By Patricia Karvelas

June 11, 2008 12:00am

SMALL business owners could be given the option of being taxed as individuals instead of as companies to cut compliance costs and red tape under a proposal the Rudd Government is considering.

Small Business Minister Craig Emerson said the Government would consider new measures designed to spare small businesses the tax paperwork burdens faced by big companies, The Australian reported.

The Institute of Chartered Accountants and Deloitte have proposed that small businesses go through the same tax process as individuals, and have their tax rate based on how much they earn.

“The Government has decided to refer the flow-through proposal to the review of Australia’s Future Tax System headed by Treasury secretary Ken Henry,” Dr Emerson said.

“The flow-through regime is proposed as an option for small companies and unit trusts with five or fewer shareholders wanting to reduce their compliance costs associated with understanding and accounting for different types of financial flows from the entity to its owners.

“I know the institute believes this regime will reduce the tax compliance burden associated with incorporation and unit trusts while maintaining the non-tax benefits of company and trust structures.”

The Government has also decided to refer the BAS Easy option for simplifying GST book-keeping for small business to the Board of Taxation chaired by Dick Warburton as part of the board’s review of the legal framework for the GST.

Dr Emerson said compliance with GST requirements remained the greatest administrative burden for small business.

“This is yet another example of the Government getting out of the way and restoring incentive by pulling away unnecessary red tape that is choking small businesses,” he said.

“Responsible tax reform proposals must maintain the integrity of the system and meet theprinciples of economic efficiency”.

Council of Small Business of Australia chairman Bob Stanton last night warned that the Government must listen to small business or face its wrath, as the Howard government did.

“The now Opposition have seen first hand what can happen to a sitting government when they ignore the might of small business,” he said in a speech at the opening dinner of The National Small Business Summit.

“Fran Bailey, the immediate past minister for small business, must be wondering how many small business owners in her electorate did not vote for her. And why didn’t they vote for the sitting minister for small business? Because the government failed to listen to them.

Because the government failed to recognise they were individuals wanting the respect they so richly deserve.”

Ms Bailey went from having a 6.5 per cent margin in McEwen before last November’s election to retaining it by just 12 votes after a recount.

Mr Stanton called on Kevin Rudd to set a new level of government support for small business and include the Small Business Minister in cabinet.

“He can then have his Government undertake a substantive study into laws from other countries that protect the rights of their small business communities,” he said. “He can have a decent discussion on the future of small business.”

Some of the articles that have been posted to the site effectively preach ‘DRAMA’. It’s not like we don’t already know what is going on! Drama is ok in a newspaper but it doesn’t get the job done for the everyday Joe!

The way to overcome financial dome & gloom is to have a goal, and a plan to achieve it. Most importantly make a habit of it!

There is an opportunity coming over the next 6-10 weeks for some- TAX REFUNDS! – Yeah!  With the new financial year upon us perhaps there are a few New Financial Year resolutions we could put into our physcie?

A key component to all this is to understand your cash flow. What comes in & what to go out, more importantly when it has to go out. Budgeting becomes an important part of this.

Budgeting needs to be thorough. It has to include annual needs like House insurance, cars through to white good replacements and alike. There are several software packages available which can assist in this area. And if you would like to be pointed in a direction I can suggest you contact me & I would be more than happy to assist. However budgeting is only the start of the process.

Once you have an idea on how and what monies are available you can start to build on a strategy to get yourself in order or ahead. It might be to make sure you have got Xmas & school holidays covered.

Then you need to make sure you have automatic payments organized where practical. So that you can’t forget to make payments. Have them set up around you pay cycle.

However if the numbers don’t add up and there is more going out than coming in, (not just now but perhaps in the next month or two) then there are a few different strategies that can be opted for. Some involve insolvency processes, not all do & there are approaches which help re-engineer debt and reduce repayments for the longer term.

In a lot of instances, it will not be just one approach that will help you through these tougher times but a combination.

By Peter Jean and Ben Packham – Courier Mail

June 11, 2008 08:44am

• Demand for home loans has slumped in the wake of high rates
• Economist tipping property will be depressed for rest of year
• In-depth: The latest interest rates news and features

DEMAND for home loans is crumbling as would-be buyers are scared away by high interest rates.

Economists predicted yesterday that the property market would remain sluggish for the rest of the year.

The number of loans taken out for owner-occupied homes in Australia fell by 3 per cent in April, to a seasonably adjusted 57,503, Australian Bureau of Statistics figures showed.

It was the third month in a row that home loans fell across the nation.

Economists had forecast a 1.9 per cent fall for the month.

The slump suggests interest rates and soaring fuel prices have caused a serious slowing of the economy.

“Consumers are being battered from all sides,” Comm-Sec chief economist Craig James said.

“It’s not just the Reserve Bank lifting rates, it’s the fact that individual banks have been forced to lift rates, the cost of petrol has been going up, food is going up. It’s all putting pressure on people’s budgets.”

Mr James said the figures were “super-weak”, capping the biggest slump on record.

“This isn’t just another modest drop. This has been the third significant fall in home lending,” he said.

“We’ve had something like an 18.4 per cent fall in new home loan lending in the past three months.

“We haven’t seen a decline like that ever before.”

He said the slump would have a serious impact on the supply of homes, given rising immigration levels.

On the up side, Mr James said there was now little chance of an interest-rate rise before the end of the year.

“The Reserve Bank certainly doesn’t need to be following up with any further interest rate action at this time,” he said.

“The economy has already responded, slowing down significantly.”

Macquarie Group senior economist Brian Redican said the high interest rates would keep stifling the depressed housing market.

“There’s certainly no sign of a turnaround in the housing market, probably for 2008,” Mr Redican said.

“Until we start to see interest rates fall, and that certainly seems a long way away at the moment . . . all the risk remains on the downside.”

Housing Industry Association chief economist Harley Dale said though the property market was subdued, there was still a shortage of homes for sale and available for rent.

“HIA has maintained for some times that Australia needs to produce 175,000 to 180,000 new residential dwellings a year to meet current and anticipated demand,” Mr Dale said.

By Kate Perry – Courier Mail

June 11, 2008 12:00am

• Lenders are not as free and easy with credit as they were
• The number of people checking their credit has doubled this year
• Unpaid bills will sit on your credit report for up to 5 years

THE days of easy credit are over, with lenders make it tougher to borrow money, and consumers struggling with mounting debts, credit agency Dun & Bradstreet says.

D&B said as it becomes tougher to borrow money more people are taking an interest in their credit status.

Since December last year the number of the number of Australians checking their credit file has more than doubled. D&B said this could be because more people are being denied credit or just want to check their credit is in good order before applying for money.

Your credit records are checked whenever you apply for mainstream credit - whether it’s a credit card, bank loan or in-store finance.

Data out yesterday from the Australian Bureau of Statistics showed that Australians’ appetite for credit has not dimmed. Total personal loans rose 5.8 per cent in April to $6.9 billion, up from $6.5 billion in March.

Lenders toughening up

D&B’s chief executive Christine Christian says the days of easy access to credit have come to an end and lenders are becoming choosier about who they’ll deal with.

“In the current environment banks are only willing to lend to those that don’t have adverse information on their record- they won’t take a risk on anyone with outstanding debts, missed payments or court actions against their name,” she said.

Unpaid bills linger

Not paying a utility or phone bill can leave a stain on your credit report that will take up to five years to clear. Paying the bill late will not be enough to clear your record. If there’s a blight on your credit report you’ll find it all but impossible to get access to mainstream credit like bank loans or credit cards.

You can get a copy of your credit report by contacting credit agencies like Dun & Bradstreet or Veda Advantage.

Protect yourself

It’s important to protect yourself from other people’s debt. If you live in a shared house, but it’s your name on the utility or phone bill, it’s you the debt collectors will come chasing.

If you’re in a relationship, make sure you read the fine print before agreeing to go guarantor on a loan, or putting your name to a bill. If the romance turns sour you could be lumped with the repayments, or ‘sexually transmitted debt’  .

If you are behind in your bills and have debt collectors knocking on your door, make sure you know your rights. Never ignore late payment demands or phone calls from debt collectors, instead try to negotiate a payment plan.

Step 1 – Know your credit rating

Before most organizations will lend you money they will look at your credit rating to assess whether you have a good conduct in paying debts.

A bad credit rating can increase the cost of lending and or hinder you in gaining further credit. The sort of things that are noted could be having your power cut off; your car repossessed or perhaps have missed payments on credit cards or mortgage. Can also include clear outs. (This is where a lender has tried to make contact by phone & writing without success. As a result they have listed you as a missing borrower)

Obtaining a copy of your credit file can be free if you are prepared to wait 10 days, however for a fee you can have it a whole lot quicker.

Step 2 – Clear up any disputed credit records

If you believe that a company has unfairly listed an overdue notice on your credit file, you should contact them as soon as possible to seek clarification for any incorrect information. This should be amended immediately.

If this is not rectified appropriately you can contact Banking & Financial Services Ombudsman (http://www.bfso.org.au) or the Telecommunications Industry Ombudsman (www.tio.com.au)

Step 3 – Improve your credit rating

Ensure that you are meeting all credit payments on time, so you can demonstrate that you able to make good on your commitments to another prospective lender.

This may be done with the assistance of your bank. They will be able to establish automatic payments to your respective loans.

Step 4 – Get help from Family and friends & locate budgeting tools

See if you can get a partner/friend to check that you are paying your bills on time. There is several good budgeting software options that are available to assist with managing your cash. Financial counselors may also be a reference point (www.afccra.org) for you.

However if you are unable to make it work there are several options which may be available to you through debt mediation or debt agreements. Debt agreements in effect is a form of insolvency. Care needs to be taken when dealing in these areas as fees are payable for the process. It is a good idea to get a few quotes for comparison.