The revenue side of the Federal Budget relies heavily on enhanced compliance activity by the Australian Taxation Office in the absence of any real tax reform to address ongoing structural funding problems, according to Chartered Accountants Australia and New Zealand.

The measures indicate the government will be working the tax system harder to extract more revenue from those, the ATO considers to be non-compliant.

As a result, the ATO has been allocated millions of dollars more in funding to roll out tax compliance measures targeting individuals, businesses and those undertaking cross-border tax planning.

The lack of any major tax reform announcements on Budget night is unsurprising given Labor’s decision to disavow so many of its 2019 tax policies in the lead up to the last election.

“The key question for the Treasurer is will the Albanese government have the courage to take an ambitious tax reform agenda to the next election,” said Susan Franks, CA ANZ Senior Tax Advocate. “The same question can be posed to the Opposition”.

Tax

Among the measures Chartered Accountants will be discussing with their SME clients:

• An instant asset write-off threshold of $20,000 will apply from 1 July 2023 but only for one-year
• Eligibility for the new Small Business Energy Incentive, and
• The government’s failure to extend temporary full expensing and the loss carry back tax offset beyond 30 June 2023 (so use it or lose it).

The ATO will be given more funding to query personal tax deductions, with the owners of short-term rental properties singled out for special attention.

$9.1 billion of revenue is expected to be raised through extending the personal income tax compliance program, the GST compliance program and merged, revamped serious financial and serious crime taskforces.

In a sign that more taxpayers are struggling, the ATO has also got more funding to deal with taxpayers with large and aged tax debts.

Superannuation

Chartered Accountants Australia and New Zealand also highlighted two superannuation changes from tonight’s Federal Budget:

1. On non-arm’s length expenses for small superannuation funds, while CA ANZ appreciates the reduced penalty, we think the government has missed an opportunity and should use a tailored compliance approach rather than a draconian tax penalty approach.
2. The employer super contribution penalty regime will need to be carefully re-designed and CA ANZ looks forward to being part of the announced consultation process.

“We will continue to argue that any concerns the government may have about small super funds incurring non-arm’s length expenses is a compliance issue and should not face excessive taxation rate. Overall, we are disappointed with tonight’s announcement,” said Tony Negline, CA ANZ Superannuation and Financial Services Leader.

The government has provided further information about requiring employers to make Super Guarantee contributions more frequently from 1 July 2026.  We welcome the announcement that the Super Guarantee penalty regime will be redesigned in time for next year’s Budget.

“Most employers will have to examine the cashflow impacts of making employer super contributions more frequently and some will need to start work on this sooner rather than leave it till June 2026. The current penalty regime is very harsh for inadvertent and accidental late payments and we hope these problems can be solved,” added Tony Negline, Superannuation and Financial Services Leader.