With the release of the 2020-21 Budget, it is timely to reflect on the important role the Board plays in advising the Government on how to improve the design and operation of tax laws.
Recent months have brought significant challenges for us all and have meant a somewhat changed focus for the Board. We have delivered real time intelligence to the Government, Treasury and the ATO on the ‘lived experience’ of the tax and business community under the coronavirus pandemic and provided tax policy and administrative proposals to cushion the economic impact.
We have also continued our traditional role in undertaking in-depth reviews of various aspects of the tax system. We were particularly encouraged to see that the Budget included a number of significant announcements drawing on the Board’s recent work.
First, the announcement of changes to the corporate tax residency rules will restore certainty to multinational businesses and ensure that, in an increasingly globalised world, the tax system is aligned with corporate practices and advancements in technology.
Secondly, the reduced compliance burden of recording for fringe benefits tax will deliver significant red tape reduction in an area that many businesses tell us is one of the biggest irritants when employing staff in Australia.
Thirdly, the Government’s announcement to exempt granny flat arrangements from capital gains tax where there is a formal, written agreement put in place will make a difference, providing greater flexibility and financial security to older Australians contemplating the next phase of their lives as well as those with disabilities.
The Board’s reports on corporate residency and granny flats have now been released and are available on this website. These reports were the result of a truly collective effort. I would like to take the opportunity to thank the many stakeholders who gave so generously of their time and expertise to help the Board navigate these diverse and very challenging tax issues.
I would also like to recognise the significant Budget commitments targeted at small and medium-sized business. We were very pleased to see the adoption of a loss carry-back, which will be particularly meaningful to small businesses providing much needed cash flow relief. We highlighted this in our recent report on small business tax concessions. Our hope is that the report continues to serve as a useful roadmap for further work in this area in acknowledgement of the crucial role small and medium-sized businesses have in building a bridge to recovery.
In these times, the Board’s mission of bringing a ‘business and community perspective’ to the tax system has never been more important.