After almost two years in the making, the Henry tax review will finally be released to the public next Sunday, 2 May.
Treasurer Wayne Swan made the announcement on Friday, 23 April. The government chose to release the report – and its response to it – on a Sunday, so as not to impact the financial markets with any potentially sensitive information.
I will be in Canberra to analyse the review papers and the government’s response to it in a stakeholder ‘lock-up,’ much the same as I do for the Federal Budget. Following the report’s release at 2.30pm, I will be working hard with my team to get as much information to our members and the public as quickly as possible.
While a lot of people think this is the end of the long debate on tax reform, the reality is that this is just the beginning. The government is expected to map out its plan for the country’s tax reform priorities over the next 10-20 years, and there is much work to be done before ideas can be turned into reality.
So what are we likely to see?
Big picture, I’ll be watching for measures that move Australia towards a much simpler, more equitable and broader based tax system. Some of the issues on my ‘To Watch For’ list include equalising the tax treatment for all categories of investment across property, shares and savings, which will help to provide an incentive for people to save for the future.
I’m also looking for the introduction of optional tax returns as a means to make our tax system simpler. I understand there is concern among some tax agents about this, but I’m also encouraged by the majority of Chartered Accountants who tell me that filing simple tax returns is not very profitable and instead they could use that time to work with other clients who need their professional advice.
Other hot issues we’ll see next week include decisions on changing the corporate tax rate, whether the government imposes a resource rent tax for the mining companies, consideration of the ‘adequacy’ of the nine per cent superannuation guarantee, and whether Australia’s ageing population requires a type of insurance designed to encourage people to make their super last longer.
While Dr Ken Henry’s report is expected to make these kinds of recommendations and more, I would still like to caution readers that the government might choose not to adopt them all straight away.
As I mentioned in my last post, Finance Minister Lindsay Tanner last week hinted that the government may choose to implement different initiatives that address underlying issues identified by the review.
If you look back on the life of the Henry Review, you’ll see the goal posts shifted mid-way through, when the financial downturn hit. The challenge for the government is to demonstrate it is serious about tax reform as it considers the impact of major changes that might jeopardise revenue collections aimed at funding the deficit for the next five years.
The danger is that uncertainty about the future can stifle business and investment decision-making at a time when the Australian economy needs it most.
One thing is for certain: all eyes will be on Canberra next Sunday, 2 May.
If you would like to follow the Institute’s response to the release of the Henry tax review, follow us on Twitter and be the first to read our press release. Comprehensive commentary and analysis will then be posted on the Henry Review page of the Chartered Accountants website.
I look forward to sharing information with you, and to engaging in discussion around Australia’s Future Tax System.
Monday, April 26, 2010
Friday, April 23, 2010
Fasten your seatbelts; we’re cleared for take-off!
The odds are now stacked heavily in favour of the government releasing the Henry tax review and their response to it sometime next week, perhaps Wednesday or Thursday. If the report is not released then, it will certainly be released the week after, which would make it the week before the Federal Budget on 11 May.
As you know, this week the government managed to achieve a breakthrough agreement (of sorts) with the Council of Australian Governments agreeing to the Commonwealth’s proposed changes to the administration and funding of health care. All states and territories agreed to the deal, except for Western Australia, which is holding out for a better deal. But putting that to one side, the point is, now that the health reform issue has been (mostly) put to bed, the government can shift its focus to tax reform. Finally, I hear some of you say.
Last night (Thursday 22 April), Finance Minister Lindsay Tanner was interviewed on ABC’s Lateline program where he said that the government’s response would not only deal with the recommendations made by Dr Ken Henry, but would in fact go beyond the specific recommendations in some areas.
I interpret what Minister Tanner said as suggesting that in some areas of the tax system the government may not in fact adopt Dr Henry’s recommendations, but rather may choose to implement different initiatives that address the underlying issues identified by the review.
Even though we’re still waiting on the 'verdict,' it is becoming clear from sources on the ground in Canberra that the government’s response to the Henry tax review is comprehensive, and that the campaign around its release is about to be unleashed on us all. This is a big deal, and this is a big event. My advice: sit down and fasten your seat belts… tax reform is about to take off!
As you know, this week the government managed to achieve a breakthrough agreement (of sorts) with the Council of Australian Governments agreeing to the Commonwealth’s proposed changes to the administration and funding of health care. All states and territories agreed to the deal, except for Western Australia, which is holding out for a better deal. But putting that to one side, the point is, now that the health reform issue has been (mostly) put to bed, the government can shift its focus to tax reform. Finally, I hear some of you say.
Last night (Thursday 22 April), Finance Minister Lindsay Tanner was interviewed on ABC’s Lateline program where he said that the government’s response would not only deal with the recommendations made by Dr Ken Henry, but would in fact go beyond the specific recommendations in some areas.
I interpret what Minister Tanner said as suggesting that in some areas of the tax system the government may not in fact adopt Dr Henry’s recommendations, but rather may choose to implement different initiatives that address the underlying issues identified by the review.
Even though we’re still waiting on the 'verdict,' it is becoming clear from sources on the ground in Canberra that the government’s response to the Henry tax review is comprehensive, and that the campaign around its release is about to be unleashed on us all. This is a big deal, and this is a big event. My advice: sit down and fasten your seat belts… tax reform is about to take off!
Tuesday, April 13, 2010
Tick Tock...
In just four weeks the federal government will unveil its 2010-2011 Budget. Before that happens, we are still expecting the release of the Henry report. Still no word on that front. Just yesterday the Assistant Treasurer, Nick Sherry, was delivering a keynote address to our 2010 Business Forum in Perth on tax reform but he refused to be drawn on an exact timeline for the release of the review. In his words, it remains “imminent.”
The release date aside, one thing is for certain: the next four weeks will be interesting to watch as the government gains momentum for Budget Night on May 11. The challenge will be for the government to adopt short term tax reforms that are aligned with a cautious approach to expenditure as it moves to return the Budget to surplus.
The good news is that the Australian economy is doing well, according to leading economists, and that means there is more scope for consideration of what I’m sure will be many recommendations contained in Dr Henry’s report.
And for those of you who are waiting to ‘judge’ the final verdict of Dr Henry’s review, just remember that contrary to what most people think, tax reform doesn’t necessarily involve cutting taxes (or imposing higher taxes, for that matter). What I will be looking for from the review are measures that are designed to simplify the tax system for the majority of individuals and businesses, so that everyday operations and compliance obligations are made easier.
What do you think? What criteria will you judge Dr Henry's review by?
The release date aside, one thing is for certain: the next four weeks will be interesting to watch as the government gains momentum for Budget Night on May 11. The challenge will be for the government to adopt short term tax reforms that are aligned with a cautious approach to expenditure as it moves to return the Budget to surplus.
The good news is that the Australian economy is doing well, according to leading economists, and that means there is more scope for consideration of what I’m sure will be many recommendations contained in Dr Henry’s report.
And for those of you who are waiting to ‘judge’ the final verdict of Dr Henry’s review, just remember that contrary to what most people think, tax reform doesn’t necessarily involve cutting taxes (or imposing higher taxes, for that matter). What I will be looking for from the review are measures that are designed to simplify the tax system for the majority of individuals and businesses, so that everyday operations and compliance obligations are made easier.
What do you think? What criteria will you judge Dr Henry's review by?
Thursday, April 1, 2010
Waiting on the world to change…
Well here we are on 1 April and the Henry Tax Review, well, isn’t! I appreciate that tax isn’t the world to most people, but for those of us who have been knee-deep in this review since it was commissioned in May 2008, the world is effectively about to change.
If you have been watching the news closely, you’ll know that the release of the report is imminent: all we can do is wait.
So, earlier this week I thought while I am waiting for the release of the most anticipated tax review in recent memory, why don’t I take a trip to Canberra and have a chat to some members there about the Review and what it means to them?
I always enjoy getting out and hearing what our members have to say. And on this occasion, I was fortunate enough to be able to share the task of answering questions with a panel of fellow experts. Andrew McCrossin (Ernst & Young), Mile Petrevski (Maxim) and Mike Bannon (Duesburys Nexia) did a top job fielding queries from the floor and helping to shed some light on issues they have experienced at the coal face.
While there were lots of questions about potential implications of changes to areas such as personal tax returns, FBT, and loss-carry back rules, I was pleasantly surprised to find myself engaged in discussions on the big picture issues such as Australia’s tax mix, our tax revenue as a percentage of GDP and where I thought we ought to sit to maximise international competitiveness. All in all, it was a great discussion to precede the great debate about to come.
We’ve come a long way since the start of this Review and it will be interesting to see how the government copes with the budget deficit ‘shackle.’ There is no doubt that the government will be focused on long-term reform over at least the next 10 years and the public will do well to realise that reform doesn’t necessarily mean lower taxes. It’s about simplifying the system to enable Australia to deal with the economic challenges that lie ahead.
Regardless of the outcomes of the Review, however, one thing is for certain: this is only the beginning.
If you have been watching the news closely, you’ll know that the release of the report is imminent: all we can do is wait.
So, earlier this week I thought while I am waiting for the release of the most anticipated tax review in recent memory, why don’t I take a trip to Canberra and have a chat to some members there about the Review and what it means to them?
I always enjoy getting out and hearing what our members have to say. And on this occasion, I was fortunate enough to be able to share the task of answering questions with a panel of fellow experts. Andrew McCrossin (Ernst & Young), Mile Petrevski (Maxim) and Mike Bannon (Duesburys Nexia) did a top job fielding queries from the floor and helping to shed some light on issues they have experienced at the coal face.
While there were lots of questions about potential implications of changes to areas such as personal tax returns, FBT, and loss-carry back rules, I was pleasantly surprised to find myself engaged in discussions on the big picture issues such as Australia’s tax mix, our tax revenue as a percentage of GDP and where I thought we ought to sit to maximise international competitiveness. All in all, it was a great discussion to precede the great debate about to come.
We’ve come a long way since the start of this Review and it will be interesting to see how the government copes with the budget deficit ‘shackle.’ There is no doubt that the government will be focused on long-term reform over at least the next 10 years and the public will do well to realise that reform doesn’t necessarily mean lower taxes. It’s about simplifying the system to enable Australia to deal with the economic challenges that lie ahead.
Regardless of the outcomes of the Review, however, one thing is for certain: this is only the beginning.
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