With the ink dry on the government’s response to the Henry tax review, the Institute of Chartered Accountants in Australia is turning its temporary attention to next week’s 2010 Federal Budget.
The Institute of Chartered Accountants say the landscape for next week’s Budget has shifted after the release of the Henry tax review and that the government faces higher expectations from business and individuals in the areas of tax and superannuation reform.
“Budget night provides the government with another opportunity to evidence its commitment towards serious reform by releasing a medium and long-term agenda for Australia’s tax and superannuation systems,” said the Institute’s Tax Counsel, Yasser El-Ansary.
Mr El-Ansary said unlike last year, he expected the government to make policy-only announcements rather than detailed technical announcements of changes to tax laws on Budget night.
“Some of the tax changes announced as part of last year’s Federal Budget resulted in significant disruption to the activities of many Australian businesses, so we hope to see that the consultation process has improved,” he said.
Regarding specific policy issues, Mr El-Ansary said he would like to see reforms to trust tax laws in Australia.
“There is a great deal of uncertainty and complexity in relation to the basic rules around the taxation of more than 350,000 trusts in Australia. There is a growing sense of urgency around the need to initiate a comprehensive review of this area.
“The imminent release of the review into Managed Investment Trusts will hopefully go some way to addressing the tax uncertainty in this sector; therefore it makes sense for an overall review of trusts to be undertaken,” he said.
The Institute of Chartered Accountant’s Head of Superannuation, Liz Westover, said that while the superannuation provisions announced following the release of the Henry tax review were a positive outcome for some Australians, they did not constitute a blueprint for serious reform under the terms of reference of the review.
“If the government is to continue its theme of equity in superannuation it will need to go further in its response to the Henry tax review,” she said.
Ms Westover said that while some quick fixes were put in place, residual issues such as excessive penalties for Australians who inadvertently breach superannuation contributions caps would create unnecessary hazards for people trying to save for their retirement.
“Australians are penalised for a great number of tax breaches but putting too much money into super shouldn’t be one of them,” Ms Westover said.