A “phased” approach to increasing business license fees along with a provision for assessments to be made based on profitability rather than gross revenue is being proposed by a senior Commonwealth Bank executive, who foresees a “very hard” 2014.
Taxes for Commonwealth Bank are expected to nearly triple once the new business license fees take effect in early 2014, at which time the government will impose an additional three percent levy on banks’ interest and fee-based income.
President of Commonwealth Bank Ian Jennings told Guardian Business that in this current economic climate the “banks have taken very high losses”, and are concerned about the change in fees as a result.
Specifically, based on 2012 figures, Jennings said the new fee proposed in the 2013/2014 budget would result in the bank’s tax liability rising from $2.4 million to over $7.4 million.
The senior executive projected that the imposition of the fees will result in losses for the bank in 2014, despite 2013 bringing an improved financial picture for the institution.
The banks, via the Clearing Banks Association, have made representation to the government on the matter but have yet to receive a definitive response.
“Up until the budget, the domestic banks paid business license fees based on asset size. So if you’re below $1.5 billion, the fee was $1.8 million, and if you’re above $1.5 billion, then it was $2.4 million. We have been crossing that threshold for the past couple of years,” said Jennings.
“Now, the tax being proposed is in addition to that tax which is three percent of gross revenue, which based on our 2012 numbers would be in excess of $5 million.”
