This week The Tax Institute lodged a submission to Treasury outlining our priorities for the Federal Budget for 2015-16. The Federal Budget submission is one of the key submissions we lodge each year and sets out the Tax Institute's tax policy agenda in broad terms.
This year the landscape has changed and there are separate Tax and Federation White Paper processes on the horizon. Accordingly, this Budget Submission focussed only on those matters that The Tax Institute believes should be considered in the context of the 2015?16 Budget, rather than in longer-term tax reform proposals, which will be the subject of separate submissions.
Our 2015-16 Federal Budget discussed the following priorities:
Company tax reform
The Tax Institute reiterated the case for reducing the company tax rate in the medium term from its current 30% to the 25% recommended by the Henry Review. The Tax Institute encouraged the Government to pursue cutting the company tax rate for all companies, not just small business companies.
The Tax Institute supported the Government's commitment to addressing base erosion and profit shifting in conjunction with Australia's G20 partners. We supported Australia's involvement in this work and in particular, the work in the area of the digital economy to address the gaps that exist that allow for double non-taxation, that is, income wherever sourced not being appropriately taxed in any jurisdiction. Australia should be involved in the OECD process rather than attempting to address these issues alone.
The Tax Institute continued to support efforts to increase transparency. However, we consider there is significant risk where the publication of selective information related to a particular taxpayer's tax position may be misinterpreted.
Significant work remains to be undertaken in respect of simplifying existing tax laws to alleviate the compliance burden on small business. This includes the implementation of the Board of Taxation's recommendations from the fast-track review into Tax System Impediments facing Small Business conducted in 2014; exploring the possibility of creating a separate 'small business entity' structure; streamlining access to small business concessions; and simplifying carry-forward loss integrity measures.
The Tax Institute focussed on the potential for deregulation in the superannuation system in this submission and proposed measures including the repeal of the '10% rule'. The rule is out-dated, discourages saving via superannuation by the self-employed, and creates unnecessary complexity and inequity. The Tax Institute deferred comments in relation to larger structural issues relating to the superannuation system to the submission to the White Paper.
Announced but unenacted tax measures
It is imperative that the Government continues to monitor announced measures in future to ensure that a legislative backlog does not develop again. The prioritised measures should be legislated as soon as possible.
The Tax Institute supported the Government's continued deregulation initiative and the publishing of a regulation impact statement in respect of each tax reform.
Child care affordability
The Tax Institute maintained its views on improving access to child care through the tax system. Two options would be to allow a tax deduction for child care costs and to use a refundable tax credit or cash grant.
The full Budget submission is now available on our website.
Thilini Wickramasuriya FTI is a 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.