The Tax White Paper process may be ended, but the structural tax problems remain.
We encourage governments to pursue structural tax reform - particularly focusing on our outdated tax mix and the problems articulated in the Re:think paper re aging population, our over-reliance on income taxes and under-reliance on taxes on consumption.
Australia's current tax system penalises taxpayers on income derived from savings outside the superannuation system.
Given the tax-preferred status of superannuation, it has become the preferred savings vehicle for most Australians.
This is beneficial for retirement savings, but does little to recognise the necessity for individuals to save income
outside of super to afford major capital purchases during their working lives. If income derived from savings was
The 2015 Re:think paper discussed the virtues of a US ‘S-Corp’ type entity for SMEs in Australia.
CPA Australia is of the view that it would be appropriate for a new type of entity be introduced into our tax regime that would have some of the features similar to that of a S-Corp, such as limited liability and streaming/ flow through of income to beneficiaries, but importantly it would also need the additional feature of being able to retain income that would be subject to income tax at non-punitive rate.
Superannuation is the primary retirement savings vehicle for the majority of Australians, so it is appropriate that tax concessions are used as a policy lever to provide an incentive, encourage desired behaviour and compensate individuals for locking their savings away in the superannuation system.
TOFA method elections should be revokable.
Whilst the Commonwealth Government has proposed to address integrity concerns with the wine equalisation tax (WET) rebate (by reducing rebate caps and tightening eligibility criteria) , these reforms do not address the underlying problems caused by the WET to the competitiveness Australian wine industry from the needlessly high compliance costs and distortionary economic impacts. Australian industry leaders have identified the WET policy as stymying the industry.
The new foreign resident withholding rules which apply to certain transactions involving the acquisition of interests in Australian real property etc do not appear to deal with the transfer of assets as a result of the death of an individual. As the rules are drafted, it appears that a withholding obligation might be triggered when an individual dies holding Australian real property valued at $2m or more and the property passes to their estate / beneficiaries / other joint tenants.
As part of the now defunct Re:think/ Tax White Paper process there was at least one paper showing that reducing the tax burden on businesses lifts productivity, and increases both business' competitiveness and their capacity to grow. Importantly it also creates jobs. Further, the tax incidence of higher company taxes falls on workers as lower wages, less jobs - or even both. For these reasons we support a lower corporate tax rate.
Amend transfer pricing rules so that when a taxpayer’s gearing ratio falls within the safe harbour rations, the taxpayer’s debt deductions are priced, for the purposes of the transfer pricing rules, on the basis of the taxpayer’s actual gearing ratio and not by reference to a notional arm’s length capital structure.
Introduce a general safe harbour effective life for long-life depreciating assets in Division 40, much like the small business general asset pool (say 20 years).