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Corporate Tax Transparency Code

Review of Small Business Tax Concessions

A message from the Chair

Sounding Board

Ideas for better tax regulation

  • Removing S&W deductions from tax returns using tax cuts

    Maybe as little as 10 years ago there used to be a lot of talk about removing the need for individuals to lodge tax returns. This talk seems to have disappeared in recent years. While I agree that the boat has probably sailed on that idea, I think there is a way to simplify individual tax returns by reducing the need for S&W individuals to claim work related expenses. This could be done using tax cuts to 'give' individuals an automatic deduction. So the government would 'purchase' say a $2,000 tax deduction using a tax cut. If you had $5,000 worth of deductions you could claim the additional $3,000 but you would of course have to substantiate ALL of it. A change like this would most benefit the people who currently claim the least - usually people on the lowest incomes. Lots of record keeping saved for people who have low amounts of deductions. The automatic deduction could be increased over time if it would produce further benefits. In time, this idea might also encourage employers to stop expecting employees to incur expenditure on behalf of the employer - because the employer would, of course, get the benefit of the deduction when the employee would not if they were under the threshold. Even if this led to some potentially odd transfers of expenditure back to the employer - at the moment tax cuts are just money for nothing, so this would still be an improvement. This idea - as opposed to removing the need for lodgment at all - would hopefully keep the tax profession reasonably happy and reduce the lobbying that would undoubtedly occur if total removal was suggested. If I recall correctly, this method was used to remove concessional expenditure in the 80's.

  • Bright line tests for potentially capital expenditure

    There are a number of categories of expenditure which can be either capital or revenue in nature (depending on case law) or are capital items with write off provisions attached (eg borrowing costs). Someone actually made this suggestion in the context of a senate inquiry a few years ago - why not simply have statutory maximums set for these kinds of expenses so that people can treat these items as revenue and write them off in the year incurred. A prime example is legal expenses. Businesses seek advice about many issues that potentially straddle issues of both capital and revenue. These kinds of things cause endless arguments in the context of audits, when it is really just a timing difference. Given the latitude around instant asset write offs these days, it is incongruous to treat this other minor capital expenditure differently. I would suggest that $50,000 per annum for a corporation and $10,000 for a sole trader would be a good start.

  • Cut compliance - Borrowing Costs Threshold to be increased

    Currently if your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, whichever is less. i.e. $20 per year - to me this is immaterial and a waste of time to require a whole process to keep track off/carry forward this information. It adds time/cost to the client to do it correctly. I think we should increase this to say $10,000. There is no loss to the revenue, only a small timing difference that will save significant compliance costs.

Meetings & events

  • 13 Feb 2019 - Melbourne
  • 14 Mar 2019 - Sydney
  • 11 Apr 2019 - Brisbane