Business & Economic Insights
Perspectives on Business & Economics
by Charles Pratten
The following commentary is provided solely for academic and general informational purposes, offering my personal perspective on questions frequently raised about various economic matters directly and indirectly concerning Australia. My opinions expressed herein are not intended as advice of any kind, nor should they be construed as guidance or recommendations for specific actions.
Keeping Family Businesses Relevant:
Strategies for Lasting Success Across Generations
Why do some family businesses struggle while others thrive? The key often lies in adapting to new trends, embracing fresh ideas, and seizing emerging opportunities.
Some family businesses struggle to scale during the founder’s tenure because, while core principles like supply and demand remain constant, the methods for reaching and engaging customers evolve rapidly. The shift from Yellow Pages to websites, and now to the dominance of social media, is a prime example. Founders who built the business may not always keep pace with these changes, and their traditional approaches can hinder adaptation to new, faster channels needed for growth. To ensure continued success and generational wealth, family businesses should conduct an independent review of operations every ten years. These reviews provide an objective assessment of current opportunities, ensuring the business remains aligned with long-term goals, adaptable, and competitive in a fast-changing market.
The Oft Misunderstood Nature of Business Decisions: The Benefits of a Business Plan
Many business owners make bold, strategic decisions shaped by experience and judgment. However, when regulators, especially tax authorities, scrutinise these choices, the outcomes can often be punitive and deeply impactful.
Business decisions often reflect unique insights, risks, and strategies shaped by experience and judgment. However, regulators and tax authorities, relying on general metrics, can misjudge these choices, especially in innovative sectors like research and technology, where bold moves may face unwarranted skepticism. To defend against this, maintaining an updated, well-documented business plan is vital—not only to justify decisions but also to showcase strategy, attract partners, secure financing, or add value during a sale. Beyond addressing external scrutiny, a business plan effectively documents strategies and successes, enhances professional credibility, and strengthens the valuation of your enterprise.
Why do some companies
pay no tax in certain years?
It’s a common question: how can large, profitable companies end up paying no tax in a particular year? The reasons often lie in accounting practices, tax regulations, and legitimate business conditions.
In some cases, companies may report losses due to high costs or low revenue, while others offset profits with losses from prior years. Tax offsets for activities like research and development can also reduce tax bills, as can deductions for capital expenses. Recent changes and increased compliance efforts by the Australian Taxation Office (ATO) have curbed aggressive tax avoidance, so today, most companies paying no tax are following legal allowances rather than exploiting loopholes. Understanding these mechanisms provides valuable insights into Australia’s corporate tax system and shows how companies work within legal frameworks to manage their tax liabilities effectively.
What Does It Mean to
Pay a Fair Share of Tax?
Paying a fair share of tax” is often perceived as ensuring that high earners and companies contribute adequately to public funds, but in tax law, it simply means paying exactly what one legally owes.
The term “paying a fair share of tax” is often used to question whether companies and high-income earners are contributing enough to public revenue. However, in the context of tax law, the concept is simpler: a taxpayer’s obligation is to pay precisely what they legally owe—no more and no less. While “fair share” implies a straightforward standard, it overlooks the complexities of individual tax situations and the foundational tax principle that obligations are defined by law, not by subjective notions of fairness. Recognising this complexity is crucial to addressing misconceptions about tax contributions and perceived inequities.
The Benefits of Mediating
Business Disputes
Settling business disputes amicably—without escalation—can be the most effective path forward. After all, no one in business wants added stress or costly legal battles, right?
In business, disputes often arise as a natural consequence of supply and demand. Conflicts can be exasperated by misunderstandings, accusations, and heightened emotions, which can obscure the real issues and needlessly escalate tensions. Mediation—whether the dispute involves thousands or millions—provides a practical and often highly effective first step toward resolution. A mediator may be engaged either as a neutral facilitator between parties or as an advocate to represent a client’s perspective when direct engagement is impracticable (Voluntary Mediation / Client Advocacy): both approaches can save time and money, making mediation and advocacy smart alternatives to court.
Vanuatu: International Sanctions on
Russian Dealings Impact & Compliance
By Charles Pratten
Asian Finance Association Annual Conference 2022
- Vanuatu: International Sanctions on Russian Dealings
- Impact and Compliance
This paper provides a high-level overview of the potential effects of recent US, UK, and EU sanctions on Vanuatu-based business activities, with insights relevant to other affected countries in Asia that maintain strong financial ties to Vanuatu. Key sectors at risk of exploitation include foreign exchange, online gambling, shipping registration, and citizenship-by-investment programs (Golden Passports). Sanctioned individuals may use Vanuatu-registered companies to evade restrictions, concealing sanctioned assets in its banking systems or real estate, as has occurred in Australia and New Zealand. This analysis is based on publicly available information as of April 22, 2022.
