Taxpayer engagement with the tax system
The House of Representatives Committee on Tax and Revenue has released its report on taxpayer engagement with the tax system. The Committee concluded that, under Australia’s self-assessment model, more should be done to make tax obligations easier for taxpayers to understand and simpler to comply with. The Committee made 13 recommendation which include:
- a complete review of the tax system by 2022, to achieve a system that responds to the rapidly evolving digital environment, and is both easier to enforce and understand
- adoption by the Australian Taxation Office (ATO) of a Regulatory Philosophy to codify the principles on which it will administer tax laws and engage with taxpayers
- introduction of a standard workplace expense deduction scheme, where a standard deduction applies unless fully substantiated claims are made
- adoption by the ATO of a roadmap for the abolition of paper-based returns, including testing and trialling with user groups, and
- consideration of an ABN withholding tax system at source for all industries with the potential for the rates to be industry specific.
Labor Party’s new tax policies
The Shadow Treasurer in an address to the COSBA National Small Business Summit has indicated that a Labor Government will maintain the tax cuts that have been legislated and implemented to date (ie the reduction in the corporate tax rate to 27.5 per cent for businesses with a turnover up to AUD 50 million per annum).
In addition, it was indicated that the Labor party will seek to legislate to establish a new position of Second Commissioner – Appeals within the ATO with funding of AUD 1.5 million to be provided over the forward estimates.
In a subsequent speech to the Tax and Transfer Policy Institute, the Shadow Assistant Treasurer announced that a Labor Government will extend the application of the Tax Haven Blacklist, specifically deny claims for unsubstantiated tax-free allowances paid for travel to tax havens (with exceptions requiring an application to be made to the ATO). If a claim cannot be substantiated and justified as incurred in the production of assessable income, it would attract a fringe benefits tax liability of 47 per cent. In addition, it will implement an integrity measure targeting ‘passport shopping’ in tax havens. Under this policy, it will also be a requirement that individual Australian taxpayers will need to notify and declare to the ATO if they have residency or citizenship of any other jurisdiction and the name of that jurisdiction.
Consultation on reforming administration of DGR status
Treasury has released a consultation paper seeking views (comments were due 21 September 2018) on the proposed design for key components of the Government’s package of reforms for administration and oversight of organisations with deductible gift recipients (DGR) status, including:
- requirement for non-government organisations with DGR status to register as a charity with the ACNC from 1 July 2019
- transition arrangements to support existing organisations with DGR status to register as a charity with the ACNC
- Commissioner of Taxation’s discretion to exempt organisations with DGR status from the requirement to register as a charity in limited circumstances, and
- the abolishment of certain public fund requirements.
The submissions to this consultation paper will assist in developing the legislation to give effect to the reforms.
In addition, 30 recommendations were made in the final report on the Review of Australian Charities and Not-for-profits Commission legislation, including a long term goal of moving towards a national scheme.