Friday, 1 August 2014

Improving access to child care through the tax system

The Productivity Commission recently released its interim report into child care and early childhood learning.

The Tax Institute contributed to the Commission’s inquiry earlier this year and argued that two options for improving access to child care through the tax system would be to allow a tax deduction for child care costs and to use a refundable tax credit or cash grant.
 
Tax deductions for the costs of child care, if appropriately targeted, would encourage highly educated women who bear the primary responsibility for domestic duties to return to work.
 
Tax deductions should only be available to reduce the tax on income from employment or self-conducted business income so that they are unequivocally tied to enhancing productivity.  That is, there is no point giving a subsidy to reduce the tax on investment income.  As such, we do not support subsidising the child care expenses of a parent who is still at home earning bank interest or share dividends.
 
The advantage of making child care costs tax deductible is that it relies on market forces (rather than Government intervention) to determine work force participation and to allow legitimate costs of work force participation to be appropriately deducted from income.
 
Tax deductibility would assist in eliminating existing incentives for primary carers to stay out of the workforce, yielding a variety of benefits for individual families as well as the nation.
Tax deductibility of child care costs therefore deserves careful consideration and study. We accept that any such scheme would need to be supplemented with means-tested payments, to ensure that women in lower marginal tax brackets who cannot benefit as greatly from deductibility of child care are also appropriately supported.  However, this assistance should be in addition to a wider consideration of deductibility of child care costs.
 
Of course, reducing costs is only half the battle. Availability of childcare places and workplace flexibility allowing part-time employment are also key factors.
 
But if we can make the tax system better recognise the true income-dependent nature of child care costs, we’ll take a significant step in the right direction.
 
Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute. 
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Sunday, 27 July 2014

Update on the Winter Sitting of Federal Parliament and the MRRT

The Winter Sitting of Federal Parliament ended last week and despite the winter chill in Canberra, the debate about the repeal of the Minerals Resource Rent Tax (MRRT) was red hot. Caught up in this debate are the tax concessions and other social security measures that were to be funded by the MRRT. These include changes to the capital allowances for small business entities, the loss carry-back regime for companies, the payment of a superannuation co-contribution to low income individuals, the increase to the superannuation guarantee rate and the Schoolkids Bonus.

The Government made an election commitment to repeal the MRRT and its related measures and it is sticking to its guns. The end of the Winter Sitting period curtailed round two of trying to get the MRRT and its related measures repealed to no avail. There were a number of attempts made in the Senate to maintain some of the associated measures that were to be funded by the MRRT. For now, there is no clear answer on what measures will stay and what measures will go, so taxpayers relying on the concessions and social security measures remain in limbo. Compounding the situation is the proposal to backdate the repeal of measures (see our post from 30 June for more detail).

We are conscious of the difficult situation that members are in who are trying to advise clients in the face of uncertainty around these measures. We have been strongly advocating to the Government to end the impasse so that our members can confidently advise clients on these measures with certainty in the law supporting them.

The Spring Sitting that begins on 26 August 2014 should see the resumption (and hopefully the conclusion) of this debate, resulting in certainty for taxpayers. We will keep a close eye on proceedings and keep members informed.


Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute. 
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Friday, 25 July 2014

Meet a member: Julia Farrell, Ruddicks

“…if a career in tax is what you want, furthering your education is a must.”

Name: Julia Farrell
Company: Ruddicks
State: Tasmania
Member since: 2012

Areas of specialty
I work mostly in the SME sphere so a great deal of my time is devoted to issues related to trusts, small business CGT concessions, Division 7A and business structuring. I also do a lot of work on deceased estates and R&D.
Why are you a member of The Tax Institute?
I joined after taking part in a Young Tax Practitioner discussion group because I wanted to be able to access the high level education materials and publications by The Tax Institute. I have also found the networking opportunities fantastic and the CPD events of exceptional quality.
How did you end up in tax?
By accident. I tried architecture and marketing at uni and quickly came to a realisation that that kind of creativity was not my forte: my lecturers politely called my creations “minimalist”. While trying out different subjects for my commerce degree, I found my way into an accountancy unit and was hooked.
Creatively finding solutions to real-life issues turned out to be much more fun than designing extravagant bus stops! While working part-time at Ruddicks, I majored in accountancy and corporate governance which complemented each  other very well. I subsequently completed my Chartered Accountant qualification and am currently doing the Master of Taxation degree through the University of NSW.
One of the many things I like about tax is that you can never know all the answers and you never know what curveball a client may throw at you – contrary to the stereotype, it’s never dull.
What are the challenges for tax practitioners this year?
Technology, for one. With the ATO going increasingly high-tech in their interaction with taxpayers and tax practitioners, it is important to stay on top of the changes and to be able to guide your clients through the new processes. Uncertainty and complexity are also big issues, but of course not limited to this year.
Small business CGT concessions are a prime example: exceptionally difficult and convoluted, these are becoming more and more relevant as baby boomer business owners are seeking to retire.
Most memorable career moment to date
The most memorable moments are unfortunately unpublishable!
The most satisfying moments are however those involving complex tax issues, and explaining to a client in simple terms the difficult concepts in a way that they understand and feel comfortable with. Being able to give a client the confidence to understand the issues involved and the comfort to make educated decisions is very rewarding.
How do you relax?
I watch a lot of films. I am on a committee for the University of Tasmania Film Society for students and the community which satisfies that particular hobby. I also volunteer at the local Harvest Farmers Market every week – it’s a completely different kind of activity to what I do every day and the market has an amazing community feel to it... I also get to meet a lot of people I would never meet otherwise.
I also enjoy sports including pistol shooting (much to the alarm of some colleagues!) and spending quality time with my two ex-racing pet greyhounds. Last but not least, wine.
Advice to those entering the profession
Hang in there. It takes a while to get your head around all the general tax concepts and it can feel rather frustrating at times. Once you get past that and start to understand the rationale behind the tax rules and the relationships between different taxes, that’s when it gets really interesting.
Also, if a career in tax is what you want, furthering your education is a must. Formal training through The Tax Institute and other professional bodies, informal in-house training and personal reading are all invaluable tools for those starting out in tax.
 
Tax Knowledge eXchange
The Tax Institute runs over 300 CPD seminars a year, and all papers and PowerPoint presentations provided by the speakers from our seminars are available through the website individually or through a Tax Knowledge eXchange subscription
 

Wednesday, 23 July 2014

National events and upcoming course intakes

Start planning for your CPD requirements early

We host a number of flagship events throughout the year to help our members stay up-to-date on industry news and to help them earn their CPD requirements. In mid-August we will be running our National Superannuation Conference in Melbourne. This conference has been designed for tax professionals from both the large fund and self-managed superannuation fund (SMSF) sectors. The event will feature speakers from the legal, accounting, audit and financial advisory services fields of the superannuation industry to discuss current challenges and opportunities.

In September we will be hosting our 2014 National GST Intensive in Sydney. This year’s intensive will feature the latest in GST issues, while also providing you the opportunity to network with colleagues and fellow GST enthusiasts.

For further information on both of these flagship events, including the program and how to register, visit us online at taxinstitute.com.au/professionaldevelopment.

Thinking of taking that next step in your career, or perhaps upgrading the qualifications of your staff?

The Tax Institute is about to commence Study Period 2 and have a number of course offerings available that can help you further develop your tax knowledge or upgrade the qualifications of your staff.

Below you will find the upcoming course offerings and enrolment dates:
You can find out more about our course offerings, enrolment dates, fees and course structure on our website at taxinstitute.com.au/education.



Noel Rowland
Noel
Rowland
Noel Rowland is Chief Executive Officer of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.
 
 

Monday, 21 July 2014

Dispute resolution with the ATO

The Tax Office’s handling of dispute resolution is receiving significant focus at present. Both the House of Representatives Tax and Revenue Committee and the Inspector-General of Taxation are conducting inquiries into the matter.

As reported to us by members, over the past 18 months, we have noticed genuine and significant improvements in the way that tax disputes are handled by the ATO.

However, there remains room for improvement in a number of areas, including:
  • Engagement and cooperation at review and audit stage;
  • Flexibility in internal ATO timeframes, in particular to avoid the unnecessary escalation or progression of a matter that may otherwise have been resolved or limited;
  • Opportunities for early engagement and resolution outside of the large business and high wealth individual areas;
  • Technical expertise within the ATO; and
  • Independence at objection and independent review stages.
Structural change to the way that objections, reviews and litigation are managed within the ATO may be constructive. On balance, The Tax Institute supports the establishment of a separate appeals area within the ATO.

You may view our complete submission to the Parliamentary Committee here.

We look forward to engaging further in the coming weeks with the Tax and Revenue Committee and the Inspector-General on these important issues. 
 
Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute. 
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.