Another Budget week has come and gone and so have some significant tax reform commitments of the Government.
It is extremely disappointing that the Federal Government has turned its back on simplifying tax time for millions of Australians. In the pursuit of short-term revenue considerations, it has abandoned the Budget proposal of only two years ago to allow a standard tax deduction for work-related expenses. The only conclusion we can draw from this is that the Government is not concerned about making it easier for people with simple tax affairs to complete their tax returns. This important tax simplification measure was a step towards fairer and simpler tax returns, but it will be no more.
In addition, Australian companies have been abandoned by the Government's decision to scrap the proposed company tax cut. The Henry Tax Review made it clear that a company tax rate in the order of 25% should be Australia's medium term target, so it is extremely disappointing that the Government has given up on achieving a modest cut to a 29% rate.
The announcement of the tax loss carry-back measure is a welcome development that will assist small companies struggling in these uncertain times. It is pleasing to see that the Government has not rushed to adopt possible tax savings measures identified by the business tax working group. As we have said for some time, these require further detailed public consultation before any decisions can be made.
Some recent media:
- Accountants fuming at Swan (The Australian, 11 May 2012)
- Welfare costs you $5000 a year (Herald Sun, 10 May 2012)
- FEDERAL BUDGET 2012: Business community sidelined by budget (Business Spectator, 9 May 2012)
- Business not happy with Swan cut (Sydney Morning Herald, 8 May 2012)
- Budget has 'abandoned companies' (news.com.au, 8 May 2012)
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.