Towards a 21st century tax system

Federal tax reform to ensure Australia’s tax system remains efficient and competitive in a changing world is not an option, but a necessity.

The onus is on industry stakeholders to engage with government and participate willingly and openly in the federal tax reform process if we want to see meaningful change. Insights from the trenches of the industry are critical to ensuring reforms are both well-informed and effective in addressing policy objectives.

As head of content for tax at Wolters Kluwer, CCH my team of tax experts and I recently authored a submission in response to the federal government’s tax discussion paper. We highlighted the need for technology integration and streamlined processes to ensure the viability of the Australian taxation system in an online environment.

Wolters Kluwer, CCH believes the Australian Taxation Office (ATO) should certify and endorse tax return software products, providing taxpayers with confidence in the accuracy of their returns and reducing the administrative burden on the ATO. Our view is that as more taxpayers use software, their simplified process results in fewer errors and the ATO can in turn reduce the complexity and expense of compliance processes. It’s a case of addressing a problem at the source.

While the government has already made some headway in this area through the introduction of the shared-assurance model in GST software, more can be done.

We have also recommended the government abandon its “legislation by announcement” approach, where changes to tax policy and law are first announced and then applied retrospectively once enacted – if enacted at all. This common practice creates uncertainty and confusion among taxpayers, particularly when policy announcements take immediate effect.

Tax changes announced on Federal Budget night are a prime example – insufficient details are disclosed and the legislative process has yet to begin, but taxpayers start making decisions on the basis that the law has changed on that night.

This has resulted in practical issues, including a large backlog of “announced but not enacted” measures, the status of which is unclear. It creates confusion and has the potential to adversely affect business decisions and current/future business operations. Because of this overly complicated process, Wolters Kluwer, CCH clients currently use the Australian Tax Monitor product to help keep track of when tax legislation is enacted and how it will affect returns, but in our view the tax system as a whole requires simplification.

From a taxpayer’s perspective, making business decisions affecting their tax position based on nothing but government media releases is risky. Ideally, new tax policies or laws would only come into effect once legislation has been enacted.

We need to make the move to a 21st century tax system if we want to remain viable and agile in the global economy. The future of Australian tax policy is dependent on tax reform, and stakeholders must be committed to engaging with the process and seeing the change through.

 

 

Diana Winfield

Diana Winfield

Diana Winfield is the Head of Content for Tax, Accounting and Superannuation at Wolters Kluwer CCH. She has a Masters of Law (Syd) with a specialty in tax. Her early career was spent in the tax divisions of a Big 4 accounting firm and a tier 1 law firm but she has spent the last 15 years in legal publishing, with a focus on bringing innovative products to the market for tax professionals.

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