The Henry Tax Review, including the Government’s response, has not gained an enthusiastic response from accountants.
Adrian Raftery, CEO of accountantsRus, says he was disappointed that after such a big build-up there was nothing new in the review.
“The release of the Henry Tax Review is the biggest anti-climax in 2010,” said Raftery.
“Hard tax decisions needed to be made and there were very few … there was mostly only window dressing.”
“The only thing of significance was the tax on resources but that was leaked out months ago.”
Superannuation guarantee levy
Raftery says that the increase in the superannuation guarantee levy from 9% and 12% will be paid for by workers indirectly.
“Employers will elect to pay smaller wage increases in order to absorb the increased super contribution … like it has in the past,” said Raftery.
“They won’t be getting any extra benefits.”
Company tax
Raftery says that a 2% reduction in company tax rate would be welcomed by business but felt that a the 25% rate recommended by the Henry Review would have been more appropriate.
“It is great that Australia will be more competitive amongst the OECD but we really needed to make a bigger impact … this will not be enough to make a significant difference,” said Raftery.
“It is nice that we move from number 22 to 17 … but shouldn’t we be aiming a bit higher?”
Small business depreciation
Raftery said that the proposed changes on the depreciation rules will have a small benefit for the cashflow for small business.
“But businesses were entitled to the deduction away … it is just that they are getting them a bit quicker,” said Raftery.
Resource Super Profits Tax
Raftery said that the sharemarket will be weaker tomorrow but that is due to Friday’s fall on Wall Street.
“I don’t expect share prices in resource stocks will fall any further (other than due to Wall St) because the market has already priced in this tax change for a few months now,” said Raftery.
Personal tax
Raftery was disappointed that there was no changes to personal tax.
“How can we have a two year review of the taxation system and not have one recommended change on personal taxation?”
“Surely there was something that could have been improved … it is far from perfect.”
$500 Government super contribution
Raftery said that he welcomed the Government tackling the super shortfall for low income earners but felt that an incentive to save rather than a mere handout would have been better.
“It would have been better to lift the existing superannuation co-contribution for this $500 rather than just handing out the money … we need to provide an incentive to save more,” said Raftery.
Concessional contribution limit increase
Raftery was very supportive of the increase of the concessional lump sum benefits limit for those with super balances under $500,000 but wanted to have the rule available for all taxpayers.
“It should not be limited to simply those over 50 … the sooner that people can prepare for a comfortable level of retirement the better,” said Raftery.
2010 tax planning
Raftery said there was nothing substantial in the review for taxpayers to worry about for tax planning before 30 June.
“The strategies won’t be anything different to tax planning for any other year,” said Raftery.