Charter of Contractual Fairness
On 1 July we launched our Charter of Contractual Fairness

We have heavily drawn the principles of contract fairness from the new consumer unfair contract protections laws. If it's fair for consumers, it's fair for small business people - the self-employed and independent contractors.

We are currently writing to Australian corporations asking them to commit to contract fairness in their dealings with small business people.
Election Face-off 2010
Here's how the 2 sides currently shape up for small business/self employed people! (10 July 2010)
Gillard's ALP

So far, they've told us "here's what we've done!"

• Started a superannuation clearing house
• Begun a small business online inquiry service
• Established a Small Business Advisory Committee
• New liability contract guidelines for government procurement
• National Business Name Registration
• A new guide for self-employed people
Abbott's Coalition
They've announced the first part of "here's what we're going to do!"

• A dedicated Small Business Minister who will be in Cabinet
• A new Small Business Ombudsman to handle and resolve small business complaints about the federal government
• The extension of consumer unfair contract protections to small business people
• Retention of the current self-employed (PSI) tax laws
• Stop small business red tape on Paid Parental Leave
• Mr Abbott's and Mr Billson's joint press release
What we've been asking for
• The extension of consumer unfair contract protections to small business people

• Retention of the current self-employed (PSI) tax laws. Our letter to the PM (28 May 2010)

Failure to fix unfair business contracts
ICA says "extend unfair contract protections for consumers to small business".

New laws:
Legislation #1 (March 2010)
Legislation #2 (June 2010)

Here's our summary of the situation.
How the legislation defines unfair contract terms.
Why small business people should have TPA protections from unfair contracts.
We need an answer on tax, please
We've made it quite clear that self-employed (PSI) tax should not be changed.

We've written to the PM for an answer, but we do not yet have a reply.

Tony Abbott has been clear. NO change!
Industry/Retail super funds must come out
The Cooper Review into superannuation says the big funds are not disclosing enough and must be forced to do so. This is vital. See Chapter 4.

Here's why workers' money is at risk if disclosure is not enforced.
Look after your retirement
The Cooper Review of superannuation says Self Managed Super Funds are good and need little change to existing arrangements. This is welcome. See Chapter 8.

The Report also seems to have stopped the attack against SMSF's.
Stand Up for Your (Contract) Rights!
We're monitoring contracts in general and promoting good contracts in particular. For example:
Another bad contract (Jun 2010)
One of the worst contracts we've seen (Jan 2010)
'Tom' versus DEEWR (Nov 2009)
But a positive development from government
Ken Phillips comments
And some interesting discussions
Central Banks on Debt
Since mid-May, central banks have been worried about sovereign debt. Click here for a list of useful links and summaries.
Problems with Phoenix companies
Two ICA members' tell their stories
ATO information on reporting suspect activity.

Govt's attempts to do something:
ICA comment

Newspaper comment:
The Australian
The Age/Sydney Morning Herald
Business Spectator

What 'Tom' thinks
What 'Jim' thinks
Dick Davies Writes...
"...the human fabric of the workplace precedes in importance that of technology!"
Dick Davies prods us to think about management, independence and motivation. Click here.
Stop Sham Contracts!
ICA supports the prevention of sham contracts. We monitor what's happening with them:
One person's story
Successful FWO prosecution (Dec 2009)
Info from Fair Work Ombudsman (July 2009)
First sham contract prosecution: ICA summary
Make a complaint to FWO
Business Spectator article
Read the debate
... Unquote
The Pessimists' Economic Views
(Posted January 2010)
We've brought together some pessimistic views about economics and likely economic trends in 2010:
US toxic loans
'US as sick as Greece'
Ken Phillips's summary
An 'IMF' perspective
Predicting 2010
Government debt a giant ponzi scheme?


Click to enlarge.

Ken Phillips on the debt equation


Watching Goldman Sachs
Rolling Stone magazine has blown the lid on Goldman Sachs:
Article 1 [July 2009]
Article 2 [April 2010]
Article 3 [May 2010]
Tax burden: UK versus Australia
Just as the UK is moving toward more sensible small business (contractor) tax laws, in Australia we're having to defend the progress we've made.
Laughing lawyers
You'll be amazed by the 'slips' that some lawyers make in court.

Tax rights under siege


In a strange move late last week the Rudd government launched an aggressive attack against the small business community. The attack came in the form of the release of the Board of Taxation's report into the operation of the personal services income tax laws, by the Assistant Treasurer Senator Nick Sherry. These laws cut to the heart of the right of Australia's two million self employed people to access business style tax treatment.

Senator Sherry's press release accompanying the report displays a government pandering to the industrial relations agenda of the Australian union movement in particular that of the militant construction union the CFMEU. Australian unions have long detested the existence of self employed people seeing us as working class traitors. Since the late 1980s they have sought to use the taxation system to force us into employment style status.

The Board of Taxation's report and Senator Sherry's press release returns to that 80s agenda. They re-raise the idea that self employed people are 'employee-like' and should be denied business taxation rights. In particular anyone who works through a business structure (company, trust or partnership) should be denied the ability to claim business tax deductions or pass income to their business partners.

The primary test they want to introduce is the discredited 80/20 rule. This says that if self employed people earn more than 80 per cent of their income from one source in a year, they will be taxed as an employee. It's an issue the Howard government grappled with in the lead up to the 2004 election. At that time Prime Minister Howard realised that if he insisted on the 80/20 rule it could cost him the election. His Treasurer Peter Costello calmed the roaring small business anger that had erupted by applying the 'results test' which stands today. It's this that the Board of Taxation recommends overturning.

The issue has long roots back to the original design of income tax laws around the period of the Second World War. Then the vast bulk of people were employees. The income tax system was designed on employment assumptions. Self employment started to increase in the 1970's. Tax authorities saw this as a threat to the operation of the tax system. Unions' equally don't like self employment because it significantly reduces unions' legal authority over the workforce.

Unions and tax authorities found themselves with common self interest in aggressing against the self employed. During the 1990s the taxation aggression took many forms culminating in the Ralph Report of 1999 which raised the 80/20 'solution.' But the idea of self employed people rorting the tax system was proven false by an Australian Taxation Office audit of 65,000 people profiled as 'income splitters.' The audit concluded the 'problem' was minuscule.

Still, Howard sought to introduce the 80/20 rule. The self employed community is known to be politically volatile but notoriously unfocused. Howard discovered to his horror that this key and huge swinging voter demographic galvanized as never before. A political storm erupted particularly after major radio talk show hosts realized they would be affected by the 80/20 rule. Howard backed off.

This experience taught Australia's federal tax authorities that it is better to work with the self employed rather than aggress against them. There's been a sea change in their approach. Following judicial clarification of the 'results test' in late 2008 the system has settled down. Internationally it leads the world. North America, the UK and EU remain in confusion.

A hallmark of the Rudd government has been its political intelligence. They've realised that electoral success heavily depends on winning a primary swinging demographic drawn from the two million self employed people. They won this group in 2007. Senator Sherry's endorsement of this new report threatens that.

This recent report raises recommendations that exceed that of the Ralph 80/20 rule. There are proposals to tie small business tax rights to complex ideas of capital investment, new, involved payer and payee reporting requirements, extending 'attribution' rules, removing business deduction entitlements and so on. Small business needs and wants tax simplicity. The Rudd government is heading down the path of significant new complexity. They risk stirring the self employed voter demographic against them.

The Rudd government has worked hard to keep this group with them. The 'education revolution' building stimulus package is all about keeping self employed tradies working. And there are other targeted programs. But to destroy small business tax rights as recommended is high risk, both politically and economically.

From the Business Spectator, December 2009.

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