Don’t wear Ralph labels: accountant

DON’T get sucked into believing the labels the media likes to use when speaking about industries affected by the Ralph Review.

This was the advice given by KPMG partner Carlo Franchina at a recent breakfast seminar held on the Ralph report.

“There have been articles in the press headed Tax plans to choke miners, Bricks and mortar windfall and Small business the real winners,” he said.

“Just a word of caution. They’re all generalisations.

“There are certain industries which, in a general sense, may gain or lose from the changes but really you need to look at the impact of the changes to your organisation.

“A mining company that has already undertaken significant capital expenditure, doesn’t have major forward capital expenditure in the pipeline and has locked itself into accelerated depreciation rates may be a winner with the changes.

“Do your own analysis. If relevant, communicate it to your shareholders and the markets.”

KPMG partner Craig Yaxley said, under the proposal, capital growth stocks were clearly more attractive, particularly with refundable franking credits on dividends.

He said property might not be as attractive unless there was high capital growth of at least twice the inflation rate.

Mr Yaxley said negative gearing was more attractive, particularly with shares, as interest would be deducted at 48.5 per cent, while franked dividends and capital gains would be taxed at only 24.25 per cent.

Mr Franchina said at the moment when a company restructured or took over another company, any shares the shareholders received were taxed as capital gains even though no cash had been received.

With the changes, the shareholder would not have to pay capital gains until the shares are sold.

Mr Franchina said it would not only apply to public listed companies but also takeovers of private companies and trusts.

“I believe it is a positive initiative and should relieve some of the obstacles which currently exist for commercial restructures,” he said.

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