We note that the growing stockpile of announced yet unenacted tax measures is fuelling uncertainty in the business community and hampering investment.
The Budget submission also outlines a number of priority areas of the tax law that are in need of urgent and significant reform.
Given the election date has been announced, it is critical for the Government to ensure the raft of announced but unenacted tax measures is dealt with as a priority. Whilst we welcome moves by the Assistant Treasurer to start discussions on prioritising announced but unenacted measures, it is imperative that the Government continues to address the announcement backlog in order to stem the uncertainty and free up businesses to make informed investment decisions.
Overall there are at least 25 significant tax measures that have been announced yet have an uncertain finishing date, including key areas of tax law such as the treatment of losses, GST and capital gains tax treatment of earnouts.
It isn't difficult to see why business confidence is being eroded by a tax system which is constantly being built and rebuilt on shifting sands. These trends include tax reforms left in limbo for months and years and the Government’s recent practice of rolling out tax measures retrospectively.
The Tax Institute has called on the Government to pursue a more open and transparent timeline for legislative change that gives taxpayers certainty when it comes to dealing with that change.
State Tax reform
The Tax Institute urges the Government to take a leadership position on State tax reform and bring the States on board with a unified vision for tax reform in Australia. This would include increasing Australia's reliance on the GST and abolishing inefficient and complicated State taxes, such as conveyance duties and insurance duties.
The Government must refocus its efforts on alleviating the significant tax compliance burden on the small business community. This includes exploring the possibility of creating a separate "small business entity" structure, streamlining definitions and access to small business concessions, and simplifying carry-forward loss integrity measures.
The Tax Institute encourages the Government to collaboratively construct a long-term, holistic plan for the superannuation system focussed on equity and sustainability. This includes addressing the low level and inflexibility of contributions caps, including via repeal of the "10% rule" and further improving the excess contributions tax arrangements.
The Tax Institute welcomes the Government's recognition of the need to update current international taxation laws to address the challenges posed by an increasingly digital economy in conjunction with our treaty and major trading partners. Any efforts to increase transparency that allow tax authorities to properly understand taxpayer circumstances and apply tax laws correctly and in a timely fashion is welcomed, but not at the cost of an increased regulatory burden.
Other areas in need of attention include: building on the Henry Tax Review platform; establishing a Tax Reform Commission; child care affordability and trust tax reform.
Robert Jeremenko CTA 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.