08 May 12 Senior Tax Counsel Report
The Federal Government has turned its back on simplifying tax time for millions of Australians.
Short-term revenue considerations have resulted in the Government abandoning an important tax simplification measure that was a step towards fairer and simpler tax returns.
The Government’s decision to scrap their Budget proposal of only two years ago to allow a standard tax deduction for work-related expenses, confirms that the Government is not concerned about making it easier for millions of Australians to fill out their tax returns.
In addition, Australian companies have been abandoned by the Government’s decision to scrap the proposed company tax cut.
The Henry Tax Review made it clear that a company tax rate in the order of 25% should be Australia’s medium term target, so it is extremely disappointing that the Government has given up on achieving a modest cut to a 29% rate.
Reducing the burden of company tax will encourage innovation and entrepreneurship and allow companies to pass on the savings to their workers with obvious productivity gains.
The announcement of the tax loss carry-back measure is a welcome development that will assist small companies struggling in these uncertain times.
It is pleasing to see that the Government has not rushed to adopt possible tax savings measures identified by the business tax working group. These require further detailed public consultation before any decisions can be made.
With regard to superannuation, the Government’s deferral of higher contributions caps for people aged 50 and over is a backwards step in encouraging people to save for their retirement.
Senior Tax Counsel
The Tax Institute