Date posted: 12/02/2018 4 min read

Pre-budget submission CA ANZ states its case

CA ANZ is advocating on behalf of membership with a pre-budget submission to the Federal Government.

In brief

  • CA ANZ is advocating on behalf of members with its pre-Budget submission
  • Tax reform, super, digitalisation and the black economy are among the themes raised in the submission
  • It remains to be seen whether the Turnbull government will embrace the reforms suggested

It’s that time of year when the Federal Budget looms, and Chartered Accountants ANZ is active in this area, having already lodged a pre-Budget submission on behalf of our members. 

The submission maintains a focus on furthering the interests of Chartered Accountants and their capacity to nurture prosperity in the business sector and overall economy. It does this by addressing a range of themes, five of which will be of particular interest to members – tax reform, digitalisation, the black economy, superannuation and the regulatory environment for tax practitioners.

Tax reform – a holistic approach is essential

The need for fundamental tax reform will not go away even if politically, it all seems too hard, and CA ANZ’s pre-Budget submission makes it quite clear that major reform of the tax base is needed. 

Digitalisation and globalisation have changed business models, and coupled with an ageing population, this is placing pressure on future revenue streams. CA ANZ advocates broadening the base and rate of GST, and suggests the introduction of environmental taxes to allow for competitive corporate and personal tax rates. 

We note that any such reform needs to be holistic – and accompanied by a review of the size and role of government, in order to achieve sustainable future budgets.

Digitalisation – governance models aren’t keeping pace

Technology and in particular digitalisation have reshaped the business world but governance models have not kept pace.

CA ANZ is advocating for a reduction of red tape, and greater efficiency of both business and government by eliminating duplication of data requests, aligning definitions and information sharing.  

Issues of privacy and cyber security also needs to be addressed, and our pre-Budget submission notes the importance of encouraging an aging population to participate digitally without being subject to abuse.  

The black economy – government can lead by example

To quote from the Black Economy Taskforce’s Interim Report “Operating in the black economy gives an unfair competitive advantage to businesses and workers and distorts economic activity.”

Quite simply, the black economy doesn’t just punish those who do the right thing.  When people who operate outside official systems are not punished, voluntary compliance with regulatory systems including the tax system, is eroded.

CA ANZ makes the case for detection and enforcement of black economy participants, noting this is best achieved by “hardwiring government”.  The government can also lead by example to directly influence the size of the black economy, for instance, using its procurement power to ensure that its contracts (and those that cascade from that contract) are in compliance with the appropriate regulations.  

Pre-budget submission 2018-19

Pre-budget submission: Chartered Accountants ANZ states its case

Read submission

Superannuation – is it serving its purpose?

We have stated in previous pre-Budget submissions that the primary objective of Australia’s superannuation system should be: “To create a national culture of saving and self-sufficiency in retirement”. This is quite different from the government’s preferred primary objective, “to provide income in retirement to substitute or supplement the age pension”.

Greater clarity of purpose of superannuation is needed, and a review of whether that objective is being achieved through policy settings needs to be undertaken on a regular basis.  

To promote equality, CA ANZ is advocating for a lifetime cap to be introduced rather than an annual cap on superannuation contributions. This would allow people who have been out of the workplace due to family commitments or lack of employment opportunities to catch up. It would also be more effective in allowing those who simultaneously hold a number of jobs to better participate in the superannuation system.

The tax regulatory environment 

The Tax Practitioner’s Board (TPB), now established for over seven years, has an important role to play in a self-assessment system to help ensure taxpayers receive quality tax related services, as well as helping to weed-out unethical and incompetent practitioners.

However, CA ANZ has become increasingly concerned about Australian Tax Office (ATO) data suggesting that some agents actively assist their clients claim false work-related deductions.  Recently, the ATO has hinted that it may act independently of the TPB and move against tax intermediaries who are of concern.  For example, the Commissioner has the power to deny an agent access to ATO systems.   

At the same time, traditional sources of tax advice are being digitally disrupted through robo advice, tax apps and artificial intelligence products.  Then there are those who simply operate outside the regulated environment.  Some of these players are located offshore, though members also report domestic service providers that undermine the business models of regulated tax advisers.   

At the same time, traditional sources of tax advice are being digitally disrupted through robo advice, tax apps and artificial intelligence products.  Then there are those who simply operate outside the regulated environment.  Some of these players are located offshore, though members also report domestic service providers that undermine the business models of regulated tax advisers.   

The voice of CA ANZ is undoubtedly one of many the government hears ahead of the Federal Budget. But we believe the views of our members carry weight. Just how much weight will be seen when the Turnbull Government delivers the 2018/19 Budget in May.

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