Reform of taxes ‘key to recovery’

Deducting taxes for clubs, pubs, and restaurants is being pitched by top accounting firm PwC as a key building block for post-pandemic tax reform.

On fringe benefits tax, PwC wants the government to temporarily exempt the hospitailty sector.

Deducting taxes for clubs, pubs, and restaurants and making Australia a more attractive place to work for the Asia Pacific’s fin­ancial services sector are being pitched by top accounting firm PwC as the building blocks for post-pandemic tax reform.

PwC has unveiled a “tax to-do list” for Josh Frydenberg ahead of next week’s budget focused on changes to fringe benefits tax, research and development incentives and easing compliance.

Top of the PwC wish list is a plan to bring tax legislation in line with Asian counterparts to let major players in the financial services sector operate here and provide tax concessions for both Australian expats and Asian ­financiers.

The major accounting firm also wants a simpler R & D tax process and to take fringe benefits tax off entertainment products in pubs and clubs, which in turn would bring more demand and help the hospitality sector recover from the pandemic.

PwC tax partner Jonathan Malone told The Australian on Sunday that while the firm was promoting a raft of minor tax changes, major reform must come back to the table once the pandemic passed.

“Tax reform in the middle of an economic shock was ­not ­appropriate while businesses and employees were already dealing with profound challenges,” Mr Malone said.

“That does not mean, however, that Australia should not act.

“In a post-COVID Australia, tax reform will become even more important because of the need to generate revenue to support government expenditure, improve equity and support economic growth.”

As the government moves to commercialise scientific and university research, PwC has developed a three-step plan to improve the R & D tax process, which includes an innovation box regime that would apply a lower company tax rate to profits generated from patents or other intellectual property that have been developed locally.

PwC also advocates simplifying tax processes for employee-share schemes in tech start-ups and better tax help for computer software developers.

On fringe benefits tax, PwC wants the government to temporarily exempt the hospitality sector and consider similar ­concessions for car parking ­businesses to attract more people to city pubs and restaurant districts.

The PWC budget to-do list also calls on the Treasurer to keep a temporary COVID-19 scheme that has allowed 99 per cent of all Australian businesses to deduct the full cost of eligible capital assets, and streamline tax compliance measures for businesses.