Budget wish list: accountants demand tax system changes

Looking to grab the attention of the Albanese government ahead of the budget, the accounting industry has called for the tax system to move away from income tax.

Chartered Accountants Australia and New Zealand has weighed in ahead of the federal budget, calling for the Albanese government to step up funding for tax agencies, as well as warning several tax raising measures risked distorting the economy.

In its pre-budget submission, CA ANZ called for a number of different interventions, as well as taking a swipe at the government’s $3m superannuation cap in addition to hitting out over its legislative rush.

CA ANZ group executive advocacy Simon Grant said it was “time for a wider discussion” about Australia’s tax base, which was heavily skewed to personal income tax collections.

“The federal government has gained a lot of revenue from Australian taxpayers over many years because of ‘bracket creep’ as Australia does not index income tax thresholds for the impact of inflation,” he said.

“It is often overlooked that Australia’s top personal tax rate has long been considered high by international standards and applies from a comparatively low income. Policymakers need to keep an eye on the international competitiveness of our personal tax system.”

It comes as Anthony Albanese signalled the government would walk back the Morrison government’s Stage 3 Tax Cuts plan.

The Morrison government had legislated the tax cuts in 2019 to remove the 37 per cent tax bracket for those earning between $120,000 and $180,000.

The government will instead cut taxes for those earning up to $150,000, as well as abandoning a move to introduce a flat 30 per cent tax rate for all those earning between $45,000 and $200,000.

Mr Grant said the government should look at broadening the Goods and Services Tax base and rate to “relieve strain on the income tax system”.

“In addition, the equity of the tax system, especially intergenerational equity, needs to be considered to help support the costs of an ageing population,” he said.

“There have already been numerous reviews of Australia’s tax system. The federal government should announce a road map of how Australia will achieve tax reform. This needs to be the focus of tax discussions going forward.”

PwC boss Kevin Burrowes, chief risk and ethics leader Jan McCahey, and people leader Catherine Walsh front a Senate inquiry into consultancy services at Parliament House in Canberra. Picture: Martin Ollman/NCA NewsWire

CA ANZ’s budget submission calls on the government to retain the instant asset write off scheme.

The government moved to pair back the scheme last year, allowing companies with a turnover up to $10m to write off the cost of new equipment.

CA ANZ also said retaining loss carry back provisions would “help build business

resilience during future economic downturns”, calling for the scheme to be made permanent.

The peak body also issued a laundry list of regulatory and technical changes to be made to make the tax system more user-friendly for businesses and tax practitioners.

This includes funding and building a modern company register, with links to director’s IDs, as well as removing search fees costs “so the cost to check the credentials of a company and its directors is no longer a barrier”.

CA ANZ also called for a reversal of funding cuts to financial reporting and audit standard setting.

It lso called for “genuine consultation” with accountants over tranche two of anti-money laundering laws “to minimise unnecessary duplication and determine a sufficient implementation time frame”.

The submission also took aim at a number of moves by the government to respond to the PwC tax scandal which “have been passed in response to the PwC matter, with no or extremely limited consultation”.

“The demise of effective consultation on this and other tax topics has been apparent in 2023. To safeguard confidence for all stakeholders in the consultation process, CA ANZ recommends open, not closed-door consultations,” the submission notes.