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One milestone but a million to go ...

Publication date: 11 May 04 | Source: THE TAX INSTITUTE

"The Treasurer, Mr Costello, may have claimed that tonight's Budget was a '...very important milestone for Australia', however, it's one mile forward and a million miles to go. However, compliance costs in this Budget are still a real issue for taxpayers across the board", said Mr Neil Earle, President of The Taxation Institute of Australia.."

Family trust elections, deemed franking of first year profits for businesses conducted through companies and GST calculation changes in respect of private use, all carry the appearances of dealing with the compliance costs imposed by Tax Reform upon small business.

"These minor steps forward may reduce compliance costs for some, but they fall short of dealing with the overall compliance burden imposed on small business by the GST and other tax reforms over the last five years" said Mr Neil Earle.

"For individuals and families, tax cuts aside, the Budget further entrenches compliance costs across the board", added Mr Earle.

Annual tax returns will be required in order to access family tax benefit payments and the compliance costs associated with the much maligned Baby Bonus will continue to apply to those mothers who give birth before 1 July 2004.

Even where rate cuts have been announced in respect of the Superannuation Surcharge, the Government has ignored the ongoing compliance costs. These costs almost exceed the revenue collected and are not altered with the rate reduction announced in the Budget. By 2008, we could end up with a tax that costs more to collect than is earned. So why not abolish it now?" questioned Mr Earle.

"It is also noted that whilst individual tax rate changes are welcome the Budget does not address the imbalance between the company tax rate of 30% and the top individual marginal tax rate of 47% which continue to create difficulties with ongoing classifications of income between taxpayers"

"The additional irony of this Budget is that, although by giving $216.4 million over 4 years to the ATO, the Government has yet to address compliance risks and has effectively announced that Tax Reform is over" stated Mr Earle.

"Apparently, the Government thinks that taxpayers now comprehend and are able to adhere to the some 300 tax acts passed since 1999. This is extremely premature as the tax reform journey still has a long way to go" completed the Taxation Institute's President.