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Australia at risk of an investment hiatus in 99

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30 December 1998

Australia at risk of an investment hiatus in 99’

Australia is at risk of an investment hiatus in 1999 because of a ‘wait and see’ approach adopted by many businesses facing major changes in the New Year, the Australian Society of Certified Practising Accountants (CPAs) said today. ,

“It seems like Australia has caught millennium fever. 1998 was a year of enormous change for business with 1999 likely to create even greater upheavals, with the complete overhaul of Australia’s tax system on the agenda," Paul Drum, ASCPA Senior Tax Counsel said today.

“The impact of continual change is that business is increasingly taking a ‘wait and see’ approach before making further investments. This approach can only worsen if the Parliament unnecessarily procrastinates over important legislation or introduces policy whose only merit is its public appeal.

Mr Drum said that the business community in 1998 faced many challenges that impacted on important business decisions, including:

• The announcement of a (1ST and other tax reform changes; • The first operational year of the superannuation contributions tax (surcharge); • Private company loan legislation that deems certain payments and loans to be dividends; • New trust loss and debt deductions provisions; • Changes to company loss rules;

• New dividend streaming provisions that impact on access to franking credits; • Introduction of the 45 day holding rules for shares; • ATO lodgement processing delays; and • Fallout from the Asia currency crisis;

1999 will be year of even greater change. Business will need to: • Plan for the introduction of the GST; • Assess the implications of tax reform changes, including changes to the FBT regime; • Assess the implications of the business tax changes recommended by the Ralph Committee; e Manage a predicted slowdown in economic growth to around 2%; and • Manage the impact of the introduction of the Euro and the continuing implications of the Asia

currency crisis.

“There are indications that business put their hands in their pockets after the election and are waiting until there is more certainty before investing in all but the most critical investments,” Mi­ Drum said. -ends-

Contact: Paul Drum, ASCPA Senior Tax Counsel, 03 5382 3655 (home), 0414 760 385 (mob), or Lisa Armstrong, PR Manager - NSW, 0414 834 700 (mob).

Australian Society of Certified Practising Accountants 170 Queen Street, Melbourne, Victoria 3000 Tel: 03 9606 9606 Fax: 03 9602 1163 ACN 008 392 452