The Carbon Tax Repeal and Your Small Business
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REIANEWS ISSUE 38: SEPTEMBER 2014 ALSO IN THIS ISSUE THE CARBON TAX REPEAL AND YOUR SMALL BUSINESS PARLIAMENTARY GROUP ESTABLISHED FOR CITIES SOCIAL HOUSING AND NEGATIVE GEARING LATEST HOUSING DATA NOW AVAILABLE MORE WANT TO FIND OUT ABOUT PROMOTING YOUR BRAND IN REIA NEWS? CONTACT REIA MANAGER COMMUNICATIONS ZOE DAVIES ON 02 6282 4277 OR AT [email protected] FOR FURTHER INFORMATION. PRESIDENT’S REPORT 1 REIA President, Peter Bushby with Ken Nichols from the Australian Property Institute 2 REIA President, Peter Bushby with Peter Howman Managing Director of Defence Housing Australia, which recently joined as REIA’s newest member 1 2 strongly supports foreign investment Friendship Group for Better Cities. WELCOME in Australia but believes there needs This is an exciting new development FROM REIA’S to be more monitoring of existing and I am proud that REIA is one regulation rather than new measures of the founding members of the that would unfairly burden the sector. PRESIDENT group. The group will provide a new I was also in Canberra recently to meet forum for diverse stakeholders to with various politicians, Government come together and identify ways representatives and industry leaders that we can create better cities. Hello and welcome to the September including Ken Nichols, acting National edition of REIA News. It has been Operations Director of the Australian This month REIA also released its a busy month for REIA and for the Property Institute and Peter Howman Housing Affordability Report which broader sector with significant from our newest members, Defence showed a concerning trend with media attention turned towards Housing Australia. Accompanied by first home buyers still staying away the Foreign Investment Inquiry REIA CEO, Amanda Lynch, and as part from the market in large numbers. and the recent increase in house of our ongoing conversation with prices in Melbourne and Sydney. It would seem the removal of first Government and the industry, we also home buyer grants in many states and REIA Board member and CEO of First raised various matters including our territories is having a negative impact National Real Estate, Ray Ellis, recently campaign to retain negative gearing in by lessening their confidence to enter spoke at the House of Representatives its current form. We believe negative Standing Committee of Economics the sector. For further information gearing plays an important role in Inquiry into Foreign Investment in Australia’s real estate sector and helps about the report, click here. Australian Real Estate. During the keeps downward pressure on rents. public hearing, Mr Ellis said that foreign investment would benefit from Whilst in Canberra I was also able to Mr Peter Bushby greater scrutiny by Government. REIA attend the launch of the Parliamentary REIA PRESIDENT Follow us on Twitter @REIANational COVER STORY This article is brought to you by REIA Chief Executive Officer, Amanda Lynch With all the recent media Some media articles have even for real estate at a total value of attention on foreign suggested that foreign investment $51.9 billion out of a total foreign levels are influencing Australian investment level of $135.7 billion. investment in Australia, property prices. These media claims Around half of the approved coincided with the recent public it timely to step back and applications related to vacant land hearings as part of the House of access whether foreign development, new dwellings, off- Representatives Standing Committee the-plan dwellings and property investment is a helpful on Economics Inquiry into Foreign redevelopments. The remaining driver or hindrance to Investment in Australian residential approvals related to existing real estate which saw REIA represented Australia’s real estate sector. residential property and these are by board member, Ray Ellis. And if there are problems, the properties that are attracting then what changes can be The 2012-13 Foreign Investment significant media attention with claims Review Board Annual Report noted that foreign nationals are pricing implemented to ensure that 94 per cent of proposals receiving Australians out of the market. foreign investment approval were it does yield benefits. However, the current foreign investment regulations stipulate that temporary Australian residents can acquire property only for their residence. The regulations also state that they cannot buy established dwellings as an investment and when they leave Australia, they must sell the property within three months. This measure was established for the very reason of mitigating any risk of foreign nationals negatively impacting on the ability of Australians to purchase an existing home. REIA strongly supports foreign investment in Australia as it has been demonstrated to increase housing supply at a time when Australia Discussing foreign investment in Australian real estate, REIA Board member and First National CEO Ray Ellis speaks with Chair of the Foreign Investment Inquiry, Kelly O’Dwyer MP is suffering from a chronic under » article continues COVER STORY CONTINUED supply of housing. Yet REIA also and that the Australian Bureau of to verify the identity of the clients wants to ensure that Australian Statistics, Foreign Investment Review they represent and reflect the client’s real estate remains affordable Board and Reserve Bank need foreign residency status while filling with the express aim of seeing an comprehensive data to better in the form in an online workspace. understand the extent of non- increase in home ownership. While e-Conveyancing will reflect the compliance. We believe the current foreign paper versions of the transfer of land investment regulations strike the There is currently an $85,000 fine in each state and territory and the data right balance between allowing for for breaching the regulations but the fields completed by conveyancers will much needed foreign investment in Foreign Investment Review Board be the same, the platform will store Australia while ensuring appropriate has apparently not prosecuted a data electronically. With 85 per cent of checks and balances are established. single foreign buyer for breaching all property transactions over the next foreign ownership rules. This fact two years expected to be completed So why is the media filled with alone should highlight the fact that electronically, e-Conveyancing has claims that the system is not the regulations don’t need to be a capacity to reflect the number of working? The question needs to strengthened but better enforced. transactions involving foreign buyers be asked, are the regulations being and, therefore, may help improve REIA believes the introduction of properly enforced? In REIA’s recent monitoring and compliance activity. submission to the Inquiry into e-Conveyancing could improve this Foreign Investment we called on much-needed monitoring and is One last point to remember as part the Government to better monitor encouraging the Government to of this issue is that the 2012-13 and regulate foreign investment in explore the possibility of using the Foreign Investment Review Board Australian real estate and have also new online platform to improve Annual Report also details the origin compliance through greater spoken directly to the Government of foreign investment in Australia. inter-departmental and agency The largest source countries of about utilising the emergence of communication, such as with the proposed investment in real estate, e-Conveyancing as an existing Department of Immigration. by value are China, Canada and mechanism that could facilitate this. the USA, accounting for 11.4 per While it is important to stress that At the hearing Ray Ellis said that the cent, 9.5 per cent and 8.5 per cent the new online platform is heavily problem with foreign investment in respectively of all approvals. regulated with a keen focus on Australian residential real estate is protecting the privacy of individuals, This is a particularly interesting fact not that it occurs, but that it requires it will be capturing a rich set of data to note as media articles on foreign greater scrutiny by Government. including identification where the investment are frequently dominated Mr Ellis stated that he believed this transaction involves foreign nationals. by stories highlighting only one issue requires regulatory attention Lawyers and conveyancers will have particular source country, China. THE CARBON TAX REPEAL – HOW IT WILL IMPACT SMALL BUSINESS The Hon Bruce Billson MP Minister for Small Business On 17 July 2014, legislation repealing the carbon tax was passed into law and applies retrospectively from 1 July 2014. The Government believes the repeal savings in regulated sectors, namely In the first instance, you should ask your of this legislation will reduce cost of the electricity, natural gas and synthetic supplier about the prices they are charging living pressures on households and greenhouse gas (SGG) sectors. you and how they are passing on any cost cost pressures on businesses, including savings from the repeal. Businesses that Companies that supply electricity, natural small businesses. Companies that were remain concerned can contact the ACCC via gas and SGGs are required to pass on all subject to the carbon tax typically will its website at www.accc.gov.au/contact-us. cost savings associated with the repeal have passed on part or all of this cost of the carbon tax. Electricity producers In relation to energy prices, businesses to their customers, smaller businesses