Macquarie nears earnings beat as ASIC gives it the cane over compliance

It’s a story of good news, bad news for Macquarie today as it posts earnings at the top of guidance, as ASIC issues a statement over the bank’s “repeated compliance failures”. (more…)

Trump wants a tariff on movies: how would that even work, and should Australia be worried?

US President Donald Trump’s recent announcement of a plan to impose a 100% tariff on movies “produced in foreign lands” could have a massive impact on the global entertainment industry.

Film and television production is increasingly part of an interconnected global system. Hollywood’s major studios and global streaming giants use a diverse range of locations around the world, sometimes working across multiple countries for a single project.

Doing so allows them to leverage production incentives and tax shelters offered by different countries, take advantage of exchange rates to lower their production costs, and more.

They also film offshore, for example in China, as strategic co-productions and feature iconic locations and local actors to appeal to audiences in that specific national market.

Many countries have become important hubs in this global system of production. Australia is a significant player. So, how exactly might Trump’s tariffs work? And why is so much Hollywood film made internationally in the first place?

‘Movies made in America’

Trump made the announcement in a post on the social media network Truth Social. But his original statement is vague and lacks crucial detail.

Based on his post, this proposal could include any foreign movie imported into the United States. More likely, though, it refers to US movies filmed (in part or wholly) overseas.

Trump’s statement only singles out movies. He doesn’t mention television series for broadcasters, or specifically film and television programs made for streaming platforms.

This suggests a focus on movies made by Hollywood studios. It may or may not include content made by streamers such as Netflix.

Tariffs on tickets?

Movies are a kind of intellectual property. They’re intangible products or services, not physical goods. If a tariff was applied to movies, they’d become the first service in the current trade war to receive one.

So what tariffs or regulations could be applied?

One option would be a levy on distributors releasing US movies made overseas. Another option would be to adapt the French TSA model, which levies a tax on all cinema tickets. In France, this money is reinvested into the local industry. The US could impose such a tax on tickets for films with production components overseas.

Both options would pass the costs on to consumers. A drop in already fragile cinema attendance or revenues could simply cause studios to reduce the number of movies made for theatrical release.

Studios might instead concentrate on making movies and television series for their own streaming platforms, such as Disney+ and Paramount+.

Taxing production

Could the tax be imposed in other ways? Many US studio movies, and television programs, are at least partly, if not wholly, filmed internationally. But they are still US-controlled movies and still dominate the box office in many countries worldwide.

Could the revenue of Godzilla x Kong: The New Empire (2024), filmed on the Gold Coast in Australia, specifically be targeted and taxed for being made overseas, in contrast to a Hollywood movie made completely at home?

Would there be a sliding scale based on how much of a film is shot overseas? Would the tax apply to post-production or only production? The process of reviewing and enforcing this would be complex.

Another option may be taxing the portion of a movie’s production budget obtained from foreign tax incentives.

Major blockbusters filming in Australia are eligible for tax rebates and incentives, which can equate to almost half, or more, of the money they spend in Australia. But exactly how the US would review and regulate such a tax is again unclear.

Australia’s film industry

International film and television production expenditure in Australia now averages A$880 million each year. International movies alone account for about half of that figure.

And the number of movies and television series being filmed in Australia has increased dramatically since the outbreak of COVID.

Production expenditure here on both local and international productions jumped from just over $1 billion in 2019–20 to about $2.4 billion in 2022–23.

There are numerous reasons for this. Australia became a more popular international production hub after serving as a “production bubble” during the pandemic, as restrictions forced filming to shut down in many other countries. Relationships were forged between local producers, crews, film agencies and studios.

The reputation of places like the Gold Coast, known for talented crews and stunning filming locations, has also played an important role in continually luring studios back.

The biggest draw card

But the major reason is the strong pull of Australia’s tax incentives for filming content here.

In Australia, international film and television programs are eligible for a 30% “location offset” on eligible production expenditures. If a project qualifies, producers will receive a provisional certificate, and they can claim a fixed 30% rebate for expenses in an income tax return for the relevant year.

There’s also a 30% offset on eligible post-production and visual effects work. And these incentives can be “stacked” on top of an extra 10–15% in incentives from state screen agencies (such as Screen QLD).

Some combined federal and state-based production offsets amount to rebates of 50%, or more, of a project’s production spend in Australia.

Why Australia is worried

International productions, which are quite different to local film and television programs, generate employment for many local actors and technical professionals. The loss of this film production would dramatically reduce employment for local professionals.

If these levies are imposed only on movies that screen theatrically, then television series and streaming films and series could continue to film in Australia unaffected. That would lessen the impact on local industries. If the definition includes both, the impact could be dramatic.

Mark David Ryan, Professor, Film, Screen, Animation, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Albanese pushing ahead with super tax but could face problems

The re-election of the Albanese government has led to renewed concern about planned changes to the taxation of investment returns in superannuation funds.

Labor’s emphatic victory on Saturday night, including what looks like an increased presence in the Senate, suggests the legislation is likely to become law in the near future.

Retirement income in Australia

Australia’s retirement income system comprises two pillars: a government-funded age pension as well as private superannuation.

Super includes compulsory employer-funded contributions as well as additional personal contributions.

These two pillars are complementary; a person can receive a pension even if they have private super. But the more super they have, the less pension they are eligible for.

About 70% of superannuation assets are held in Australian Prudential Regulation Authority (APRA)-regulated funds and 25% are held in self-managed super funds (SMSFs).

There are two types of tax – and tax concessions – on super. First, employer contributions and capped personal contributions are taxed at a concessional rate of 15%. Second, income earned by a super fund is taxed at 15% for balances in the accumulation phase (when contributions are being made). Income earned in the pension phase is tax-free.

So what does the proposed reform entail?

Starting July 1, the government proposes to increase the concessional tax rate on super account earnings in the accumulation phase from 15% to 30% for balances above A$3 million.

Those affected – about 80,000 super account holders, or 0.5% of the total – will continue to benefit from the existing 15% concessional tax rate on earnings on the first $3 million of their super balance.

They will also be able to carry forward any loss as an offset against their tax liability in future years.

Concerns with the proposed reform

Concerns have been raised this reform implies the taxation of unrealised capital gains on assets held in super accounts, such as shares or property, even if they have not been sold.

This is, indeed, a significant departure from the status quo. Both APRA-regulated funds and SMSFs are currently only required to pay capital gains tax once the asset is sold and the gain is crystallised.

The move to tax unrealised capital gains is likely to prove particularly onerous for SMSFs. The typical industry super fund has a diversified portfolio of assets of varying liquidity, including significant cash holdings. But SMSF portfolios are often dominated by a large and illiquid asset (ones that cannot be easily sold and converted into cash) such as a farm or business property.

As a result, an SMSF facing a large unrealised capital gain, say from an increase in property values, may not have sufficient cash flow to pay the associated tax bill. The SMSF trustee might be forced to prematurely sell assets to meet the fund’s tax liability.

In the United States, President Joe Biden’s 2025 budget included a similar proposal to tax unrealised capital gains for households with more than US$100 million in wealth.

Purpose of the proposed reform

In announcing this initiative, Treasurer Jim Chalmers suggested the motivation was two-fold.

First, the federal government is facing pressure on the budget bottom line and generous tax concessions for super are becoming expensive.

Second, current super tax concessions are highly regressive. This means most benefits of the concessions flow to the wealthiest households which, in any case, will not be eligible for the pension.

The cost of current super concessions to the federal budget is about $50 billion in foregone revenue, according to Treasury. That is almost the cost of the age pension.

The Grattan Institute argues superannuation has become a “taxpayer-funded inheritance scheme”. A Treasury review found most Australians die with large outstanding super balances.

The Association of Superannuation Funds of Australia Retirement Standard calculates that, for a comfortable retirement, a couple needs a super balance of about $700,000 if they retire at age 67. The $3 million threshold is out of the ballpark. However, if the threshold is not indexed more people will be affected over time.

So, is this reform useful?

According to the government’s Retirement Income Review, the objective of Australia’s super system should be to “deliver adequate standards of living in retirement in an equitable, sustainable and cohesive way”.

While the proposed tax change aims to improve the equity and sustainability of Australia’s super system, it is not clear how it will work in practice.

In response to SMSF concerns about the difficulty in paying tax bills, the government’s proposal gives taxpayers 84 days to pay the tax liability instead of the usual 21 days. This hardly mitigates the risk that SMSF trustees may have to liquidate the main asset in their fund.

The Biden proposal had presented an alternative model, allowing for the tax liability to be paid over several years, not all at once. Alternatively, taxpayers could pay an interest-like charge while deferring their unrealised capital gains tax liability.

Such alternatives do not appear to have been seriously considered in the Australian government’s proposal.

Ultimately, though, the question must be asked: is taxing volatile unrealised capital gains really the most effective way to improve equity in, and the sustainability of, the superannuation system?

Mark Melatos, Associate Professor of Economics, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

(more…)

Trump announces trade deal with UK, markets breathe small sigh of relief

Everyone relax. It’s let's-make-a-deal time, as US President Donald Trump announces plans for a trade deal between the US and UK. So what do we know so far? (more…)

Ozempic claims another scalp as Weight Watchers hits the wall

The so-called “behavioural” weight loss market continues to struggle in the shadow of the “medical” weight loss boom, with Weight Waters (aka WW International) filing for bankruptcy in the US overnight as part of its results. (more…)

Will AI & the employer unfriendly Albanese government kill jobs?

The great challenge for the new Albanese Government is to make sure that its policies become more pro-business.

Without said policies, we’ll be saddled with two big problems.

First, productivity. Treasurer Jim Chalmers has told us productivity must increase to ensure inflation doesn’t get to worrying levels. We know how that looks!

Higher productivity is also needed to ensure we see higher levels of real income. That is, Australians will see their income have greater purchasing power.

Second, the workforce wll face real theats to their c desk jobs thanks to AI. It may not do the best work, but it’s cheaper and easier to manage. Especially if the government makes it harder to keep people employed.

Right now, workplace insurers are experiencing a surge in compensation claims. WorkSafe Victoria has experienced a 46% increase in workers compensation costs, for example.

Being a boss has become particularly challenging. The lure of artificial intelligence and the use of robots will become attractive alternatives to employing ‘real’ live people, if the Albanese Government cant balance protections for both employees over employers.

In the US, HR experts are already trying to see how AI will threaten jobs and how employees can be protected from the threats from this new technology. And it comes as the U.N. Trade and Development agency warned in an April report that AI could affect 40% of jobs worldwide and widen inequality between nations.

While some employers are pondering how they add AI to their production process and keep their employees, others question the wisdom of job protection.

“We need to establish that protecting employment might not be the right mindset,” Tomasz Kurczyk, chief information technology officer at Prudential Singapore, told CNBC Make It. “The question is: ‘What can we do to make sure that we adapt employment?’”.

“It’s like trying to prevent a tsunami wave. We know protection will not necessarily be effective. So, it’s thinking really how we can adapt,” he surmised.

Microsoft – which has its own proverbial skin in the AI game, has found in its research that: “47% of leaders say that upskilling their existing workforce is a top priority, and notably, 33% are considering headcount reductions.

It’s good that some bosses are actively planning for the “tsunami” of AI and caring about their employees but a third are thinking about cost savings by killing jobs.

Unemployment is on the rise in Australia. And there are no business indicators saying the last three years of the Albanese Government have made life easier for employers.

If the new Labor Government really wants to raise the standards of living of as many Australians as possible, it will need to make employing easier not harder.

If it doesn’t, AI will become embattled employers best buddy.

Bhutan will let you pay for your next holiday in Bitcoin

I’ve just come home from a trip and every time I went to pay for something, store owners shook their heads to decline my American Express. One country is going above and beyond just tap-and-pay systems however, with the nation of Bhutan now saying it will accept tourist payments via Bitcoin. (more…)

NAB up following results, but a worrying cloud is gathering over Aussie banks

NAB scored an expectations beat on its results on Wednesday morning, but echoes of market warnings came attached. (more…)

The one market quants aren’t touching: who will be the next Pope?

You can learn a lot about any event by looking at the data that goes into it. This is especially true with sports: a multi-billion dollar global industry that uses techniques anchored in financial analysis to predict the outcome of a particular match-up. But there’s one market that finance experts are steering well clear of, and that’s who will be the next Pope. (more…)

6 reasons why you shouldn’t wait for a US-China trade deal to start investing

Since April 2’s “Liberation Day” tariff announcements from US President Donald Trump, the stock market (and your super) have probably taken a hit in the wrong direction. The ensuing uncertainty driven by geopolitical volatility now faces its ultimate test with news that a US-China trade deal might actually be closer than we thought.

Dow Jones futures, which we see before Wall Street starts trading at 9:30am each day, were up 270 points (or 0.7%) on the revelation that US Treasury Secretary Scott Bessent and top-ranking trade official Jamieson Greer were set to meet with their Chinese counterparts this week on neutral ground in Switzerland.

Believe it or not, but those hanging out at the New York Stock Exchange are excitable types, with an inclination towards positivity negativity. And while you might think this irrepressible inclination of Yanks is excessive and problematic, a brief history of investing tells us it pays to be positive when it comes to markets.

Back in March, Fidelity looked at 6 reasons for investing “right now”, even before we knew about Trump and his big board of reciprocal tariffs.

Their reasons were:

History shows that there's no "wrong" time to get in the market.

The Fidelity team’s research found even if $5,000 was invested at the "worst" possible time each year—that is, when the market was at its peak—it would still significantly outperform a cash allocation over time, demonstrated by this chart.

Their research also showed that when you invest your money actually has very little effect on the average, long-term performance of your portfolio:

“Even investing during a recession has historically provided an average expected return in line with other, less volatile parts of the business cycle,” they found.

Being out of the market for even a short time can significantly reduce growth.

“When you get into the market isn't likely to make a big difference in your long-term growth potential—but being out of the market, even for a short period, certainly can,” Fidelity maintains.

“As the chart below shows, a hypothetical investor who missed just the best 5 days in the market since 1988 could have reduced their long-term gains by 37%.”

Stocks have tended to rise even amid upheaval and uncertainty as the chart below shows.

“Be it war, recession, or even the COVID-19 pandemic, stocks have historically shown resilience during short-term volatility, which could potentially lead to long-term gains for investors,” the Fidelity team asserts, and the market history generally supports it.

In fact, investing when a crisis is at its scariest can be very rewarding in many market situations, provided you can hold your nerve better than most.

4. Investing in the market for a longer period may potentially increase your chances of experiencing positive outcomes.

This chart shows the longer you trust stocks, the “luckier” you will be. As students of market history, we know it’s not a matter of luck, but more on that later.

5. Which party controls Washington has historically tended to have little effect on stock returns

The colour of the man’s necktie behind the White House’s famed Resolute Desk bears little relevance to market performance. At least in an historical context, according to Fidelity:

“Although popular myths sometimes suggest that one party or the other is "better" for market returns, the historical data does not bear out these theories,” Fidelity argues.

“The S&P 500 has historically averaged positive returns under nearly every partisan combination, as the chart below shows.”

Donald Trump could test out this historical observation, though I doubt it will bend to his whims.

6. Many investors have worried too much about rising deficits and persistent inflation.

While deficits and inflation aren’t easily swept aside, issues stocks have typically risen in spite of their pressures. Instead, their persistent presence builds a convincing case of why one should always be a diversified investor. Stocks, bonds, property, other assets and cash should all have a home in your in your investment portfolio basket.

My approach with my financial planning clients is to be diversified between stocks and fixed interest/bond investments, as well as property. At various times, we adjust the mixture depending on the current market forces, but these assets are typically persistent.

After a market crash, the percentage of stocks we hold would typically be high. This is because history tells us that big rebounds follow market-smashings. Then after a few years of rising stock prices and higher interest rates, we’d look to add more bond-like products to the portfolio.

Fidelity continually makes the sage point that “past performance is no guarantee of future results” and I agree, carry through the same warning. History, however, says that being too cautious and remaining permanently scared about the stock market is not a great wealth-building plan.

Finally, it’s always important when considering a study like Fidelity’s to look at how it was conducted. Fidelity analysed returns data for a fictional individual exposed to the total market. That includes exchange traded funds (ETFs) like Vanguard’s Australian Shares Index ETF (VAS), which captures the Australian stock market, while iShares’ S&P 500 ETF (IVV) embraces the US stock market.

These products form great bases for a portfolio, but for better or safer returns we often add other stocks and investment products to the mix for greater diversification and appropriateness, based on where the market is at the time.

We also use hedging when we think the Australian dollar is likely to rise which can reduce overseas returns.

I hold out hope. That the Trump team expedites its trade deals. While I know that it could create market problems in the short-term, they’re likely to be just that. Short-term.

If we adopt the saccharin optimism of our American counterparts over the long-term, we may find buying opportunities in areas we haven’t considered yet as a result.

As usual, it pays to be a student of financial history!

Piling into bank stocks might be ‘safer’, but for how long?

Team Switzer has spoken before about the whopping prices commanded by bank shares in Australia right now. Shares in banks like CommBank and Westpac are seemingly acting as a safe(r) haven for investors while they ride out the Trump tariff storm. But how long will the banks stay safe as houses? (more…)

Is Albo about to axe the Australian luxury car tax?

Fresh off a knockout election win, Prime Minister Anthony Albanese is hard at work negotiating better deals for Australian goods overseas. According to new reporting, everything is on the table when it comes to the trade negotiations, including an axe of the notorious luxury car tax.

What is the Australian luxury car tax (LCT)?

The LCT celebrates its 25th birthday this year after being brought in by the Howard-era government way back at the turn of the century. It was revamped along the way by the Rudd government in 2008.

It’s a 33% tariff paid by Aussies on vehicles made overseas that were imported into Australia and sold for more than $80,567 (or $91,387 for so-called ‘fuel efficient vehicles’).

In both 2000 and 2008 when the tax debuted and was refreshed, the idea was simple. Dissuade Aussies from buying BMW and Mercedes vehicles by making them more expensive to purchase and instead direct them to locally-made Holdens and Fords. Classic tariff tactics, there.

But in 2017, the last Australian-made Holden Commodore rolled out of its Victorian plant and spelled the end of locally-made vehicles, thus rendering the LCT a solution looking for a problem. However, the tax has stuck around since then, much to the chagrin of MPs and motorists everywhere.

The Federal Government seems more than happy to keep the LCT despite the death of local manufacturing. Probably because it’s actually a handsome money-maker that nets them over a billion dollars a year in revenue.

So what would tempt PM Albanese to part with over a billion dollars a year?

The road to free trade may spell the end of the luxury car tax

As the returned PM gets back to work on the business of the nation, he’s on a grand tour to drum up better deals for Aussie exporters.

This includes regular discussions with Indian Prime Minister Narendra Modi, and open discussions with the European Union. The EU has reportedly signalled that it's open to better trade deals with Australia, but wants something in return first.

A source has reported to News Limited that Albanese wouldn’t drop the LCT arbitrarily, and would want better deals for our agriculture on the continent in return.

The benefits of lower tariffs and taxes in Australia are obvious for Europe, with the car industry revving its collective engine at the idea of challenging China's rapidly expanding fleet of electric vehicles currently taking to Aussie roads.

Improving deals for Australian agriculture isn't new for Albanese, either. Back in 2022 when he first took office, wrote in an op-ed that "there is great potential for our farmers to increase their exports of bulk commodities to a broader array of trading partners". At the time, it seemed he was talking about working to lift the export ban to China and defrosting our relationship with our neighbours. In his new term, it seems the names have changed but the goals remain the same.

It's a lofty goal to aim for, too: Australian farmers net over $6 billion a year exporting our agriculture into Europe alone, making the $1.2 billion scored via the local Luxury Car Tax seem like the coins you find in the couch by comparison. It's worth giving up for Australia's economy, too. Any increase in the output of the so-called Australian farm gate to Europe brings with it a significant revenue upside in the form of tax revenue from new jobs created and higher company profits (provided margins don't decline for exporters)

It’s a game of political wait-and-see as negotiations reportedly continue.