The Institute of Chartered Accountants has called for the Federal Government to address superannuation and business tax reform issues in its 2006-07 pre-budget submission. 
 
Key recommendations include: 
 
Tax Deductibility of financial planning fees: The Institute recommends changes to the legislation to include the tax deductibility of financial planning advice fees for developing a financial plan.  
 
Deductibility of self-employed superannuation contributions: From 2002-03, a self-employed person can claim a tax deduction for superannuation contributions up to $5,000, plus 75% of the amount over $5,000, subject to the age based limits. In comparison, contributions made by employers for employed individuals, including salary-sacrificed amounts, receive a full tax deduction, up to the age based limits. This represents an unfair difference and discourages self-employed people from contributing more than $5,000 pa. The Institute of Chartered Accountants believes removing this inequality will encourage greater savings and a simpler more uniform system. 
 
Co-contribution payment: From 1 July 2004 the Federal Government introduced a co-contribution scheme for employees on incomes up to $58,000 who make an after tax member contribution to superannuation. Those who are self employed are not eligible for this scheme, regardless of income. Removing this inequality will encourage greater savings and a simpler and more uniform system. 
 
Personal Tax Reform: The Institute believes that taxpayers, and the broader community, would be better served if the Government adopted a more holistic approach to personal tax reform, rather than the piecemeal approach of the past, which has focussed on the top marginal tax rate. 
 
Key areas requiring review include: alignment of corporate and personal tax rates; addressing effective marginal tax rate inequities; optional tax returns (for taxpayers whose income is subject to withholding at its source) and indexation of marginal tax rate thresholds to remove “bracket creep”. 
 
Business Tax Reform: The Institute recommends the Government should review the corporate tax base and look at more favourable tax treatments, in the following areas: CGT relief for business assets held in the medium to long term; introducing an effective life cap for all capital allowance items; increase in the R&D tax concession back to 150% and review employee share scheme rules with a view to increasing incentives. 
 
Australian equivalents of International Financial Reporting Standards (AIFRS): The Institute strongly urges the Government to allocate sufficient resources to urgently address the outstanding taxation issues arising from the introduction of AIFRS. There remains a need for legislative amendments in respect of other areas of the income tax legislation such as: share capital tainting and disqualifying accounts; issues arising under AASB 139 “Financial Instruments: Recognition and Measurement”; and consolidation.  
 
Small business: The Institute recommends that the Government allocate funding in order to conduct a review of how the definition of small business and the eligibility criteria for various concessions can be made consistent throughout the income tax legislation. Consideration should also be given to the possibility of extending existing concessions/carve-outs and introducing new initiatives. 
 
Financial Reporting by SMEs and Non-Listed Companies: The Institute has also called for the thresholds for classifying companies as small to be significantly increased to reduce unnecessary financial reporting and a review of the requirements for non-listed companies to lodge financial statements with ASIC. . 
 
Accountant skills shortage: Australia is suffering a significant shortage of qualified professionals with accounting qualifications. The severity of the problem is too great for the profession to solve on its own. In this regard the Institute recommends a range of measure, which the Government can assist with including reviewing visa requirements for foreign students; changing HECS funding and reviewing Australia’s personal tax system. 
 
ENDS