Monday, 29 October 2012

Resignations, rewrites and releases

What a week! Beginning with MYEFO, last week reached a crescendo at the virtually simultaneous announcements in relation to Commissioner D'Ascenzo's resignation, the end of the Business Tax Working Group company tax rate cut reform process and release of the Trusts taxation rewrite Policy Options Paper.

MYEFO brought little joy or surprise for most. Tinkering with company tax instalment payments made the biggest news. However, hiding underneath were multiple changes that will also affect members, such as the denial of a concessional FBT treatment for in-house benefits acquired via salary-sacrifice, and legislative changes to alter the treatment of superannuation pensions paid after death. The ATO also got a $390 million boost in funding over the forward estimates period for compliance initiatives.

Just in case that wasn't enough excitement, the Trusts rewrite policy design paper was released on Wednesday afternoon, with more questions on and development of the previously aired options for reform. The Tax Institute will of course be significantly involved in this consultation process. We are aware that this rewrite is of great interest to our membership. If you are interested in contributing to our submission on the Policy Options Paper, please contact us at Tax Policy.

A mere hour later came the news that our Commissioner Michael D'Ascenzo AO will be retiring to take up a position at the Foreign Investment Review Board. The Tax Institute's relationship with the Commissioner has always been productive, honest and collaborative, and we thank him for his contributions. Our CEO Noel Rowland's farewell is contained in our press release, and thanks the Commissioner for the instigation of programs that have significantly improved the taxpayer and professional experience.

Latest in the day came the low-key release of the Business Tax Working Group's brief draft report which noted that consensus could not be reached in the business community for a revenue neutral package to fund a company tax rate cut. The end of the BTWG process is a missed opportunity to secure a company tax rate cut that would have yielded significant benefits for the economy.

As such, we have called on the Government to renew its commitment to this reform via a revision of the terms of reference of the Working Group, including allowing consideration of broader reform options (such as changes to the base and rate of the GST).


Deepti Paton CTA is Tax Counsel at 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.

Tuesday, 23 October 2012

The future of the tax profession and you

Chartered Tax Adviser information sessions

What does the future look like for the tax profession in Australia and internationally? As a tax professional how will you be seen?

We invite you to join us over drinks and canapés for an evening of discovery and to learn what the Chartered Tax Adviser designation means for you. Let us help you make an informed decision about the future of the tax profession and your role in it.

Are you an experienced tax professional with many years’ experience? Or a student, recent graduate or new entrant to the profession? Whatever your background, as a tax professional you need to look towards the future and discover what becoming a Chartered Tax Adviser means for you, your business and your career.

Find out more on our website.

You will learn about

  • The history of the prestigious Chartered Tax Adviser designation
  • The introduction of the designation in Australia
  • What the CTA designation can do for you and your career
  • What the CTA designation can do for your business or practice
  • The importance of the CTA designation in today’s global landscape

Who should attend?

  • Anyone who is considering tax as their career path
  • Anyone who wants to expand their career opportunities
  • Anyone who wants to expand their business or practice
  • Anyone who is considering obtaining the Chartered Tax Adviser designation now or in the future
  • Employers and training managers who want to grow their organisation’s workforce.

To register
Click on the location below you would like to attend to register online.

Sydney
Tuesday 13 November, 6.00-7.30pm

Melbourne
Wednesday 14 November, 6.00-7.30pm

Perth
Thursday 15 November 6.00-7.30pm

Brisbane
Monday 19 November 6.00-7.30pm

Adelaide
Wednesday 21 November 6.00-7.30pm

Online
Thursday 22 November 6.00-7.30pm AEDST

If you would like more information, please call us on 02 8223 0060.

Monday, 22 October 2012

Tax Time 2012 deadline looms

As the first major lodgment deadline of Tax Time 2012 (31 October 2012) looms overhead, The Tax Institute is pleased to see there have been relatively few concerns arising during Tax Time 2012 so far.

The main issues which have arisen have concerned issues such as identity fraud (which both the profession and ATO continue to combat), rather than the types of issues which arose in Tax Time 2011 (such as delayed refunds for taxpayers).

We hope that the smooth running of Tax Time 2012 so far bodes well for the next few months over which many tax agents will remain busily assisting their clients to comply with their tax obligations and lodge their tax returns. In this regard, we hope members are too finding Tax Time 2012 to be a much better tax return season than the previous year.

Of course, Members experiencing issues during Tax Time 2012 should contact us at Tax Policy to report their concerns.

Lodgment Program Differentiation Framework

Also, we thought this might be a good time to remind members about the new Lodgment Program Differentiation Framework that will start from 1 July 2013. We have published information in previous TaxVine newsletters about the Framework and will continue to keep members informed as more information is made available by the ATO. Information about the new Framework can be found on the ATO website.

We strongly recommend Members familiarise themselves with the new Framework so that they can be prepared for when it starts next year. Members with any concerns regarding the Framework should contact us at Tax Policy.

Stephanie Caredes CTA is Tax Counsel at 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, 19 October 2012

A membership update from the CEO

Membership renewal packs

If you have not already received your membership renewal pack, it will be with you in the coming weeks. With the launch of the Chartered Tax Adviser designation, these packs include a complimentary certificate (and frame, if purchased), membership card and decal for Chartered Tax Adviser, Fellow and Associate members. Affiliate members receive the complimentary membership card, and all packs include important information on our products and CPD.

Logos can be downloaded from our website with your postnominals are available for Chartered Tax Adviser, Fellow and Associate members as a complimentary marketing tool. They can be incorporated into your larger suite of business marketing, such as business cards, letterhead, website, and other marketing collateral.

Your pathway to a globally recognised tax designation

The Tax Institute now offers the CTA Advisory Exam to tax professionals who are seeking to qualify for the highest level tax designation in Australia, the Chartered Tax Adviser (CTA).
To attain the new designation, applicants will be required to sit the CTA Advisory Exam to ensure that they demonstrate the highest level of professional tax skills, quality advice and acute commercial skills joining a growing international network. The first CTA Advisory Exam will be held on 20 November 2012.

Australia’s first CTAs

Congratulations to all our new and existing members who have successfully qualified as Australia’s first Chartered Tax Advisers. The new designation allows these qualifying members to join a growing international network of Chartered Tax Advisers, providing international opportunities previously unattainable for Australian tax professionals.

The future of the tax profession and you

What does the future look like for the tax profession in Australia? As a tax professional, how will you be seen?

We invite you to join us for an evening of discovery and to learn what the launch of the Chartered Tax Adviser designation means for your career. Enjoy drinks and canapés at free information sessions that will be held in November around the country.

For more information, and to register, visit our website.

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.

Thursday, 18 October 2012

Social media for tax professionals: getting started with LinkedIn (Part 2)

This article discusses how to use LinkedIn to build your professional profile and enhance your network.

Build your network

LinkedIn shows any mutual connections that you have with someone, which is a valuable tool for building beyond your first-degree network. Begin by connecting with your direct contacts by uploading information from your email accounts. You can then browse the connections of those in your network for new relevant contacts.

Joining groups

There are thousands of groups on LinkedIn where professionals "meet" to discuss the latest happenings in their industry or things they are interested in. Joining in the conversation is a great opportunity for you to build your visibility and position yourself as a thought leader.

You could even choose to start a group around something you have a professional interest in — this automatically positions you as a leader on that topic. Share relevant content and start pertinent discussions and member activity will follow.

Start by joining The Tax Institute's LinkedIn group and get involved with the discussion.

Promote your business 

Due to the business-focused nature of LinkedIn, the site offers ample opportunity to interact with decision-makers, generate leads and form strategic alliances.

Setting up a company page for your business on the site allows users to "follow" your business and keep up to date with the latest happenings.

Want to know more?

Learn more about building your profile on LinkedIn. The LinkedIn Learning Centre offers valuable tips and hints on how to get the most out of the site, and includes user guides for new users and small businesses.

New to social media?

Connect with The Tax Institute and join the conversation.


Like us on Facebook
Follow us on Twitter
Join us on LinkedIn


Coming soon: Getting started with Facebook.

Wednesday, 17 October 2012

Why do we need The National Tax Liaison Group?

I want to reflect on one of the most important of the ongoing consultation forums with the ATO, the National Tax Liaison Group (NTLG). The importance of the NTLG cannot be underestimated. The ATO is represented at the very highest level by the Commissioner, Second Commissioners, Chief Tax Counsel and other very senior officers as called on from time to time to explain issues about the administration of the tax system. The Tax Institute is represented by the President, Vice-President and Senior Tax Counsel. That representation demonstrates our commitment.

The NTLG is focused on those issues which impact on higher-level tax administration, while more detailed consideration of the intricacies of the law and its administration are left to the NTLG sub-groups. Those sub-groups are peopled by members with specialised knowledge. Some examples are sub-groups for international tax, consolidations and trusts (of which I am inordinately fond, having wrestled with intractable trust taxation issues for some six years). There are also working groups brought into existence to deal with new legislation or particular issues that require special expertise. These working groups are flexible and usually have a limited life but can achieve a great deal in a short time.

An example of the high-level discussions taking place in the NTLG is that which occurred at the most recent meeting on 20 September 2012. The professional bodies asked about how the ATO would maintain its service levels in critical areas in view of the need to meet the government’s efficiency dividend. Frances Cawthra, the Chief Financial Officer, explained the measures being taken by the ATO to meet its obligation, and the Commissioner discussed how scarce resources would be nurtured. This is a side of the ATO’s administration that professional practitioners rarely consider, but it is important that we recognise the reality of the pressures under which the ATO operates and assist by communicating to the Commissioner our understanding about what is important and those things that are less important.

Another example of the good work that can be done in the NTLG coming out of the meeting concerned the recently introduced director penalty notice rules, particularly as they impact on associates of directors. An array of questions was posed by The Tax Institute and it became apparent in the response that a lot of work was being done by the ATO but a great deal more needed to be done. The Commissioner quickly recognised this and decided that a working party approach was appropriate to bring external experience into the decision-making process.

Treasury is also represented at these meetings and we appreciate the candour with which the ongoing logjam of legislation is discussed. It is very important that The Tax Institute appropriately keeps pressure on government through Treasury to deal with the backlog of unaddressed issues. Our tax system can only maintain its health if legislation is brought into existence. The system will start to fail if taxpayers have to guess at what their liabilities might be.

The balance of the meeting roved over the ATO’s dispute management plan, the risk differentiation project, the trust resolution project, and lodgments. It is all good stuff and, as I have said at the outset, critical to keeping the tax system alive and well on a cooperative basis.

Ken Schurgott
Ken
Schurgott
Ken Schurgott is President of the National Council at 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, 14 October 2012

Effective tax consultation

Last week, The Tax Institute wrote to the Assistant Treasurer, The Hon David Bradbury MP to set out our view on the ethical framework that should apply to all participants in the tax consultation process.

As members will agree, effective consultation is essential to produce tax laws that are in the broader national interest. The Government's commitment to construct a framework for consultation stemmed from a recent recommendation of the Board of Taxation. We were pleased to have this Board of Taxation report and the Government's response publicly released at our Queensland Corporate Tax Retreat in September.

While consultation has improved significantly in both quantity and quality over the last decade, it is encouraging to see the Government's attention and commitment to continuously improve the tax law design process. We look forward to further discussions in relation to the development of the ethical framework.

An outcome in the broader "national interest" means one that yields the greatest benefit for the broader Australian economy and community (rather than an outcome that is either pro-revenue or pro-taxpayer). Furthermore, the consultation process will benefit from greater clarity as to the rights and responsibilities of all parties. As such, we have recommended that the ethical framework apply equally to both Government and external participants.

Our proposed ethical framework acknowledges that all participants should:
  • recognise the role of the tax system to generate Government revenue in a manner consistent with Government policy and judicial interpretation of tax laws
  • recognise the need to balance the interests of taxpayers directly affected by the relevant tax measure with the need to safeguard the integrity of the tax system and the broader national interest
  • recognise the need to minimise the compliance cost impost of the relevant tax measure and the tax system more broadly, for taxpayers and the ATO
  • recognise the need for an appropriate balance between legislative certainty and sound interpretation/administration
  • be required to be fully informed of all the details made available in relation to the relevant tax measure before engaging in consultation
  • demonstrate mutual respect for the expertise, contributions and role of all participants. This includes an understanding on the part of Government participants that while external participants are informed by the provision of private advice, their contributions to the consultation process are motivated by national interest
  • be willing to offer insights and opinions on tax policy and implementation that may be contrary to their self-interest, the interests of their clients or the narrower interests of revenue protection i.e. all participants should recognise that an outcome in the national interest is one which maximises the benefit for the broader Australian economy and community
  • be willing, in the interests of transparency, to provide additional information/clarity where possible and in a timely fashion if so requested by other participants
  • recognise the need to identify all flow-on effects of the relevant measure as well as interactions with other laws/regulatory frameworks, regardless of the impact of such effects/interactions, and
  • respect the scope of the consultation.
We have also noted that the following pre-conditions for consultation need to be satisfied before effective application of the ethical framework will be possible:
  • appropriate definition of the scope and nature of the consultation
  • sufficient time for preparation and participation in consultation
  • a commitment from Treasury and/or the ATO to undertaking consultation on policy aspects where possible and to disclose the nature of and framework within which such consultation has been undertaken
  • a commitment from Treasury to provide feedback on consultation efforts and commission post-implementation reviews in relation to new tax measures where possible and appropriate, and
  • a commitment from Treasury to transparency with respect to time frames for consultation.
We look forward to engaging further with the Government on the development of this framework, which should provide greater clarity as to the rights and responsibilities of all parties thereby improving the tax consultation and tax law design process more broadly.

Please feel free to contact me at Tax Policy with any queries or to discuss in further detail.

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, 12 October 2012

Structuring professional practices [Video]

In our latest video Andrew Noolan CTA discussed the CGT issues to consider when it comes to structuring a professional practice.




Recorded for the Trust Issues for SMEs DVD, Andrew’s session at the 27th National Convention "Structuring professional practices" examined:

  • limitations posed by legislation and professional requirements
  • tax agents services legislation
  • micro practices and PSI
  • Part IVA and restructuring pratices
  • no goodwill restructures.

The Trust Issues for SMEs DVD includes three sessions filmed at the 27th National Convention in March 2012, as well as the speaker papers and presentations.

Thursday, 11 October 2012

Social media for tax professionals: getting started with LinkedIn (Part 1)

This article discusses how to use LinkedIn to build your professional profile and enhance your network.

What is LinkedIn?


LinkedIn is the largest professional network on the internet, with more than 175 million members in over 200 countries. The site offers valuable opportunities to build your professional profile and enhance your network, and allows you to connect with other professionals to exchange knowledge, ideas and opportunities.


Why get involved?


LinkedIn attracts decision-makers and helps you connect with them. It’s a place to generate new leads and stay up to date with the latest movements in your industry. Having a significant presence on the site can help you to position yourself as an expert in your field by sharing your expertise, as well as drive traffic to your business’ website.


Because the site is purely about your professional connections, there is not as much unrelated “noise” as on other social networks like Twitter and Facebook. One analogy suggests that Facebook is like the local pub, while LinkedIn is more like a trade show and an outlet to show off what you can offer professionally.


Build a solid presence


Stand out from the crowd by building a solid profile. The aim is to entice visitors to your profile to want to know more about you and your business. Filling in your profile completely will help you showcase what you have to offer. To complete your profile, upload a professional photograph, write an eye-catching and relevant headline, list your current position, and complete the “summary” section.


You should also request recommendations from those you have done business with; as this will prove that you are an expert in your field. Often the best ways to have someone else recommend you is to give them a recommendation.


New to social media?

Connect with The Tax Institute and join the conversation.


Like us on Facebook
Follow us on Twitter
Join us on LinkedIn


Coming soon: Getting started with LinkedIn (Part 2).

Wednesday, 10 October 2012

Consultation! Consultation!

One of the most important jobs that The Tax Institute performs is to engage in consultation on tax and related matters primarily with government agencies — Ministers of governments, both state and Commonwealth, their oppositions, Treasury and the ATO, just to name the usual suspects.

We engage because, while we are a body devoted to educating our members and the public on all things tax-related, that task is made easier if the legislation is simpler, efficient and fair. Moreover, it is the responsibility of everyone to ensure that our tax system is healthy and operates for the betterment of all Australians.

The Tax Institute has a distinct advantage in carrying out its social responsibilities because, with its long history of engagement with professional tax advisers, it is able to harness a deep pool of talented advisers with an intimate knowledge of how the tax system presently operates and with the flair to understand how it should work into the future.

Coming soon: Why we need The National Tax Liaison Group

Ken Schurgott
Ken
Schurgott
Ken Schurgott is President of the National Council at 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.

Tuesday, 9 October 2012

Qantas and GST in the High Court

The Commissioner of Taxation had a solid win in the High Court last week in the Qantas litigation. The airline unsuccessfully argued it was not liable to the Commissioner for the GST it collected on tickets sold to customers who forfeited their flights.

As summarised by the High Court: "Flights were sold and bookings taken on the basis that Qantas would use its best endeavours to carry the passenger and baggage, having regard to the circumstances of the business operations of the airline. Consequently, even if the passenger did not actually travel, there was a taxable supply incurring GST liability and Qantas was liable to remit the GST received on fares for unclaimed flights to the Commissioner."

This decision clarifies the GST treatment of similar situations involving pre-sold tickets, such as services provided by tour operators, concert and sporting event promoters. Just because someone doesn't turn up or forfeits their ticket, the company cannot hold on to that GST, they still have to pay it to the Commissioner. This is a sensible outcome, as the alternative would see the company receiving a GST windfall that the customers have funded.

Perhaps there is also a silver lining of sorts for those customers who are out of pocket, because the GST component of the amount they forfeited will at least find its way to State government coffers via the Commissioner.

The case has also complicated the concept of supply by placing such emphasis on the contractual terms rather than the true essence of the supply. In time this may prove to be an issue that the Parliament will need to revisit.

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, 5 October 2012

Learn from the best and brightest in tax

Keeping up to date with your professional development

Each year, the Institute runs a number of flagship residential events that are a perfect opportunity for you to meet and network with like-minded professionals and hear about the latest developments from some of the best and brightest minds in tax. Don’t miss those coming up in the second half of the year:


View more upcoming events.

New webinar series

Due to popular demand, a selection of our highly topical estate planning and superannuation sessions will be held online as webinars throughout October and November 2012.

The focus of these events will be on practical issues, recent developments and, most importantly, new cutting-edge strategies and planning opportunities for your clients.

Tax Knowledge eXchange

Congratulations to the latest winner in our Tax Knowledge eXchange 10th Anniversary celebrations. Ben Jenkin, CTA, Principal of Ben Jenkin CPA in Port Augusta, SA, has won a free subscription to Australia’s leading tax knowledge base.

For your chance to win one of the three remaining free subscriptions, visit our website and register for your free trial.

New titles from The Tax Institute

With Estate & Business Succession Planning 2012-13 published in August, we’re now focused on the Division 7A Handbook 2012-13, due for publication in October.

2012 Annual Business and Professions Study

As in previous years, The Tax Institute will participate in the 2012 Annual Business and Professions Study conducted by Beaton Consulting. This survey will assist us to identify areas where there may be scope to improve member services and add further value to membership.

You will receive the survey via email in November. We appreciate your feedback as this helps us to ensure that we continue to do things right.

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.

Thursday, 4 October 2012

Division 7A developments

With the new edition of the Division 7A Handbook publishing in October, a timely article appeared in The Tax Institute’s journal, Taxation in Australia. Read on for a summary, and click any of the links below to view the full article.

The Commissioner has recently issued several interpretative decisions and a final determination on aspects of Div 7A which need to be noted.

Loan agreement amounting to new loan

Interpretative decision ID 2012/60 considers the situation where a private company makes a loan in an income year (the original loan) and, in the following income year (and before the relevant lodgment day), puts in place a written loan agreement which amounts to a new loan. It is concluded that Div 7A and, in particular, s 109D of the Income Tax Assessment Act 1936 (Cth) (ITAA36) applies to the original loan in the income year in which the original loan is made.

More on ID 2012/60 [PDF]

When amalgamated loan made

Another interpretative decision makes it clear that, if a private company makes a loan in an income year and, in respect of the loan, in the following income year (and before the relevant lodgment day) puts in place an agreement that satisfies the criteria in s 109N ITAA36, the income year in which an amalgamated loan is taken to be made (for the purposes of Div 7A) is the income year in which the loan is made (ID 2012/61). The putting in place of a complying loan agreement, in respect of a loan, does not alter the date on which the loan was made.

More on ID 2012/61 [PDF]

Unpaid present entitlements unit trusts

Another recent interpretative decision concludes that, where all unpaid entitlements (UPEs) in a fixed trust are mixed with the trust fund but employed by the trustee to benefit all corporate beneficiaries (by retiring trust debt) in the exact same proportion as each unpaid entitlement bears to the total of all unpaid entitlements, a loan will not arise for the purpose of Div 7A (ID 2012/62).

More on ID 2012/62 [PDF]

Distributable surplus calculation: income tax

A final determination has been issued by the Commissioner which considers, in light of the Full Federal Court’s decision in FCT v H ([2010] FCAFC 128), when income tax of a private company is a “present legal obligation” and, therefore, taken into account when calculating the company’s distributable surplus under s 109Y ITAA36 (TD 2010/10).

The full article features several examples from the determination [PDF].

This article originally appeared in Taxation in Australia, Vol 47(2) 67, prepared by TaxCounsel.

Division 7A Handbook
Division 7A Handbook
John Gaal of TaxCounsel is the author of our Division 7A Handbook, the new 2012-13 edition of which publishes in November. Find out more and take advantage of our special pre-sale offer – you’ll save 15% when you place your order before 9 November 2012.

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.

Tuesday, 2 October 2012

Cutting company tax

In the last week The Tax Institute finalised its response to the Business Tax Working Group's discussion paper on cutting the rate of company tax.

Our submission has been formulated on the basis of members' primary concerns and interactions with the tax system (that is, from a tax design and tax policy perspective) and as such does not seek to address the consequences of the proposed changes on business operations or behaviour. We encourage the Working Group's ongoing consultation with the business community in order to obtain essential feedback on the likely effect of the proposals in the discussion paper on business investment and outlook.

We note that the discussion paper has been developed in line with the Working Group's terms of reference, including the requirement to "identify a range of off-setting budget savings from existing Commonwealth business taxation (or spending) measures" without considering changes to the GST.

We have made our submission in line with these terms of reference, but we note significant concerns in relation to this restriction. This missed opportunity to lower the overall tax burden on companies and reconsider the appropriateness of Australia's current tax-mix will limit the potential benefits to the Australian economy arising from this reform process.

We broadly agree with the detailed arguments set out in the discussion paper in relation to the potential benefits to the Australian economy of a cut to the company tax rate in the short term in the order of 2-3 per cent, with a longer term goal of a company tax rate of 25 per cent as recommended in the Henry Review.

The widely accepted likely increase in Australia's attractiveness as a destination for foreign investment, the resulting short term increase in returns on capital, and the longer term projected increase in returns on labour, as well as the multitude of tax administration savings (for example by way of reduction in the incentive to transfer price) are all valid and widely accepted reasons for pursuing a cut in the company tax rate.

We acknowledge that such a cut will first and foremost affect the investment decisions (and returns on investment) of foreign investors, and will largely constitute a timing benefit for domestic investors as a result of Australia's imputation system. Regardless, we consider a cut in the company tax rate to be worthwhile as it will reduce the cost of equity financing for many small to medium enterprises currently operating in a credit constrained environment.

We also note that while a cut in the company tax rate will not immediately benefit the majority of small to medium enterprises that are not currently operating in a company structure, it is our view that the balance of these businesses will nevertheless benefit from the economy-wide benefits that will flow from the cut. In addition, it is our recommendation that the company tax rate should be made available to any separate entity for small business that is developed in due course.

You can read the complete submission.

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.