, where the contact or attempted contact relates to work) outside their working hours, unless the refusal is ‘unreasonable’.
“It was pared back from an original proposal which would have seen employers banned from making contact with employees outside their usual working hours. Employees can exercise this right from 26 August 2024 (small business employers are exempt from the operation of the provisions for 12 months following their commencement, that is until 26 August 2025).”
This law change is certainly at odds with the sentiments of two successful entrepreneurs who spoke at the AFR Summit.
The reporters quoted Honey Insurance founder Richard Joffe and Goterra boss Olympia Yarger, who said tech workers needed to realise that “to succeed in a start-up, you’re not optimising for work-life balance”.

‘‘This idea that you can be in an exceptional environment and create wealth while sitting on the beach and finishing at five is just nonsense,’’ Joffe said. ‘‘I think the worst thing you can do is pretend to people that [working at] an early-stage company is a cakewalk, that it’s a ping pong table, and it’s a joke.’’
To use a quote I relied on yesterday (but is again appropriate), people who are risking their reputation, their money and their life in trying to build something important want committed employees.

On the other hand, employees, who don’t share the dreams and the profits of an entrepreneur, see life very differently.
History has shown that it is those entrepreneurs who can select the right people and who provide enlightened leadership, as well as equity options, are the ones who get the employees who make business success happen.

Great business leaders not only learn to deal with employees who aren’t the right fit, they also learn to deal with governments who don’t really understand the importance of job creators, worker trainers and big taxpayers.
One way an entrepreneur gets buy-in from their staff is to underline the importance of the business.
The AFR says the CEO of Goterra, Olympia Yarger, runs “a Canberra-based start-up that grows fly larvae and uses them to convert food waste into protein and fertiliser. It works with customers including Woolworths.”

She only keeps staff who she implies are effectively made of the right stuff. ‘‘The more traditional approach to work-life balance doesn’t exist at Goterra. We believe we’re in a climate crisis, and you don’t take work-life balance during a climate crisis,’’ Ms Yarger said.
‘‘That’s an upfront conversation we have with staff, so we’re attracting the sort of people who want that kind of work environment.”
We live in a new world with new age concerns for employees and their overall happiness, so it’s going to take a special group of entrepreneurs to create great businesses while not having a “we’re at war” mentality.

The likes of Steve Jobs and Elon Musk were “at war” leaders. Bill Gates was famous for 2am phone calls to his key staff, so the new age entrepreneurs will have to be outside-the-square thinkers to win at business and provide a winning life for their workers.