25th May 2006 
 
According to 80 percent of local business professionals surveyed at the Institute of Chartered Accountants Business Forum, Australia's top marginal tax rate of 45% should be aligned with the corporate tax rate of 30 percent.  
 
The survey revealed also that 82 percent respondents believed that tax returns should be made optional for taxpayers who have very simple tax affairs.  
 
Simon Grant, General Manager at the Institute of Chartered Accountants in Queensland, said that the tax relief announced in the Federal Budget was welcomed but more was required by the Government in order to address the inefficiencies caused by the difference in the tax rates.  
 
"Unfortunately, the changes in the Federal Budget, to the marginal tax rate do not go far enough and these rates are still high in comparison to the corporate tax rates, resulting in distortions in the tax system," Mr Grant said.  
 
He also said optional tax returns should be encouraged in Australia because the current system diverts scarce resources for preparing information that adds little if any additional benefit to achieving taxation compliance.  
 
"The majority of taxpayers have very simple tax affairs - they derive only salary and wages and / or interest income and have only minimal deductions - but they are still required to lodge annual tax returns," Mr Grant said.  
 
"We consider that the effort undertaken to complete these returns is not in proportion to the revenue collected. Our proposed solution is the introduction of optional tax returns for taxpayers whose income is subject to withholding at its source".  
 
In addition the survey revealed that 82 per cent of the respondents believe tax brackets should be indexed in accordance with the Consumer Price Index to avoid 'bracket creep.'  
 
"The Federal Government should preserve the taxation rates that apply to individuals so that they are not pushed into a higher tax bracket purely as a result of a strengthening economy and rising salaries," said Grant.  
 
Whilst the Budget contains some much needed personal tax reform, the Institute will continue to lobby for an overhaul of the personal tax system.  
 
Issues remaining to be addressed (as raised in the Institute's personal tax policy) include the following: 

• Indexing of marginal tax rates to remove "bracket creep"
 

• Alignment of corporate and personal tax rates; and
 

• Optional tax returns for certain taxpayers.