On 22 August 2018, the CEO of the Board of Taxation, Karen Payne, released her latest CEO update covering the Board’s recent meeting in Adelaide.
The Board discussed the scope and direction of its current work program, including the following.
- A review of small business tax concessions. To date, the key themes emerging from the Board’s consultation activities include:
- The range of concessions are not widely known and are generally thought to be complex. The exception is the $20,000 instant asset write-off which has strong support.
- The (tax and regulatory) compliance burden is significant and has a disproportionate impact on small business owners. Many business owners feel like de-facto tax collectors.
- Business owners are dissuaded from hiring new employees – concerns include costs of setting up appropriate systems for PAYG withholding, superannuation, associated insurance costs, and dealing with payroll tax (once the exemption threshold is exceeded).
- The different definitions (thresholds) of a “small business” across the regulatory environment leads to too much complexity and confusion.
- Overall, the tax concessions are heavily skewed towards the end of the business life-cycle and business owners need more support earlier in the crucial start-up and survival phases to be successful.
- A review of FBT compliance costs –
- The Board has commenced a review of the compliance costs associated with obligations under the FBT legislation. The Board is currently working to finalise two surveys to collect quantitative and qualitative data on the comparative compliance burden of the FBT regime.
- One is a targeted survey of random taxpayers;
- the other a public survey for stakeholders to complete on a voluntary basis.
- Examples from international experiences are also being investigated for comparison and possible benchmarks in lowering compliance costs.
- A further review of residency rules for individuals –
- A Consultation Guide is being developed and will be released shortly (via the Board’s website) with further details. This is in response to the then Assistant Treasurer’s referral of its interim report on this subject, back to the Board, to further develop its ideas. It’s ideal situation would be a ‘count the days’ kind of ‘bright line’ residency test that delivered certainty, alone with an acceptable tax result. See the related Tax Technical article.
- The Board reports a lot of registered interest, in this, to date.
- Tax Transparency Measures – As at 20 August 2018, there were 142 signatories to the Voluntary Tax Transparency Code (though some reports don’t meet the minimum standard). The Board is conducting a review of the Code to identify areas for improvement, in the light of various ‘transparency’ developments, such as the following.
- Work is currently being undertaken by the ‘Global Reporting Initiative’ (GRI) onimprovements to tax transparency reporting standards – new disclosures of tax and payments to governments, to be considered as part of the GRI Standards. The proposed standard is currently in draft form.
- The Extractive Industry Transparency Initiative (EITI) Standard is being reviewed against the Australian adapted model developed by the Australian 2014 EITI pilot;
- Global investor interest in tax transparency as part of a responsible investment approach – see for example, the Principles for Responsible Investment Association; and
- Financial reporting developments (that are yet to commence) may have an impact on tax transparency, including:
- Implementation of the new Reporting Conceptual Framework in Australia; and
- Implementation of Australia Accounting Standards Board Interpretation 23: Uncertainty over Income Tax Treatments.
- Sounding Board – which is the Board’s on-line forum for ideas for tax system improvement (replacing the ATO’s TIES initiative).
- The Board is reviewing this platform.
- It also said it is looking for ideas that reduce red-tape, result in compliance savings and/or remove ambiguity and uncertainty (e.g. streamlining tax registration thresholds, re-drafting complex provisions to ensure clarity and removing unnecessary sections from tax returns). This is not a focus on ‘big policy changes’ but rather ‘non-contentious’, policy ‘lite’ and little or no ‘revenue impact’.
Comprehension questions (answers available)
- Where was their recent meeting?
- What was the one small business tax concession that was well known?
- Is international experience going to be part of the Board’s review of FBT compliance costs?
- Is the Board doing further work on its ‘count the days’ bright line residency test for individuals?
- How many people have signed up to voluntarily lodge ‘tax transparency’ reports?
- Are there external developments propelling ‘tax transparency’?
- Name one.
- Is the Board looking for ‘big policy change’ suggestions for its ‘Sounding Board’ tax improvement forum?