IMF’S TAX TIPS; NDIS PRODUCT CRACKDOWN

IMF backs RBA inflation fight, tax reforms

Economic growth in Australia will pick up in 2025 but elevated inflation levels remain a major domestic risk, according to the International Monetary Fund (IMF). In a report card on Australia, the IMF says the Reserve Bank’s restrictive monetary policy stance aimed at combating persistent inflation is appropriate. The IMF predicts that Australia will record economic growth of 2.1 per cent for 2025, up from 1.2 per cent in 2024. It says that underlying price pressures remain elevated, mostly in non-tradable sectors like rents, new dwellings, and insurance, reflecting ongoing supply-demand imbalances. In the medium term, the IMF says Australian tax reform should target system efficiency and fairness. It suggests that tax breaks, including from capital gains tax discount and superannuation concessions, could be phased out to generate a “more equitable and efficient tax system.”

Shorten cracks down on NDIS services

National Disability Insurance Scheme (NDIS) Minister Bill Shorten has cracked down on the range of support allowed under the scheme, releasing a central list of legal services. Mr Shorten said that for the first time (in 11 years), participants would have clarity on proscribed services in the $42 billion scheme. The Minister said there had been a rise of opportunistic, unethical providers who sold services that should not be paid through the NDIS. For example, he said the NDIS did not support home schooling, prescription drugs or items available through the Pharmaecutical Benefits Scheme or through Medicare. In addition, Mr Shorten said the NDIS would not pay for spa baths, rent, political contributions, fines, tarot cards, clairvoyance or cuddle therapy. The 2024-25 Federal Budget forecast that the NDIS would cost more than $48 billion this financial year, rising to $60.1 billion in 2027-28.

Marles talks up NZ capability for AUKUS Pillar II

Deputy Prime Minister Richard Marles has brushed off suggestions that New Zealand should be wary of taking part in Pillar II of AUKUS if it meant antagonising China. In an interview on New Zealand television, Mr Marles said that like NZ, Australia’s biggest trading partner was China. The Defence Minister said, however, that China was a source of security anxiety and Australia would disagree with it where it must. Mr Marles said Australia sought to be a country that seriously engaged with China; a “serious capability” increased diplomatic space and enabled it to be engaged politically. He said a “more (militarily) capable” New Zealand was “very much” in the interests of Australia.

Gas reforms lifting market efficiency, says regulator

Australia’s statutory energy regulator says that reforms to the National Gas Law earlier this year have “contributed meaningfully” to competition and efficiency in the wholesale gas market. A report by the Australian Energy Regulator (AER) into the ‘Day Ahead Auction’ process said access to additional capacity had resulted in shippers being better equipped to manage long-term commodity agreements. The AER said there had been a significant growth in use of the auction by traders, who supported market efficiency by moving gas from where it was abundant and cheap, to where it was scarce and expensive. In addition, the AER found evidence that gas-powered generators were winning capacity on routes that supported generation in the National Energy Market.

Goods exports, imports weaker in August

Imports and exports to and from Australia both fell during August, in a sign of a potentially cooling economy. Imports fell by 0.2 per cent to $37.5 billion seasonally adjusted in August, the third successive month of a fall in imports. According to the Australian Bureau of Statistics, exports were also down by 0.2 per cent to $43.2 billion, leaving a surplus of around $5.6 billion. The fall in trade levels was attributed to a reduction in the import of non-industrial transport equipment and in the export of rural goods.

Tax promoters facing further review

The Albanese Government is stepping up its campaign against promoters of tax exploitation schemes, as it moves to strengthen laws on unethical tax avoidance. Assistant Treasurer Stephen Jones has released a Treasury paper that is reviewing the tax promoter laws, which he said were designed to capture tax agents who promoted illegal and fraudulent schemes to clients. Mr Jones said the review would consider whether the current regime was fit-for-purpose, adequately addressed current types of promoter activity, and effectively safeguarded taxpayers.