‘Where do I start?’: Accountant lists concerns with tax reform, access to advice

Because valuations can be subjective, she continued, it raises future risks of the ATO or the court being able to argue why the valuation was incorrect, lower, or higher, depending on the circumstances.

“I think they were thinking too broadly around the rules,” she said.

“You might need a valuation at 30 June 2027, and maybe that works for property, but it certainly doesn’t work for all assets. When I think about assets like cryptocurrency, which is already moving too fast for our tax legislation system to keep up with, I can’t even imagine how complex those calculations could become.

“We already had a somewhat complex process, but now we’re talking about deferred and non-deferred gains, commercial and non-commercial, residential, and non-residential. I think the tax system should be somewhat easy enough for a layperson to understand and practitioners to uphold, but we’re moving away from that.”

No time to comment, no time to learn the law

Besides the complexity, Heaney joined the chorus of accountants who have condemned the notoriously short consultation periods for the tax profession to provide feedback on tax reforms of this magnitude.

“When you look back through the history of certain major tax changes and consultation processes, they’re getting shorter and shorter. The major accounting bodies have less and less time to respond to these changes,” Heaney said.

“If the government is thinking or talking about major reforms of this magnitude, it should contact small businesses, the major accounting bodies, and the Australian Chamber of Commerce and Industry, and allow them to come back with responses across a much longer period of time.”

Heaney said she is also concerned about how long the parliament would take to pass legislation, and when those changes would come into effect.

“It’s giving accounting practitioners a very short period of time to learn the law and be able to implement it effectively,” she said.

“I worry about the errors that could occur with the new CGT and discretionary trust rules considering how rushed they’ve been, and the flow-on effects of that in relation to potential disputes about valuations and court cases.”

Discretionary trust issues

The lack of details around the final legislation for discretionary trusts is a pain point, Heaney said, because accountants are hamstrung around how much advice and guidance they can provide to their clients.

“I think the government does not realise how many questions practitioners get from clients on these issues, but we can’t answer them right now because we don’t have the details,” she said.

Treasurer Jim Chalmers recently introduced the bill on the 30 per cent minimum tax on discretionary trusts, which provides an expanded list of exclusions covering employee share trusts, fixed trusts, charitable trusts, superannuation trusts, and special disability trusts.

On stamp duty, the NSW and Western Australian governments have said that trusts choosing to become an excluded election trust (EET) will not pay stamp duty on that choice, but in NSW this would only be the case if the government is re-elected. However, the stamp duty consequences for trusts that restructure are still not clear.

“I don't think any of my clients are going to want to become an election trust,” Heaney said.

“Restructuring is the only option. If there's no stamp duty exemption on restructuring, then there's no option.”

Advice could be critical but unaffordable

On top of this, Heaney questioned how clients would be able to access fast and practical advice to enable decision-making on assets.

“In the past, clients who contemplated making a move on an asset might have asked us to give them a rough guide of how much the capital gain would be. But I think that’s gone,” she said.

“There’s no way of being able to quickly provide that rough estimate. You’re talking about ordering valuations for a start. I think valuers are going to be inundated. I also think we might see a lot of incorrect valuations, especially for business goodwill. This makes me worry about errors and the flow-on effects of that.”

Heaney warned that while advice would become critical amid these changes, it could become unaffordable.

“I don't think a tax system should be so complicated that being compliant depends on a taxpayer's ability to afford expensive advice. I think that our current tax reforms keep increasing complexity, without necessarily making it fair for everyone. I think the uncertainty in general is just not good for Australia,” she said.