Huge task confronting the Government as EY releases list of 95 announced but unlegislated tax changes
Monday 7 October 2013 —The enormity of the job to clean up the Australian tax process is abundantly clear, EY said today as it released a list detailing 95 announced but unlegislated changes to the tax system.
The EY list details tax measures announced by the previous Government and during the new Government's election program. Many of the measures are effective from previous years or come into effect soon, making business planning difficult.
EY Tax Policy Leader Alf Capito said the list highlighted the difficult task in front of the new government.
“The fact that this list has grown to such an alarming size demonstrates the complexity and uncertainty that have been the hallmarks of the Australian tax system,” Mr Capito said.
“This uncertainty damages business confidence and discourages productive investment which impacts jobs and economic activity.
“The new Government has spoken positively about addressing the problem of announced but unlegislated tax measures.
“The full list makes clear just how full the Government’s dance card is.”
The Henry Review in 2010 recognised the complexity and uncertainty of the tax system. It stated that "the capacity of the legislative and operating platforms of these systems, and their human users, to deal with the resulting complexity has been overreached.”
Assistant Treasurer Arthur Sinodinos recently announced the deferment of changes to Offshore Banking Unit rules.
Mr Capito said the announcement is the first of many that the Government will need to make deferring or cancelling measures.
“Along with a commitment to greater consultation, it is a step in the right direction, but there is a need to keep the pressure on to clear the backlog,” Mr Capito said.
One of the most urgent measures to address on the list is the previous Government's decision to deny companies a tax deduction for interest on money borrowed for overseas expansion.
“In our view this measure should be immediately deferred and reconsidered in the context of the Government’s review of the Australian tax system” Mr Capito said.
“This issue is fundamental to the competitiveness of Australia’s tax regime and warrants rigorous consideration.
“It also has the potential to substantially increase compliance costs and red tape for businesses. This is contrary to the Government’s stated agenda for the tax system.
“This is just one example of the problems caused by the complexity and uncertainty that have plagued the tax policy process for too long.
“We do recognise that it will take some time to work through the backlog list of measures and the Government must complete the work in a considered manner."
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