Tax reforms to impose ‘substantial costs’ on public
The federal government’s planned tax changes will shift compliance costs to taxpayers and their advisors, an accounting firm warns.
Under Labour’s reforms, the 50 per cent capital gains tax cut will be replaced by a calculation indexed to inflation and a minimum rate of 30 per cent.
Negative assessments on investment properties will also be reduced to only apply to new homes from July 2027.
Chartered Accountants Australia and New Zealand will tell a senate inquiry on Tuesday that a statutory review of the legislation must take place within 12 months due to the short consultation period and complexity of the changes.
This will act as a safeguard mechanism to ensure that the legislation is working as intended and to provide opportunity for any “fixes” that need to be made.
In the presentation of the summit body, it was stated that “The package, as drafted, lacks clarity in terms of legislation and will create significant compliance costs on taxpayers and their advisors.”
The organization, which represents more than 140,000 accounting professionals, said the $1,000 instant tax deduction for work-related expenses should also be indexed periodically to ensure its true value is not eroded by inflation over time.
Tuesday’s hearing will be the second in two days for the snap investigation, which has raised concerns that the process of reviewing the amendments has been rushed.
The Australian Council of Trade Unions, which was also present before the inquiry, said the current capital gains tax break and its adverse effects had created an “untenable situation” for people trying to enter the housing market.
In their submission, unions said the use of trusts – which will also be withdrawn after the May budget – contributed to a system that disproportionately benefits wealthy individuals.
“Attempts to defend the trust system are an attempt by the already wealthy to defend their own interests,” the ACTU said.
The Australian Council of Social Service has backed the proposed changes as “long overdue” to bring equity to the tax system.
But the council described the current historical allocation of negative value properties as problematic, saying it delayed the impact of the reforms on the housing market and preserved unfair tax benefits for existing investors.
Instead, they propose a five-year phased reform to give investors time to adjust.
While the coalition has vowed to fight the changes, the Greens have yet to lend their support.
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