It’s said that the Federal Budget is an accountant’s Christmas – so what would they like to see under the tree this year?
The biggest present under the tree they hoped for (and do almost every year) is big-bang tax reform.
“Everybody wants a sugar hit come budget time, but you need to stand back and ask whether our tax system is fit for purpose,” IPA Senior Tax Advisor Tony Greco said.
“The answer is no.”
Both the IPA and CA agreed that the budget is a chance to kick off discussions on big-bang tax reform, but the political climate means it’s unlikely to happen.
For Greco, the current tax system relies too deeply on ‘direct’ taxes such as income tax and company tax.
For CA’s Senior Tax Advocate, Susan Franks, the current tax system ignores the increasing casualisation of Australia’s workforce.
“We have a lot of people participating in the gig or sharing economy. The tax system as it stands now is really predicated on employees and being able to collect PAYG from employers. That tax base is rapidly diminishing,” she said.
Both Greco and Franks agreed that the $20,000 instant asset write-off scheme should be extended or become permanent.
While Greco said the policy “made sense” for small businesses, Franks pointed out that it means more business for accountants.
“We’ve heard that the asset write-off has encouraged small businesses who wouldn’t normally go to an accountant to go to an accountant and get advice,” said Franks.
“Given that management of cash flow and business seems to be a weakness of small business, encouraging them to use accountants is a very positive thing.”
Greco said he would like to see the government fix the lack of funding for small businesses.
While acknowledging new tech players on the scene and banks were getting better with small business lending, there was still a gap in the market.
“Do you really want small businesses to sacrifice equity in their home to get something off the ground?” said Greco.
“The banks have tried to lend more to small business, but some of their rules are a little restrictive for small businesses which don’t have a lot behind them in terms of bricks and mortar.”
Greco said he would like to see the budget bring in a government-backed loan guarantee scheme based on other jurisdictions.
Both Greco and Franks said they expected to see budget measures that target the ‘black economy’, after a taskforce closed an initial investigation in August last year .
Franks said change could be driven through procurement contract policy – where contracts were only awarded to contractors with good tax records.
“The government said in the last budget it was exploring opportunities to only have contracts with good taxpayers,” said Franks.
“Rather than requiring the head contractor comply, cascading it down the chain to sub-contractors could make a huge difference and flow through the economy. Those doing the right thing are then playing on a level playing field.”
Greco, who was on the taskforce, said it gave the government “40 or 50” recommendations.
Greco said moving small businesses to digital systems would help with tax collection and stamping out the black economy – but urged the government to support this shift.
He pointed to Single Touch Payroll as an example of a “burden” placed on businesses.
“A lot of small businesses are doing grunt work for the government, in this particular case the ATO,” said Greco.
“There’s some obligation on the government to say we put an obligation on business and we’ve upped the ante with Single Touch sending info to the tax office.”
He called for government to include provisions in the budget to help businesses, particularly micro businesses, manage the transition.
“Every time they load up a business with more compliance, it comes out of their resources. A lot of small businesses find it tough dealing with disruption and margins are tight,” said Greco.
“If the government is imposing those costs, they must also help with being part of the solution.”
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