The Institute of Chartered Accountants has called for the Federal Government to address business, indirect and personal tax reform issues, superannuation and financial reporting standards in its 2006-07 pre-budget submission.  
 
Key recommendations include:  
 
Business Direct Tax Reform 

• Small Business: In the 2006 - 2007 Federal Budget, the Institute has welcomed a number of small business initiatives that the Government introduced including reducing the compliance burden for accessing the small business concessions by aligning the various eligibility criteria for these concessions.  
   
  The Institute recommends that the Government continue to address small business issues such as the problematic Division 7a.
 
 

• Company Losses: In response to the Government’s request, the Institute provided, in January 2006, a number of options for improving the Same Business Test (SBT). Of these recommendations the Institute believes that, as a matter of priority, the Government should reinstate the ability of companies with income of more than $100 million to rely on the same business test (SBT) to recoup prior year losses and claim bad debt deductions. The Institute also recommends measures be introduced to allow consortium companies to flow through losses to their shareholders and introduce loss carry backs rules.
 
 

• Property Funds Industry - Divisions 6B and 6C: The efficiency and international competitiveness of the Australian property fund industry could be substantially enhanced by a number of legislative changes. The Institute will provide a submission to Treasury in the near future outlining our recommendations.
 
 

• Taxation of rights: The Institute supports the development of a systematic approach to the treatment of rights, rather than the case-by-case approached adopted in the 2005 / 2006 Federal Budget. The approach would be principles-based and would include a level of flexibility for the tax system to respond to changes in the business environment.
 
 

• Fringe Benefits Tax: The Institute recommends that a broad Fringe Benefits Tax (FBT) reform agenda be pursued and consideration be given to taxing of fringe benefits in the hands of the employees rather than the employer.
 
 

• Capital Gains Tax: The Institute calls for CGT taper relief for business assets held for the medium to long term.

• Equity changes to the Superannuation Guarantee Regime: The Institute advocates the current Superannuation Guarantee legislation be reviewed; in particular S16 of the Superannuation Guarantee Charge Act, to ensure the penalty regime is equitable by targeting those employers that fail to comply at all.
 
 

• Allowing gearing in superannuation funds: Rather than limiting borrowing to installment warrants, the Institute recommends that the Government consider allowing funds to borrow up to a total of 50 per cent of assets, reflecting the use of gearing as an important tool in maximising investment returns.
 
 

• Deductibility of superannuation contributions: The Institute proposes that limited access to deductible superannuation contributions, under section 82AAT of the Income Tax Act, be revoked allowing all employees to make their maximum deductible contribution, regardless of how their income is earned.
 
 

• Application of the Superannuation Guarantee to HECS debts: The Institute is calling on the Government to apply the Superannuation Guarantee to Australian HECS (Higher Education Contribution Scheme) debts, in an effort to enable employees to repay their debt sooner.