Next week's Federal Budget is the Government's opportunity to open the books of the nation and let everyone see the state of our economy. It is also a convenient platform for the Government to announce savings and spending measures across every portfolio. With regard to tax, we remain hopeful that our long-standing arguments against the excess super contributions tax being applied to inadvertent breaches of the caps will be heeded and the Government will announce some relief. Other measures likely include changes to the ability to access the same level of effective tax-free threshhold when a trust distributes income to a child beneficiary and changes to the FBT statutory formula method for cars.
The Tax Institute's President, Peter Murray FTIA, will join me in the Budget 'lock-up' on Tuesday afternoon, where we will have the ability to see 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 gets to his feet in the House of Representatives to deliver the Budget speech.
In other news, yesterday saw the Government release the Inspector-General of Taxation's report into the ATO's Change Program. The Tax Institute's media release can be accessed here. Tax professionals welcome the acknowledgement of the stress caused by the ATO’s implementation of the Change Program. The long-awaited report into the Program underlined deficiencies in system testing and communication of issues to tax professionals and the broader community.
The ATO has shown the ability to learn from the mistakes of the Change Program and lift its game in communicating potential problems. Members will remember the white-hot frustration felt by many during the Change Program implementation over a year ago. The period is one that members would rather forget. The Inspector-General’s report draws a line under this episode and points the way forward. The tax system is too big and too important to be allowed to be disrupted by IT problems. It’s good to see the ATO admitting there were problems and now agreeing to establish further processes to try to get it right next time. The pace of technological upgrades will accelerate as the ATO responds to the need for systemic improvements. While we note the report’s comment that the ATO was in a position where it had to ‘go live’ with its new system when it did, we hope it will engage in more comprehensive testing before future upgrades, and that its communication of any problems is more proactive and transparent.
Robert Jeremenko FTIA