Tax Forum – closing remarks

The concluding remarks of the Treasurer  and the speech of the Assistant Treasurer indicated a number of action points arising from the tax forum.

The Treasurer’s key concluding remarks were: 

• Business tax - A business tax reform working group will be established with Chris Jordan as its chair. It will include business leaders, tax experts, and unions and will be supported by treasury. It will look at business tax responses to a patchwork economy and how to fund them. The first priority is to identify losses and options for savings to fund them. The second priority is to look at longer term company tax options, including how an equity allowance can work and compare these ideas to changing company tax rates. Any costs will need to be recouped from the ‘business tax bucket’. The first priority will have an initial report by November and a final report by March 2012. The second priority will have a reporting deadline of during 2012
• Small business taxation – Treasury, ATO and the Council for Small Business to jointly identify the best ways to reduce complexity in the coming months
• State taxation – Mike Baird (NSW Treasurer) and Andrew Fraser (Qld Treasurer) will work with the Council of Australian Federation (Council) to develop a state tax reform plan for further discussion with the commonwealth. The first iteration is due by the end of 2012, including a clear timetable for harmonisation and additional steps beyond that. The Council will develop the plan which will be discussed at treasurer’s level and then be taken to COAG (council of Australian Governments). The commonwealth will not be funding state tax reform through an increased GST or state income tax levy
• Personal taxation – first priority is to increase the tax free threshold further to at least $21,000 and remove the low income tax offset entirely. But the government needs to ensure that it can afford it. Such a measure would result in over a million people not be required to lodge an income tax return. Want to explore the possibility of generating savings in relation to the living away from home allowance
• Not for profits – the not for profit council is to extend its work to look at ways to support the sector more effectively
• Governance – The government will contribute $1M a year to create an independent Tax Studies Institute as a centre for research excellence which will be linked to universities.

The main point in the Assistant Treasurer’s Tax Forum speech is that the government believes that a tax system advisory board can add value to the administration of the tax system and enhance the reputation of the ATO as a world leading administrator. The government would appoint members with a range of diverse organisational skills to the board and there would be an independent chair. The board could operate as a small set of trusted external advisers with whom the Commissioner could freely discuss a range of organisational issues. The chair and members of the board will be announced in the near future.

Article last updated 21 March 2012