CA ANZ weighs-in on BoT red tape reduction review

According to CA ANZ, its various suggestions were derived from member feedback, which revealed that tax compliance remained a “major pain point” for businesses of all sizes.

“Many organisations spend excessive time and resources navigating complex reporting requirements, which can stifle innovation and productivity,” CA ANZ said.

“The submission notes that small and medium-sized enterprises are particularly affected, often lacking the capacity to manage growing regulatory demands.”

From the feedback received, CA ANZ proposed the board tackle the reduction of red tape by streamlining and harmonising reporting for international tax obligations to reduce duplication and confusion, modernising the corporate tax residency rules, as well as simplifying and streamlining tax legislation for complex areas such as Div 7A, FBT, small business CGT provisions and the family trust election provisions.

The professional body also suggested making the small business instant asset write-off permanent, considering automatically indexing the compliance cost savings measures in the tax legislation and investing in substantial enhancements to the ATO’s online services for agents.

The body noted red tape reduction was an urgent area of attention as some of the most efficient businesses in Australia, such as multinationals, were subject to very heavy duplicative international tax reporting burdens which could be substantially streamlined without adversely affecting transparency.

It was also outlined that some of the heaviest compliance costs were usually generated from complex legislation, which had already been highlighted in BoT reviews of Div 7A, FBT, GST and the small business CGT rollover provisions.

From these reviews, CA ANZ said the board needed to revisit its own recommendations contained in its reports, as this advice could reduce compliance costs and increase certainty.

Like many professional bodies and industry professionals, CA ANZ said the continued uncertainty about whether the instant asset write-off would be extended or legislated was “unsettling”.

“Businesses do not know whether they will be required to create depreciation schedules or continue to write off assets,” CA ANZ said.

“The instant asset write off has been extended so many times that it should now become a permanent feature of the Australian tax system and provide certainty to small businesses.”

A major area commented on by CA ANZ included the ATO’s online services for tax agents (OSFA), which had previously caused a notable stir and controversy across the tax profession.

CA ANZ said OSFA needed “substantial enhancements such as improved access to client data, real-time status updates, and expanded communication features to allow tax practitioners to self-serve effectively and efficiently”. 

This would have the impact of substantially reducing administrative costs for the ATO, tax practitioners and by extension, taxpayers.

“Further enhancement of OSfA is also needed to reduce the risk of fraud by improving the way the ATO interacts with agents. The digital solution offered by the ATO must be designed for tax agents. Expecting digital service providers (DSPs) to tailor solutions for Australian tax agents is unrealistic.”

“ATO investment in services that assist tax agents servicing tax payers streamlines the administrative burden of both the ATO and tax agents providing reduced costs for taxpayers and better assessment and collection of tax for all Australians.”

CA ANZ emphasised this was a key area for improvement as tax agents helped 92 per cent of businesses, as they were relied on to help navigate a complex tax system and manage key tax lodgements and payments.

Another critical area highlighted by the body included index compliance cost reduction measures, as throughout the tax and FBT legislation, there were compliance savings measures, many of which had been long-standing and used a specified amount as a threshold.

The accounting body said these thresholds were generally not updated, which had the consequence of the effectiveness of the compliance savings measure deteriorating, as inflation increased the costs to which they applied.

CA ANZ said both small and medium enterprises were impacted by compliance challenges, and therefore needed to be addressed as soon as possible to help these businesses gain the capacity to manage growing regulatory demands.

“Ensuring that legislation is passed and appropriate guidance is issued before the legislation becomes operative improves certainty which reduces the need for scenario planning and creates a positive investment environment,” CA ANZ said.

“Timing of legislative changes is also important to ensure that compliance implementation does not become overwhelming.”