Institute lodges 2012-13 Budget submission with government

On 30 January 2012, the Institute lodged with Treasury its 2012-13 Budget submission to the federal government. The Institute argues against planned cutbacks in expenditure within Treasury’s Revenue Group, in particular, with any reduction in resourcing capability expected to jeopardise the timely development of new policies in the tax and superannuation areas.
 
Some of the other key tax-related points in the Institute’s submission included:

• The government announced in November 2011 that it would be reforming Australia’s domestic transfer pricing regime with the objective of making the rules more consistent with international standards. The Institute urges the government to re-consider its position on the retrospective aspects of the November 2011 announcement, and focus instead on putting in place changes that improve certainty for taxpayers on a go-forward basis
• The establishment of the Business Tax Working Group (BTWG) to examine a range of specific business tax issues across the current treatment of losses and the practicalities of the allowance for corporate equity (ACE) model is an appropriate way to progress some of the initial thinking that has been done to date. While the small cross-representational design of the BTWG is a sensible way to kick-start further analysis of the key issues, it should not replace the more traditional open public consultation processes that are necessary in designing major reforms to our taxation system. The Institute does not believe the government should make final decisions about the dimensions of new tax policy in the area of either losses or the ACE model without a comprehensive consultation dialogue with private sector policy experts outside of the Business Tax Working Group (BTWG)
• One of the key actions arising from the October  2011 national tax forum was the commitment provided by the New South Wales and Queensland governments that they would commence a dialogue to examine how best to achieve greater harmonisation and rationalisation of various state-based taxes over the next few years. While the commitment to work towards such outcomes was originally put forward by the Queensland government – and supported by the New South Wales government – it was our understanding (at the time) that all States and Territories broadly supported the proposal. Since the October 2011 forum, no further information has been provided about whether, or how, the harmonisation work is progressing. The federal government should take an active role in bringing all States and Territories together in order to advance the work that was initiated in this area following the October 2011 commitments
• In the 2011-12 federal Budget the government announced that it would be introducing a suite of reforms impacting the not-for-profit sector. We believe it would be appropriate for the government to consider deferring the introduction of the proposed new unrelated commercial activities test for at least one, or perhaps two, years in order to provide a more realistic timeframe for development and introduction of such significant reforms. It is our understanding that many not-for-profit entities share our concerns about the unnecessary pace of change in this area
• The Institute has been a long-time supporter of the need to update the trust income tax provisions contained in Division 6 of the Income Tax Assessment Act 1936 with a view to rewrite the provisions into the Income Tax Assessment Act 1997. The indicative timetable indicates that this reform project is expected to run the course of 2012 culminating with the introduction of legislation in November 2012 for a 1 July 2013 start date.  The Institute is of the view that the proposed timetable may be overly optimistic given the complexity of the issues involved with the operation of Division 6 and its interaction with other provisions, some of which are subject to separate reviews.
• While the floods were an unexpected natural disaster on a massive scale, they were not unpredictable.  It is for this reason that we believe the government should put in place a well-financed natural disaster relief fund to meet the Commonwealth’s commitment to the States and Territories in situations where vital community infrastructure has been destroyed or damaged.

The Institute will engage in further discussions with the government about its submission in the lead-up to the federal Budget on Tuesday 8 May 2012.

Article last Updated 13 February 2012