The Coalition Government's decisions regarding the Tax Working Group recommendations signal the start of a significant tax policy workstream – the prioritisation and speed at which these items can be addressed will be key.
Chartered Accountants Australia and New Zealand (CA ANZ) supports the Government's decision to not progress with a Capital Gains Tax. In our original submission to the group, we recommended that the status quo be retained and that any extension to the taxation of speculative investments required be included within the Income Tax Act framework.
There are a number of policies CA ANZ would like the Government to prioritise, but which are currently designated for 'consideration for inclusion on the tax policy work programme'. Among them is reform of the treatment of black-hole expenditure by spreading such expenditure over five years with a $10,000 safe-harbour threshold for upfront deductions for feasibility expenditure.
CA ANZ is disappointed that its recommendation to establish a taxpayer advocate service to assist with the resolution of tax disputes will not be progressed. We believe this feature would make a significant contribution to enhance taxpayers' trust in the tax system.
We fully support the establishment of a Taxpayer Advocate Service (TAS) as an independent "voice for the taxpayer" within the tax system. With appropriate safeguards this could operate as an autonomous unit within IR.
Long-term issues facing New Zealand's tax system require more work, in particular the reliance on a small number of individual taxpayers as the largest single source of the country's tax revenue.
Individual income tax is New Zealand's highest revenue earner with more than 40 percent of the total tax take. It is crucial that we continue to think about the sustainability and future of our tax base, and the risks posed by a shrinking income tax pool due to advances in technology, the changing work landscape and ageing population.