Federal Budget October 2022: Resetting the agenda
Federal Budget October 2022: Resetting the agenda
Tonight’s federal budget, Labor's first in almost a decade, was all about resetting the agenda, setting the priorities for the new government, but lacked any detail on real tax reform according to BDO tax experts.
Neil Billyard, National Leader of Tax at BDO said the government has left the door open for tougher conversations around tax reform in future budgets.
“This is a big reprioritisation budget, setting out the government’s high-level agenda in terms of energy, infrastructure, and the caring economy but without providing us with the necessary details from a tax perspective,” said Mr Billyard.
“The government has not gone anywhere near tax reform despite the Treasurer saying we need to have that difficult conversation with the Australian people.
“They've left themselves a big job for next year, and we would expect to see that detail come through in the next budget.”
As expected, the government has announced a raft of measures targeting multinationals, while extending funding to the ATO in a bid to collect additional revenue from large and small businesses, and individual taxpayers.
“The government is firmly tightening the net around multinationals,” said Mr Billyard.
“In particular, if you are the Australian subsidiary of a foreign controller, or you are an Australian controller of a foreign entity and you have interest deductions, then you’re going to have to redo your thin capitalisation calculations.
“More interestingly perhaps, those in the business of paying for the use of intellectual property (i.e. royalties) from off-shore related entities in low-tax countries (less than 15%), will not receive a deduction from those payments.
“The additional funding towards the ATO’s compliance programs will also mean all taxpayers will need to ensure their compliance affairs are in order or they can expect greater scrutiny from the Tax Office.”
The already legislated stage three tax cuts have survived any changes but their sheer cost to the budget bottom line will likely generate further debate ahead of its 1 July 2024 start date.
“The stage three tax cuts are still up for grabs and the government still has plenty of time to make any changes next May if they see fit.”
For media enquiries, please contact:
Jotham Lian
Manager, Media
Jotham.lian@bdo.com.au
Jane Ward
Senior Manager, Media
Jane.ward@bdo.com.au