iscoverFollowing the launch of the Board of Taxation’s red tape reduction review, The Tax Institute has weighed in with recommendations to help reduce red tape and compliance burdens on the tax and super systems.
The Tax Institute calls for ‘tax simplification’ in BoT red tape review
30 October 2025
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9 minute read
The Tax Institute has provided the Board of Taxation with recommendations across the four key areas of large business and international, superannuation, small businesses and fringe benefits tax (FBT).
The Tax Institute welcomed the board’s move to conduct a review to identify compliance burdens and red tape in the tax system and revealed it would work collaboratively to identify such burdens, as well as opportunities to alleviate them.
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“Considering the government’s current focus on increasing productivity, it is timely that the need to reduce red tape and implement some immediate solutions is being considered by the Board,” the institute said.
“By reducing bureaucratic hurdles and simplifying compliance processes, we can help create an environment that fosters innovation and efficiency.”
According to the Institute, this was particularly crucial for small businesses that often faced disproportionate challenges in the navigation of complex regulatory frameworks.
For its recommendations, the Institute consulted with its National Large Business and International Technical Committee, National Superannuation Technical Committee and the Fringe Benefits and Employment Taxes Technical Committee to prepare its response.
Though the submission included information and recommendations to superannuation and large international businesses, the small business and FBT sections were important areas to highlight based on their continued struggle in the regulatory environment.
The institute said, “one of the most pressing issues is the complexity and cost of the tax regimes small businesses must navigate”, as despite their vital contributions, the challenges small businesses faced hindered their potential.
In an attempt to ease the compliance burden, the Institute proposed that the board make the instant asset write-off (IAWO) a permanent feature of the tax system and increase the turnover threshold requiring businesses to register for GST and index the threshold in line with inflation.
In addition, it was proposed that the definition of small business for income tax, GST, capital gains tax and other laws be simplified, as well as a streamlining of tax legislation concerning small businesses to facilitate easier compliance and support growth.
In terms of the IAWO, as previously reported by Accountants Daily, its permanency is widely advocated for by the tax and business community, with The Tax Institute pushing for the threshold to be increased to $30,000 and business eligibility to be expanded to include businesses with an aggregated annual turnover of less than $50 million.
Based on its suggestions, the institute reinforced that these recommendations should not be taken as the solution to the overarching issue of needing “comprehensive tax reform”.
“While the recommendations outlined in this submission are no substitute for comprehensive tax reform, we consider that our proposals can help ease the burdens experienced by taxpayers until a broader overhaul is achieved.”
The submission to the Board of Taxation also cast light on the FBT gap and the inefficiency and complexity of the regime.
The institute revealed that from the 2021–22 income year, the estimated net FBT tax gap increased to 34.2 per cent or $1.882 billion from a net gap of 31.2 per cent in 2019–20, as well as accounting for less than 1 per cent of Australia’s net cash collections.
Reviewing the onerous nature of FBT return lodgment timing in general and harmonising the definition of employee and employer across employment taxes were among the institute's suggestions for reforming FBT.
“FBT was introduced as an integrity measure to ensure that tax was paid on non-cash benefits provided to employees in respect of their employment,” the institute said.
“However, it imposes a disproportionately high compliance cost on businesses, due to the underlying complexity in understanding, calculating, reporting and paying FBT on relevant benefits.”
In addition to its suggestions to the Board of Taxation, The Tax Institute said its members believed that cutting red tape, promoting business certainty, reducing compliance costs, deregulation, and simplification should be core objectives for government and its agencies, such as the ATO and Treasury.
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