CA ANZ welcomes some Budget progress but still awaits substantive tax reform 

BUDGET REACTION – Chartered Accountants Australia and New Zealand (CA ANZ) will continue to push for substantive tax reform and a roadmap to achieve it, despite welcoming aspects of the latest Federal Budget.

CA ANZ used its pre-Budget submission to push for a wider discussion about the tax system, the heavy reliance on personal income tax collection and the need to consider the equity of the tax system – especially intergenerational equity – to help support the costs of an ageing population.

“The structural deficit means it’s well and truly time to discuss the sustainability of Australia’s heavy reliance on personal income tax collections,” CA ANZ CEO Ainslie van Onselen said. “We again urge policymakers to keep an eye on the international competitiveness of our personal tax system.

“That said, following our calls for well-resourced and better targeted regulatory activity outside our remit as a membership body at numerous parliamentary inquiries, I am pleased to see that ASIC staff will be increase by 14 percent, or 239 people.

“This is an important development as it’s in the best interest of the auditing and accounting professions to have a strong, well-funded regulator but CA ANZ will be looking for more information on exactly where within ASIC, these additional employees will go,” Ms van Onselen said.

Small business support 

CA ANZ’s senior tax advocate, Susan Franks said she welcomed the extension of support for small businesses but remains concerned at the growing list of announced but un-enacted tax measures.

“Small business clients keep asking Chartered Accountants obvious questions: why keep tinkering with the instant asset write-off and why not make it permanent?” Ms Franks said.

“It is disappointing that the government has not continued the 120 percent boost for training and the transition to energy efficient assets for small business when there is a large need for trained staff and for all businesses to reduce their carbon footprint,” she said.

CA ANZ is calling for the Federal Gvernment to legislate this and other changes as a matter of urgency.

“The extension of the instant asset write-off in last year’s budget and the 120 percent boost for energy efficient assets are still languishing before Parliament,” Ms Franks said. 

“Small business owners or sole traders who may want to take advantage of these measures are holding back until they have certainty that their investment will receive the benefits they’ve been promised. 

“There is clarification of some announced but un-enacted measures in the Federal Budget but the list remains long. This Budget adds further uncertainty about changes to the capital gains tax treatment of inbound investment.

“Creating a new ‘front door’ for investors with major investment proposals to make it simpler to invest in Australia won’t be as effective as it should be if there is an uncertain tax regulatory environment,” Ms Franks said. 

More money for the ATO  

This year’s Federal Budget also includes another funding boost for the Australian Tax Office (ATO). 

“Ensuring the integrity of the tax system is essential to the maintenance of Australia’s high level of tax compliance and providing a level playing field for businesses doing the right thing,” Ms Franks said.

“In the wake of the Operation Protego scandal, combatting fraud is the tax centre piece of this Budget.

“Businesses expecting fast business activity statement refunds may be in for a shock. The ATO has been given the power to retain those refunds for 30 days, rather than the current 14 days, to give the ATO time to ensure that its systems are appropriately preventing fraud.

“While the ATO has been allocated extra resources, the Inspector General of Taxation and Taxation Ombudsman (IGTO), the key agency which helps taxpayers deal with the monolithic ATO, has not received any significant additional funding.

“With taxpayer disputes with the ATO likely to escalate as the ATO commences the huge job it faces in collecting $100 billion of outstanding tax debt, it is concerning that the IGTO has not received a significant funding boost and the outgoing IGTO has not been replaced,” Ms Franks said.

A quiet night on the superannuation front 

CA ANZ had used its pre-Budget submission to push for a plan for the ageing population, including replacing the annual superannuation caps with lifetime caps. 

CA ANZ’s superannuation and financial services leader, Tony Negline emerged from the Budget lock-up with this view:

“The Federal Budget is very quiet on a superannuation and financial advice perspective,” Mr Negline said.

“The government’s decision to provide $1.1 billion to pay super on government funded parental leave over four years, then $623 million every year after, is an important to step to an equitable superannuation system. The retention of the deeming rates at current levels for another 12 months will assist part-pensioners struggling with the inflationary impact on basic living costs,” Mr Negline said.

“A roadmap towards long-term sustainable simplification of the superannuation, age pension and aged care regulatory environments remains a task yet to be started.”  

www.charteredaccountantsanz.com 

 

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