iscover The reality of a more complex tax system
TaxFor some accountants, the budget simply adds more compliance and administration amid a more complex tax system. For others, it is a win for the profession, creating more billable work.
The morning after the federal budget on 12 May, the Institute of Private Accountants (IPA) and the Canberra Business Chamber held its Federal Budget Breakfast, with a panel consisting of Australian Chamber of Commerce and Industry chief of policy and advocacy David Alexander (pictured, centre left), independent MP Allegra Spender (pictured, centre right), and senator David Pocock (pictured, left), and hosted by former ABC journalist Michael Rowland (pictured, right), to discuss this year’s key changes.
At the breakfast, IPA senior tax adviser, Anthony Greco, told Accountants Daily that the removal of the CGT discount for many has the potential to cause entrepreneurial harm. On the panel, Spender stressed that only moderate changes should be made to CGT to ensure that entrepreneurs are not driven away from Australia’s tax system, with Pocock highlighting the increasing difficulty of procurement and the challenges start-ups face when seeking contracts with the Australian government.
Despite the drawbacks of CGT and the removal of negative gearing for all but new builds from July 2027, Greco commended the implementation of the instant asset write-off (IAWO), which he said helps small businesses by introducing more cash flow certainty, which was also supported by Pocock, who agreed that the measure was “good for small businesses”.
The budget’s inclusion of a permanent loss carry-back came as a pleasant surprise to some, with RSM tax leader Liam Telford telling Accountants Daily that it will provide businesses with greater resilience. Greco said that the IAWO, coupled with the loss carry-back scheme, can provide incorporated businesses with greater financial certainty.
“From a cash flow perspective, it makes a lot of sense, it provides certainty now that we don't have to wait till the end of the financial year,” Greco told Accountants Daily.
Although Alexander called the budget a “win for accountants”, he told Accountants Daily that small business accountants must monitor the changes and prepare for the increased consultation moving forward.
“For accountants, as small businesses, they're going to be subject to a range of these changes themselves, so they'll have to think about how their business is going to work in this new world,” Alexander said.
Telford also told Accountants Daily that the discretionary tax changes will lead many small businesses to restructure, increasing the need for more administration. At the event, Assistant Treasurer Daniel Mulino asserted that the budget aims to create intergenerational fairness and greater productivity, calling the budget stronger, fairer, and more sustainable; however, Shadow Treasurer Tim Wilson said in his address that it was simply a budget to manage decline.
With the “broken promises” refrain repeated by the opposition, Spender emphasised that the government can regain the trust of Australians by committing to taxpayers and voters through investment, increasing confidence. Following the release of her Personal Tax White Paper in March, Spender said at the event that if the budget’s reforms do not give back to working Australians, it is simply a meaningless tax increase.
Alexander stressed that productivity and investment remain key issues, noting that extra taxes will decrease investment. Spender emphasised that “cutting spending is line by line”, noting that productivity comes from supporting high-growth firms, through assistance like the budget’s R&D incentive.
“I don't think we're going into a simpler tax system …. I think that's the reality,” Greco said.
Want to see more stories from trusted news sources?Make Accountants Daily a preferred news source on Google.