04 May 12 Preamble - Friday 4 May 2012
Next week's Federal Budget will see the Government deliver on its commitment to achieving a Budget surplus. What we don’t want, however, is for this achievement to be at the expense of sound policy decisions with a vision for Australia's future needs. Short-sighted, populist tweaks to the tax and superannuation systems are not in the interests of a sustainable Australian economy. The Government must look to longer-term goals such as those detailed in The Tax Institute’s Budget submission.
The Tax Institute's President, Ken Schurgott FTIA, will join me in the Budget 'lock-up' on Tuesday afternoon, where we will have access to all of the Budget papers and announcements ahead of their public release at 7.30pm that day. Members will receive our comments on the Budget and a summary of the tax measures via a special edition of TaxVine sent shortly after the Treasurer rises in Parliament to deliver the Budget speech.
In other news, the Federal Government’s decision this week to delay the implementation of significantly important consumer protection measures is grossly disappointing. The reforms, which would have increased scrutiny of financial planners who provide tax advice by regulating them under the Tax Agent Services regime, were scheduled to commence on 1 July 2012. The Government has further delayed the measure until 1 July 2013, leaving a gaping hole in the protections afforded to consumers that receive tax advice from financial planners. The Tax Institute has long advocated that consumers relying on tax advice should be able to expect that their tax adviser meets the high standards set by the Tax Agent Services regime. The delay of these important reforms is a major blow to consumers who are entitled to expect to receive a high professional standard of tax advice when having it paired with financial planning advice. Consumers will also miss out for yet another year on the protective measures contained within the regime, such as safe harbour rules regarding tax advice.
The reality is that there has been more than enough time for the Government to work through the detail of the proposed regime and a further delay is unnecessary. In these Budget-constrained times, the Government should be focusing on implementing (not deferring) such revenue neutral reforms that will yield significant benefits for taxpayers.
On a positive front, this week The Tax Institute and the Council of Small Business of Australia co?hosted a Small Business Roundtable to discuss issues including a standard definition for small business. Among those present to discuss a broad range of challenges affecting Australia’s small businesses were the Assistant Treasurer, the Hon David Bradbury MP; the Shadow Minister for Small Business, The Hon Bruce Billson MP; the Federal Member for Lyne, Rob Oakeshott MP; and a range of small business leaders, economists, tax professionals and government representatives. After the Roundtable, we have called on the Federal Government to take the lead and properly consider the merits of establishing a separate small business entity as well as a universal definition of what constitutes a small business. A separate small business entity structure would blend the advantages of existing company, trust, partnership and sole trader structures in order to provide an easy, cost-effective, default entity to start a small business. Such a concept deserves further analysis as it could present a viable alternative to existing business structures in terms of asset protection, limited liability and flow-through tax treatment.
Robert Jeremenko FTIA