HomeView 2016 Media ReleasesCall for tax changes to spark innovation and competition

COBA has called for tax changes in the Federal Budget to spark innovation, promote greater banking competition and deliver more consumer choice.

COBA has called for tax changes in the Federal Budget to spark innovation, promote greater banking competition and deliver more consumer choice.

“The current tax system puts an unfair burden on the customer owned banking sector. We currently pay a higher effective tax rate than our major bank competitors,” COBA CEO Mark Degotardi said.

“Measures contained in our pre-budget submission provided to Treasury would support a more competitively neutral framework in retail banking.

“The Government has responded positively to the Financial System Inquiry (FSI) blueprint for a more competitive and innovative financial sector.

“COBA’s tax policy proposals will strengthen the capacity of the customer owned banking sector to take advantage of this more pro-competitive regulatory framework to apply genuine competitive pressure to the major banks.”

COBA’s submission to Treasury proposes:

  • a company tax rate of 22-25 per cent for customer owned banking institutions; and
  • an expansion of GST Reduced Input Tax Credit (RITC) item 16 ‘Credit Union Services’ to cover mutual building societies and former building societies that are now mutual banks.

“The FSI warned that the banking sector is concentrated and this poses risks to both the stability and degree of competition in the Australian financial system. 

“We believe the modest and sensible measures contained in our submission will support the Government to deliver on FSI recommendations that are competition, consumer and innovation focused.”

COBA’s two proposals are summarised below:

Proposal 1: A company tax rate for customer-owned banking institutions that matches the effective tax rate of major banks of between 22% and 25%.

A competitively neutral company tax rate for customer-owned banking institutions of between 22% and 25% will increase the amount of capital available to our sector to expand lending and/or to invest in technology and innovative customer service. This will step up competitive pressure on the major banks.

Proposal 2: Expand GST RITC item 16 ‘credit union services’ to accommodate mutual building societies and mutual banks that are former mutual building societies.

This measure will reduce the anti-competitive impact of GST input taxing that unfairly benefits large banks. It will also add further momentum to a new wave of collaboration and aggregation that is occurring in the customer-owned banking sector.

The benefits of innovation, efficiencies and economies of scale achieved through collaboration and aggregation in our sector will be delivered directly to customers because our model does not have to service a separate group of shareholders.

Customers of listed banks will also benefit as listed banks will have to respond to increased competitive pressure from our sector.

Media Release175.21 KB

Pre Budget Submission861.84 KB

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Customer Owned Banking Association is the industry body for credit unions, building societies, mutual banks and friendly societies.  See coba3.nexusone.com.au


Media Contacts

Ashley Penny
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 431 932 950
Email Ashleycontact-arrow

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