If the bill amending Part IVA (the general anti-avoidance provisions) currently before Parliament becomes law in its existing form, Australia’s tax laws will have reached a new low. The impact will be felt by all taxpayers, not merely the larger corporate sector. The narrative is complex but worth telling.
Successive Australian Governments have encouraged taxpayers to utilise companies rather than trusts for business and investment purposes. This has been demonstrated by the reduction in the corporate tax rate to 30% and by the overt series of obstacles placed in the paths of those attracted to the use of trusts.
As the 2012 year draws to a close the winds of change are blowing through the Taxation Office. The term of Mr. Michael D'Ascenzo as Commissioner of Taxation is about to end and the appointment of a new Commissioner, Mr. Chris Jordan has been announced.
In recent years the pages of The Taxpayer have contained much commentary regarding the complexity of the Australian tax system and the adverse effects this has had on the small business sector. In forming these views we have drawn on reliable, but predominantly anecdotal, evidence from members and other interested stakeholders. This evidence is now strongly supported by a comprehensive survey of small business conducted during the 2010-11 year which resulted in a report being issued during 2012.*
The current approach to reform of the tax system in Australia is unacceptable. Examples abound. We have recently witnessed three attempts to legislate amendments to living away from home arrangements whilst business has not known whether the income tax or fringe benefits tax laws, or a combination of both, would be applied to this vital element of their day-to-day operations and the extent to which an additional tax burden would be created by the changes.
The current situation involving the living away from home allowance (LAFHA) concession is a typical example of the adverse outcomes which can occur when tax policy is made ‘on the run’ without adequate consideration of the ramifications of the proposed changes.
Welcome to the new monthly edition of The Taxpayer. We trust readers continue to find the publication informative and of practical help in navigating the increasingly tricky waters with which tax agents, in particular, must cope.
The Tax Agents Services Act was introduced with an intention of enhancing consumer protection for those Australians who utilise the services of professional advisors to assist them with taxation and related matters. The pursuit of consumer protection by means of legislation which is practical and effective would be applauded by the vast majority.