Australia's national Tax Forum

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Australia’s national Tax Forum (held on October 4 and 5, 2011) will influence tax reform directions for Australia and has resulted in some initial actions.

EY participated, represented by Alf Capito, Tax Services & Tax Policy Leader Asia Pacific, with 230 other delegates and policymakers. The many divergent views highlighted the political challenges in any extensive reform process, but some areas of common ground resulted in some acceleration of Australia’s tax reform processes.

Australia’s tax system needs reform. Australia’s Future Tax System (AFTS) Review chaired by former Treasury Secretary Ken Henry identified long-term reform directions and made 138 recommendations.

The EY  submission to the Tax Forum highlighted taxation reforms for consideration in the short term – to support business development and restructure in a time of change, including review of tax loss rules, and examination of lower tax rates including transparent consideration of and allowance for corporate equity (ACE). This followed our submissions of April 2009 and October 2008, jointly with the Corporate Tax Association, which identified reform priorities including:

  • Indirect taxes, with major implications for state taxation
  • Other consumption taxes including GST (goods and services tax)
  • Business tax reforms including corporate tax rates
  • Individual and family taxes, welfare and workforce participation
  • Governance and administration of a tax system which needs greater certainty

Actions and directions

The Treasurer signalled the following actions:

  • New Business Tax Reform working group to report on challenges for business in the ‘patchwork economy’
    • An initial report by November focused particularly on improving tax loss rules
    • A 2012 report on longer term directions for Australia’s corporate tax policy, including consideration of the scope for an allowance for corporate equity (ACE)
  • A review of the scope to reduce complexity for  small business
  • A working group including  State Treasurers  Mike Baird and Andrew Fraser to develop a state tax reform plan
  • The government’s intent to introduce an advisory board to provide additional governance for the Australian Taxation Office, with input requested on its scope of activities
  • Funding some academic research into improving the tax and transfer system
  • An awareness of the need for improved tax consultation processes

The Forum has highlighted the need for further work on Australia’s complex tax system and demonstrates that an extensive reform agenda is required.
Businesses should prepare for the consultation processes of the Business Tax Reform working group. View our analysis on what needs to be considered in preparation for the new Australian tax reform directions.