iscover ‘The uncertainty is the killer’: The consultation gap and lack of clarity in budget reforms
BusinessTax experts slam the cloudy state of the federal budget announcements, citing a lack of information, uncertainty, and insufficient consultation.
In an Accountants Daily webcast, a panel consisting of National Taxation and Accountants Association senior advocate Robyn Jacobson, BDO corporate and international tax partner Mark Molesworth, and Two Sides Accounting founder Natalie Lennon said that the lack of clarity and uncertainty in the federal budget is killing business decisions.
“At the moment, we’re working off budget announcements that contain no detail. While we can absolutely say to people with existing structures, existing investments, we can afford to wait. For the people who are more difficult to advise are those who have an investment decision to make now,” Molesworth said in the panel discussion.
While Molesworth said that regardless of who is in power, he will advise his clients to the best of his ability to model out the results before telling them what happens.
“I think my problem is a lack of information. The uncertainty is the killer here, and the consultation at least allows for that building of confidence as to what the changes are probably [sic] going to be,” Molesworth said.
Molesworth said that the passing of the CGT measures in two tranches with base rules and separate carve-outs for start-ups was “really difficult to stomach without proper consultation”.
For Jacobson, the lack of a clear definition of a discretionary trust is a concern.
“It’s a really interesting nuance in the budget papers where it says discretionary trusts are going to be subject to this 30 per cent tax and then you can restructure into another entity, such as a company or a unit trust. That suggests that maybe unit trusts will be able to be a vehicle that you can roll over into, which means maybe they’re not subject to this 30 per cent tax. On the flip side, we almost never refer to discretionary trust in the tax law. It’s always fixed or non-fixed trust,” Jacobson said.
“Isn’t it ironic we’ve had uncertainty for years because the corporate tax measures still haven’t been dealt with. These unannounced measures have created uncertainty, and yet perversely we’ve got uncertainty because they’re rushing through legislation in what could be a matter of days.”
Lennon noted that heavy tax planning will be needed in the financial year as a result of all the regulatory changes, emphasising the opportunity for practitioners to review structures regularly.
“I know practitioners don’t have a lot of downtime in the next six months, but this is the time to be looking at any clients that have family trusts and see whether or not those disclosures should be made to try and get that GIC remission,” Jacobson added.
“The direction of travel in the Budget seems to be for investors and taxation of investment returns and investment assets,” Molesworth concluded.
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Carlos Tse
Carlos Tse is a graduate journalist writing for Accountants Daily, HR Leader, Lawyers Weekly.