A paper to prompt discussion for the future of Australia’s tax system
-Andrew Mills, CTA (Life)
The Case for Change is a holistic report opening the conversation around the need and options for reform of our tax system. Developed in collaboration with an inclusive community of practitioners, academics and subject matter experts, it captures the voice of not just the tax profession but also the wider community, from the smallest to the largest players.
This is tax reform as it’s never been done before.
The Case for Change covers an extensive – though not exhaustive – range of issues. We encourage you to read and consider its arguments as a web of interconnected ideas that, together, form a single, clarion call of the need for change to our tax system overall.
Between widespread bushfires, floods and the COVID-19 pandemic, Australia has experienced unprecedented events that shook the economy. To propel Australia forward, government needs to generate revenue, support economic growth and job creation, and improve equity for future generations. Holistic reform of the Australian tax system is fundamental to these goals.
This chapter identifies the obstacles and opportunities to encourage both an outward-looking Australian corporate sector and an attractive environment for foreign capital. It considers how current settings should be recalibrated to be consistent with leading international trends for corporate taxation and moving beyond the traditional parameters of corporate taxation.
In this chapter, explore how the taxation of SMEs could be redesigned to liberate the flow of capital, reduce compliance costs and reduce complexity while maintaining integrity in the system. The taxation of SMEs is unnecessarily complex, and the design of the law produces anomalous outcomes depending on the choice of business structure.
Continuous and piecemeal legislative amendments mean the tax rules affecting small business taxpayers have grown both in length and complexity. Each new amendment has imposed additional compliance costs on small business taxpayers who often do not have access to the advisory resources that larger businesses enjoy. These rules are due for significant reform.
The charities and not-for-profit (NFP) sector in Australia is large, diverse and provides many services to the community. The complexity of the regulatory environment for NFPs is disproportionate to the level of compliance and willingness to comply shown by the sector. This chapter considers challenges faced by NFPs in tax treatment and administration at the state and federal levels.
In 2021, governments around the globe are presented with the challenge of how to prepare for a time of transformation. This section of the Case for Change discusses aspects of the Australian tax system that are in urgent need of tax reform to support a more optimal workforce for the current and future economy, and more broadly, for the benefit of society.
The world will continue to innovate, and those who do not will be left behind. The global economy is evolving and developing at exponential rates with the ongoing search for efficiencies, increased productivity and new ways to increase competition. This chapter explores how the tax system can support innovation and growth in our economy.
This chapter considers Australia’s individual tax and transfer system. Individuals income tax is the most important and largest source of government revenue, consistently raising approximately half of total revenue since the 1970s. The challenges and opportunities for designing a future tax and transfer system for Australia have been identified.
In this chapter, we turn to the taxation of private wealth and the transfer of wealth following death. We consider how a well-designed tax law can improve equity in respect of the tax treatment of private wealth assets and whether more appropriate tax outcomes following the death of a taxpayer can be implemented.
This chapter considers the fundamental design of the superannuation system, and the best reform options to support a sustainable superannuation and retirement system, reduce unnecessary complexity, ensure greater consistency, and encourage improved compliance by employers with the mandatory superannuation guarantee (SG) regime.
The Australian tax system comprises a complex matrix of State and federal taxes, both direct and indirect. This chapter considers the Australian indirect tax landscape, the pervasive issues in those taxes, including the state and federal dichotomy, and potential pathways for reform. This section also considers a number of direct State taxes.
In Australia, GST is imposed at a rate of 10% of the final price of goods and services, subject to a broad range of exemptions and exclusions that effectively excludes around 50% of consumer spending from its scope. In the 20 years since its introduction, there has been a myriad of amendments to the GST law, but no substantive changes. Holistic tax reform to support Australia’s economic recovery must include a comprehensive review of the GST regime.
Key to ensuring that the tax system is and remains fit for purpose is the way in which tax policy is developed, implemented and ultimately administered. There are great opportunities for improvement in policy development and tax administration to improve trust in, support of and compliance with the overall tax system.
In 2020 we embarked on a journey to identify what true tax reform looks like, starting with a series of events through which we garnered insight, ideas and opinions from voices across the tax profession. At The Tax Summit: Project Reform, we brought your ideas to the table and they formed the basis of The Case for Change.
This report calls for a discussion and plan for tax reform as it’s never been done before – holistically, driven by the profession and with long-term vision. It is a huge achievement for everyone involved.
But the path to meaningful tax reform doesn’t end here. The Case for Change is being shared with regulators, thought leaders and change-makers across the tax landscape.
We aim to open conversation. Spark innovation.
The Tax Institute will continue to advocate for the reform solutions put forward by our community, is an ongoing effort to convince politicians of the need for sensible, wide-ranging tax reform across all levels of government.
The Tax Institute extends its sincere gratitude to all our members and friends who contributed their expertise, time and dedication to make The Case for Change a reality.