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2020-21 Federal Budget poses opportunity for meaningful tax reform

Publication date: 06 Oct 20 | Source: THE TAX INSTITUTE

SYDNEY, 6 October 2020: With an emphasis on tax measures to help Australia’s economy recover from the COVID-19 pandemic, the Federal Budget due to be delivered tonight is an opportunity to make meaningful change to our tax system.
Budgetary measures announced so far by the Treasurer The Hon. Josh Frydenberg MP include expanding access to small business tax concessions, removing Capital Gains Tax (CGT) from granny flat arrangements and a Fringe Benefits Tax (FBT) exemption for skills training for redeployed employees.

“These are welcome announcements and there is clearly appetite for change in our tax system when it presents a real benefit to Australians and our economy,” said The Tax Institute Director of Tax Policy and Technical, Andrew Mills, CTA (Life). “The only shame is that the measures didn’t go even further.”

“It will be interesting to see if the Budgetary measures announced tonight go far enough to enact meaningful, lasting change in our system. I suspect that while they will be a step forward, there will be further work to do.”

For example, the FBT exemption for redeployed employees, means that employers will no longer pay this tax when providing training to employees in an area not sufficiently related to their current employment. However, the Government is yet to consult on potential changes for workers who undertake training at their own expense and are currently still limited to deductions for training directly related to their current employment.

Chris Richardson, Director of Deloitte Access Economics and a keynote speaker at The Tax Summit: Project Reform, said, “Once the health side of this crisis settles, the economic scars will linger. That’s why the Treasurer reframed the Budget rules a fortnight ago. Only once unemployment is “comfortably back under 6%” will the government start to worry about the deficit again.”

“Until then, the focus of Budget policy is aimed at driving unemployment down as fast as it can.”

“Or, in other words, the government’s aim is to fix the economy first, and deal with the deficit later. That’s a sensible plan, not least because the best medicine for a wounded Budget is a healthier economy,” Richardson said.

“But will the government’s latest Budget announcements – including earlier personal tax cuts and a new business investment allowance – do the trick?”

Mills said, “Changes to the tax system have a vital role to play in seeing Australia recover from the impact of the COVID-19 pandemic, and that recovery is top of mind at the moment. But we are advocating for tax reform as a long-term, holistic strategy, which lays the groundwork for a simpler, fairer and more equitable tax system, and which will benefit Australians for generations to come.”

Chris Richardson will deliver his Keynote address as part of The Tax Summit: Project Reform this Friday, 9 October 2020, delving into tax reform and its economic impact in the wake of the Federal Budget announcement and the COVID-19 pandemic. 


ENDS
For more information, please contact:
Kelly Emmerton – Media Contact, The Tax Institute kellyemmerton@taxinstitute.com.au 02 8223 0029


The Tax Institute is the leading forum for the tax community in Australia. Our reach includes membership of 12,000 tax professionals from commerce and industry, academia, government and public practice and 40,000 Australian business leaders, government employees and students. We are committed to representing our members, shaping the future of the tax profession and continuous improvement of the tax system for the benefit of all, through the advancement of knowledge, member support and advocacy. Read more at taxinstitute.com.au