The first day of The Tax Summit: Project Reform Virtual Summit event was bursting at the seams with debate, insight and ideas, so we want to share some of the highlights with you.
The Virtual Summit is the place where the entire program of 6 Keynote sessions and 8 Focus sessions comes together to form the basis of our Case for Change.
Over the course of the event, we’ll be discussing some of the key challenges facing our profession and the potential solutions which could lead to a fairer, simpler and more equitable tax system. With the help of our members, delegates and nearly 50 expert presenters, we’ll define the priorities for reform as seen by those who know our tax system best.
Some of the brightest mind in tax are gathered for The Tax Summit: Project Reform. Here are a few of the insights shared.
The Case for Reform
Andrew Mills, CTA (Life), Director, Tax Policy and Technical at The Tax Institute and one of the driving voices behind The Tax Summit: Project Reform, opened the Virtual Summit with a discussion of the underlying principles of a good tax system – equity, efficiency, simplicity, sustainability and transparency.
The conversation between Andrew and panellists Robert Breunig, Professor and Director of Tax & Transfer Policy Institute, Michelle De Niese, Executive Director, Corporate Tax Association and Grant Wardell-Johnson, CTA, Partner, Tax Leader of KPMG's Economics & Tax Centre also covered the importance of building a Case for Change.
“We want to set up a tax system that we think we’re going to be happy to pass onto our children and grandchildren… that we can be proud of,” Robert Breunig said.
And now may be a particularly good time to embark on that goal, according to Grant Wardell-Johnson, who said “I think we’re moving into a positive era.”
In the next year, he said, we’re likely to have three major positive turns – a COVID-19 vaccine, progress on climate change and a mentality that we are able to do things better, after COVID-19.
“That, to me, is a positive setting for tax reform,” he said.
Designing optimal workforces for the future economy
What will the future workforce look like? What shape might it take?
Celeste Black, University of Sydney, set the scene for session 3.1, saying,
“In the last 12 months, we’ve perhaps seen an acceleration of a transition that was already underway, to a more flexible workforce, where the forms of work arrangements are increasingly diverse. We can see this through automation, replacing both manual tasks and professional and administrative work through artificial intelligence, permanent casual positions replacing full time employment, outsourcing and offshoring becoming increasingly common, the growth of gig work both in relation to lower skilled services such as the food deliverer as well as higher skilled work like software development. And perhaps a permanent shift towards more flexible working arrangements that include working at home.”
Presenters Clint Harding, CTA, Arnold Bloch Leibler and Mark Pizzacalla, CTA, BDO discussed how the move toward the gig economy and sharing economy might affect our tax system, and how our system may need to evolve to cater to these new forms of work.
One particular tax in the spotlight was the FBT. Talking about the FBT, Celeste said that “Low revenue itself doesn’t indicate a tax or a tax system isn’t working… But it does seem to be a prime place for some reform.”
Targeting concessions for small and family businesses
Recapping session 3.2, dealing with our small business taxation and the complexity around the number of concession involved, Robyn Jacobson, CTA, Senior Advocate at The Tax Institute, said, “One of the main themes that we talked about was if we better design the system at the front end, if we rationalise the way that the laws are applying and producing simplifications through that we actually end up removing some concessions and removing some of that complexity.”
“For example, there are some concessions that exist like the small business income tax offset, which if we taxed business income differently at the front end … then we can actually get rid of that offset all together.”
“Small business CGT concessions are incredibly complex and there are four of them. If they were reformed into a single concession along the lines of a lifetime business retirement cap, then someone running a business could be agnostic across the type of business asset they sell and have one of three choices: roll it into super, take advantage of a rollover and buy replacement business or active assets, or simply pay tax. And having those three streamlined avenues instead of all the multitude of rules we've got currently including all the different rollovers.”
Designing a sustainable superannuation system
Among many other insights in to how our super system could work more efficiently, in session 4.2, panellists, Graeme Colley, SuperConcepts, Jemma Sanderson, CTA, Cooper Partners, Julie Dolan, KPMG and Liz Westover, FTI, Deloitte talked about the Superannuation Guarantee and whether we’ve struck the right balance between ensuring employees receive their entitlements, and proving employers with the framework needed to navigate and meet their obligations.
“Time’s really moved on. The Super Guarantee came around in the early 90s. It was the legacy of a failure, and that failure was the Award system, where they were trying to get people to put 3% of their salary into superannuation. I think now there probably should be reform of Super Guarantee,” said Graeme.
“These days, the way in which employment has changed – since the 90s we’ve seen contractors come in, we now see people in the gig economy – maybe there needs to be some more expansion of the super guarantee system to cover those that are currently not covered.”
Is there a more encompassing definition of an employee we can apply the superannuation guarantee to? The issue of defining an employee also arose in session 3.1, with Clint Harding, saying “We do have this strange world where, to answer a question about one person, you’ve got to go through 4 different sets of legislation.”
“If you want simplicity, and that’s certainly what clients and people setting up businesses want, [you need] harmonisation of a single definition across all the different things we were talking about, so income tax, superannuation, payroll tax,” he said.
“It’s crucial we get it right. It’s worthy of our time and it’s a worthy goal, no matter how difficult it may be.”
Have your say
If you have a question about one of the ideas brought up in a session or an idea of your own, we’d love to hear them. Head over to our member forum, Community, to add to the tax reform conversation.
On Day 2, we delve into topics including taxing private wealth, how state and federal taxes interact and the role of an expanded GST in tax reform. Plus, we’ll hear from a panel of powerhouse speakers including Dr Julianne Jaques, CTA, Victorian Bar, Viva Hammer, Brandeis University, Rt Hon Sir Bill English, former Prime Minister of New Zealand, Hon. Andrew Leigh MP, Shadow Assistant Minister for Treasury and Charities and Hon. Dominic Perrottet MP, NSW Treasurer.
See you there!