Tax and super issues that are most pressing: Extensive business survey results

A survey of the Australian business community has found that businesses are frustrated by the lack of tax reform. Tax and super issues that are most pressing

After getting so close to genuine tax reform through the tax white paper process, many businesses feel cheated by its recent abandonment and are fearful the federal budget will present only piecemeal measures and a vague commitment to look closer at tax reform after the next election.

The survey, conducted by business and corporate advisory services firm BDO, also found that most respondents (around 90%) would have liked to have seen a tax reform options paper ahead of the budget — a hope BDO says seems to have all but faded.

Many of BDO’s findings reflect a good many of the 38 recommendations, divided into seven categories, contained in Taxpayers Australia’s own submission to the government over the now abandoned Re:think tax discussion. These recommendations were also based on extensive research of stakeholders (download this submission here), with our many thousands of members surveyed for tax reform priorities, concerns and wider reform ideas.

For example, Taxpayers Australia’s submission recommended the government consider indexing the personal tax thresholds to the ABS wage price index, look at introducing a standard work-related expense deduction up to a cap, and increase the turnover threshold for small business entities to $5 million.

National tax director at BDO, Lance Cunningham, says BDO’s survey this year’s survey (its fifth) attracted more than double the number of respondents to last year’s, which he says is “a clear sign the business community still sees holistic tax reform as an urgent priority, even if the government does not”.

Some of the key survey findings include:

  • 80% of respondents agreed a review of the GST is essential to any discussion of tax reform
  • 85% agreed state stamp duties are a significant impost on business and reduce the mobility of the population by discouraging the sale of residential and business real estate, and other business assets
  • 47% of respondents agreed the adoption of OECD’s BEPS (base erosion and profit shifting) initiatives was an appropriate way of discouraging companies from avoiding taxation in Australia (although about the same number had a neutral view, which BDO concludes may indicate a lack of knowledge about the issue).

The recent hint that a company tax rate reduction was being considered as part of this year’s budget was welcomed by 59% of the survey’s respondents, however businesses also identified other tax reform proposals as more urgent priorities.

“Like previous announcements regarding carve outs of specific tax areas like GST and individual income tax, there is danger in addressing one-off measures like company tax cuts without taking a holistic view,” Cunningham says. “Certainly from a business perspective, reform of GST to allow for removal of inefficient state taxes have been identified as much more pressing issues than company tax rate cuts.”

For superannuation, key BDO survey findings included that more than 64% agree the capping of super contributions is inconsistent with the superannuation system’s original intention. And 60% think that the rate of compulsory contributions should continue to increase from 9.5% to 12%.

Download the full BDO survey here.

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