• Federal Budget 2022

    Business

Business

Federal Budget 2022 issues impacting business and organisations in Australia.

The Government is continuing its support of small businesses by introducing boosts for both skills and training, and technology investment.

Skills and training boost

Small businesses with an aggregated annual turnover of less than $50 million, will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.

The external training courses must be delivered by entities registered in Australia and are required to be provided to employees either in Australia or online.

Expenditure incurred between 7.30pm (AEDT) on 29 March 2022 and 30 June 2022 will be eligible to have the boost claimed on the 2023 income tax return. Expenditure incurred between 1 July 2022 and 30 June 2024 will have the boost included in the income year where the expenditure was incurred.

Technology investment boost

Small businesses with an aggregated annual turnover of less than $50 million, will be able to deduct an additional 20% of expenditure incurred to support digital adoption, including on the purchase of depreciable assets.

Eligible expenditure includes portable payments devices, cyber security systems and subscriptions to cloud-based services. An annual cap of $100,000 will apply in each qualifying income year.

Expenditure incurred between 7.30pm (AEDT) on 29 March 2022 and 30 June 2022 will be eligible to have the boost claimed on the 2023 income tax return. Expenditure incurred between 1 July 2022 and 30 June 2023 will have the boost included in the income year where the expenditure was incurred.

BDO Comment

BDO welcomes the Government’s support of small businesses and hopes it will assist in upskilling the workforce and providing advanced technological infrastructure as we begin to navigate life in a post-COVID economy. While the caps are somewhat arbitrary, setting the turnover requirement at $50 million will allow a large number of businesses to benefit.

The Government will expand its patent box tax regime from only applying to the medical and biotechnology sectors to also include the agricultural sector, and low emissions technology innovations.

In line with the initial May 2021 announcement and subsequent draft legislation introduced in February 2022, this regime will effectively result in a concessional tax rate of 17% for ordinary income derived from exploiting Australian-owned and developed patents that fall under these areas. This represents a decrease in the corporate tax rate of 13% for large businesses and 8% for small and medium enterprises.

However, it is important to note, unlike the medical and biotechnology sectors for which the regime will apply from 1 July 2022, the expanded application to the agricultural sector, and low emissions technology innovations, will only apply from 1 July 2023. In addition, details of the expansion of the patent box regime are yet to be finalised, pending consultation with industry experts.

BDO Comment

BDO welcomes the extension of the patent box regime to include agricultural, and low emissions technology innovations. This extension will continue to incentivise the international commercialisation of Australian-developed technology to be retained in Australia, resulting in numerous flow-on benefits such as further investment and development activities. However, to be truly competitive with other jurisdictions, the regime should be further extended to be industry agnostic and the concessional rate should be made more competitive.

The Government has announced two new policies to update the PAYG instalment system which require businesses to report and pay their tax obligations via instalments throughout the year. 

First, business taxpayers can now choose to have the ATO automatically calculate their quarterly PAYG instalment amounts based on live financial information captured from their accounting software, subject to certain tax adjustment calculations. This is advertised as an improvement to the current system which largely relies on projecting expected income tax based on past tax returns. Allowing businesses to automatically report their financials aims to reduce compliance burdens and produce instalments more reflective of the end of year tax amount due. The Government expects this system to be in place by 1 January 2024.

Second, the Gross Domestic Product (GDP) uplift factor, which is used to adjust PAYG instalments from year to year, has been set at a flat 2% for the 2022-2023 tax year. The GDP uplift rate is lower than the statutory default rate of 10% which would have otherwise applied, resulting in lower PAYG instalments for eligible taxpayers. However, this is higher than the 0% rate that was available in the 2021-2022 financial year. The lower 2% rate will be available to small and medium businesses that have an aggregate turnover of less than $50 million for PAYG instalments and $10 million for GST instalments.

BDO Comment

The Government’s goals regarding PAYG instalments appear to be twofold - make sure you pay the right amount and - pay on time. The stated purposes of these changes are to improve cashflow of businesses and help taxpayers with their reporting obligations. Hopefully, this will make the tax collection system more responsive to changing economic activity. The advantages of these changes are definitely desirable, but this budget also includes beefed up funding for the extended Tax Avoidance Task Force and compliance enforcement generally. Live information being fed to the ATO will create less room for error and possibly less scope for tax planning. To paraphrase Mr Owell, if you want to keep a secret, you must also hide it from yourself, because the Commisioner is watching...

Many Australian businesses are currently required to complete a Taxable payments annual report (TPAR) by 28 August of each year. TPARs capture payments made to contractors for services provided to the business.

TPAR is an industry-specific reporting requirement, and only includes payments made towards contractor services in building and construction, cleaning, road freight, courier, information technology and security, investigation or surveillance industries. The data from TPARs is then used by the ATO to match the annual income declared by contractors.

What is changing?

From 1 January 2024, the Government will allow businesses to align its taxable payments report with its activity statement reporting cycle through its businesses accounting software.

The Government hopes this will result in more accurate and timely reporting, while lowering compliance costs for taxpayers.

BDO Comment

In line with the remainder of the budget which focusses on investment in technology and digital assets, the Government is hoping to streamline the reporting requirements of taxpayers through the use of improved software services. BDO welcomes any change that will lower the compliance requirements for taxpayers, particularly through the use of accounting software.

We also note that once TPARs in these industries can be made in a streamlined manner, there is nothing to prevent the extension of the regime to all industries and all recipients of payments.

Single Touch Payroll (STP) is an initiative currently implemented by the Government to reduce an employer’s reporting burdens to government agencies. Under the STP initiative, an employer is required to report its employees’ salaries and wages, PAYG withholding and superannuation information under a streamlined reporting software, directly to the ATO.

Commitment of Government funding to states and territories

The Government will commit $6.6 million in developing IT infrastructure to allow STP data to be shared on a continuing basis between the ATO and State and Territory Revenue Offices. Funding from the Government will be dependent on the extent to which each state and territory is willing to streamline their current systems and payroll tax compliance processes.

BDO Comment

BDO acknowledges the sharing of information between the Federal Government and State and Territory agencies will increase as a result of these new measures. While this may serve to reduce compliance costs for businesses, BDO questions the immediate effectiveness of these measures given the requisite funding is dependent on each state and territory’s willingness to make investments in their own internal systems and processes.

The automation of processes will move to promote business efficiencies, but also continues a growing trend of the ATO having greater visibility into the taxpayer’s financial systems. State revenue offices currently rely on various sources for their data matching systems, including from federal income tax returns and pay as you go (PAYG) data. 

It will be important for businesses to focus on reconciling their STP data to their payroll tax returns as we are likely to see an increase in audit activity from state revenue offices where there are discrepancies between STP and payroll tax data. 

A key talking point preceding the Federal Government’s 2022-2023 Budget was the continued modernisation of the Australian tax reporting system. A step forward has been taken through the proposed digitalisation of trust and beneficiary income reporting and processing. However, the Government has also taken a surprising step back with the 12 month deferral of the start date of the Black Economy – strengthening the Australian Business Number (ABN) system measures.

Electronic lodgement of trust returns

All parties required to lodge a trust tax return will now be permitted to lodge electronically from 1 July 2024. Previously, trust tax returns for large managed investment trusts and public unit trusts have been excluded from the electronic lodgement requirement. The continued digitalisation of this process will assist with reporting, as increased pre-filling will lessen the compliance burden on taxpayers and reduce processing times. Likewise, this measure is expected to enhance ATO assurance processes.

Black economy measures

Conversely, the Government has deferred the start date of the black economy system measure announced in the 2019-2020 Federal Budget. Under current law, income tax compliance doesn’t impact the ability to hold an ABN. The proposed measures outline ABN holders can be stripped of their ABN through the discretion of the ABR Registrar if they fail to meet income tax lodgement requirements. Additionally, they will be required to confirm the accuracy of their details on the ABR annually.

Accordingly, these measures have been deferred by a further 12 months:

  • From 1 July 2022, ABN holders are required to comply with income tax obligations to maintain their ABN
  • From 1 July 2023, ABN holders must confirm the accuracy of their details on the ABR annually.

BDO Comment

The continued digitalisation of tax reporting is welcomed by taxpayers and practitioners alike. The current exclusion of some trust entities from electronic lodgement is an archaic oversight that ought to be resolved. The black economy measures have faced significant delay in their implementation by the Government, and BDO encourages taxpayers to ensure their compliance with tax obligations before the ATO finally pull the enforcement trigger.

The Government has chosen to not extend multiple support measures previously aimed to incentivise increased investment in Australian businesses and help businesses recover from the impacts of COVID-19. In particular, the loss carry-back tax offset and the highly publicised temporary full expensing incentive and instant asset write–off, will no longer be available for income years ending after 30 June 2023.

Current law

Loss carry back tax offset

Currently, companies with an aggregated turnover of less than $5 billion may carry back losses incurred in the 2020 to 2022 income years to the 2019 income year onwards. The following limitations are in place and will continue to apply with respect to the loss carry-back measure:

  • Losses carried back cannot be more than the earlier taxed profits
  • The loss carry-back amount must not generate a franking account deficit.

Companies that elect to apply this measure will receive a tax refund in the loss-making year equal to the amount which has been offset by the losses carried back.

Temporary full expensing

Under the current law, businesses with an aggregated turnover of less than $5 billion are entitled to an immediate deduction for the cost of depreciating assets purchased after 7.30pm (AEDT) on 6 October 2020, and first used, or installed ready for use, by 30 June 2023.

Businesses with an aggregated turnover exceeding $5 billion may also be entitled to an immediate deduction under the ‘alternative test’, which requires Australian income of less than $5 billion, and the cost of depreciating assets for the 2017, 2018, and 2019 income years, to exceed $100 million.

Moving forward

Loss carry back tax offset

The Government has not extended the loss carry back tax offset past income years ending after 30 June 2023.

Temporary full expensing

The Government has not extended the temporary full expensing measures past income years ending after 30 June 2023. No announcement has been made as to whether the instant asset write-off incentives will be reintroduced after the end of temporary full expensing.

Impacts

While these measures end on 30 June 2023, businesses still have a strong opportunity to benefit from these support measures in the 2022 and 2023 income years. As a result, careful capital expenditure planning over these years can result in increased tax deductions and potentially a better post-tax cash position.

BDO Comment

BDO is disappointed the Government has decided not to extend these support measures as it is clear businesses and clients are still recovering from the long-term economic impact caused by the COVID-19 pandemic. BDO believes in order to achieve the economic recovery the Government is aiming for, an additional extension of the temporary full expensing measure was warranted.

The Government has made a number of announcements in this year’s Budget regarding COVID-19 measures as set out below.

Tax deductibility of COVID-19 tests

The Government has confirmed the costs of taking a COVID-19 test to attend a place of work will be tax deductible from 1 July 2021. This also means no Fringe Benefits Tax (FBT) will apply where employers provide or reimburse costs for the COVID-19 tests. This is because the FBT is effectively reduced to $0, where the employees would have received a tax deduction if they paid for the test themselves.

Under the current income tax law, such expenditure incurred by individuals may, in certain circumstances, be considered private or domestic expenditure and therefore not tax deductible in their individual tax return. Where the expenditure is met by the employer, under the current FBT law, FBT could also apply.

We note there is an FBT exemption currently available where the testing is carried out by a legally qualified medical practitioner or nurse, and testing is available to all employees. However, this is not met in the case of Rapid Antigen Tests administered by the employee themselves. Further, there is currently an FBT exemption available where the testing costs for the employee is less than $300 and provided on an infrequent or irregular basis, however, this is also not met in practice where the tests are required to be used frequently or regularly.

This measure is not new, as it was previously announced by the Treasurer on 7 February 2022.

Where the COVID-19 test is provided in order for an employee to undertake a work-related trip, this expenditure is already tax deductible under current law. Also, no FBT results where the employer provides or reimburses the work-related travel.

Non-assessable COVID-19 business grants

The Government has extended the measure previously announced in September 2020, enabling certain business grants to be treated as non-assessable, non-exempt income for income tax purposes, until 30 June 2022.

The Government has made the following additional state and territory grant programs eligible for this treatment:

  • New South Wales Accommodation Support Grant
  • New South Wales Commercial Landlord Hardship Grant
  • New South Wales Performing Arts Relaunch Package
  • New South Wales Festival Relaunch Package
  • New South Wales 2022 Small Business Support Program
  • Queensland 2021 COVID-19 Business Support Grant
  • South Australia COVID-19 Tourism and Hospitality Support Grant
  • South Australia COVID-19 Business Hardship Grant.

These support payments will only be eligible as non-taxable, where the taxpayer carried on a business, and has an aggregated turnover of less than $50 million in either the income year the payment was received or the previous income year.

BDO Comment

While these COVID-19 measures have been announced previously, we welcome the confirmation from the Government they will be proceeding.

We would like to see the COVID-19 test measure fast-tracked, so it is in place in time to give employers certainty when lodging their 2022 FBT returns. However, since the due date for lodgement of the 2022 FBT return is 21 May 2022, where employers lodge the return themselves (rather than through a tax agent), there seems to be little time to achieve this goal, particularly with an election looming.

Presently, farmers who sell Australian Carbon Credit Units (ACCUs) generated from on-farm activities cannot treat the sales proceeds as primary production income. Similarly, income from biodiversity offset schemes is not primary production income.

The Government will amend the tax law so income from the sale of ACCUs and biodiversity certificates will be treated as primary production income for the purposes of primary production tax averaging and the Farm Management Deposit (FMD) scheme. This treatment will apply to biodiversity certificates created once the Biodiversity Stewardship Market Bill becomes law.

Additionally, the Government appears set to allow eligible primary producers to opt-out of the rolling balance mechanism that applies to ACCUs. They will only be taxed in the year when ACCUs are sold.

The current tax laws that deal with ACCUs were drafted when farmers were excluded from the Carbon Pollution Reduction Scheme, so their impact on primary producers was never properly considered. Subsequent changes in climate policy have altered the mechanism so now farmers are generating ACCUs, but the tax laws haven’t kept up.

BDO Comment

BDO welcomes these amendments. They signal an acknowledgement by the Government that environmental services provided by farmers are part and parcel of their primary production activities, rather than a different business activity altogether, as is the situation under the current law. Farmers should have the reassurance their tax position will reflect that income from carbon or biodiversity credits is the same as any other farm income.

Farm businesses are increasingly considering ACCUs not just as an additional income stream, but also as they consider how they can achieve net-zero in their own operations. Allowing farmers to defer the taxing point to the disposal of an ACCU means there won’t be tax costs where ACCUs are held for several years.

However, it will be important to ensure the deductibility of costs relating to generating or acquiring ACCUs is not inappropriately deferred by these amendments.

In our view, the amendments should go further. They should extend the proposed tax treatment to carbon credit schemes that are not currently able to be registered on the Australian National Registry of Emissions Units. They should also extend to environmental credits that may not be covered within the proposed biodiversity certificate scheme.

The Government has committed a further $17.9 billion to fund existing and new priority infrastructure projects across Australia. The funding will support major infrastructure projects with a focus on improving regional roads and freight networks. It is estimated the increased investment in infrastructure will create 40,000 jobs across every State and Territory.

State and Territory measures

Queensland

The Government will commit a further $3.3 billion to prioritising regional and urban road and rail infrastructure projects in Queensland. The additional funding will be allocated to key projects such as:

  • $1.6 billion for the Brisbane to Sunshine Coast Rail Extension  
  • $1.1 billion for the Brisbane to Gold Coast Faster Rail Upgrade
  • $190 million for the Mount Isa to Rockhampton Corridor Upgrade.

Australian Capital Territory

The Government will provide a further $51 million for key projects in the Australian Capital Territory including:

  • $46.7 million for the Athlon Drive Duplication
  • $2.8 million for Kent Street and Novar Street Intersection Upgrades.

Northern Territory

The Northern Territory will receive an additional $237 million in funding for priority road and rail projects. Key road projects as part of the additional funding include:

  • $132 million for Central Australian Tourism Roads 
  • $50 million for Alice Springs to Halls Creek Corridor Upgrade.

New South Wales

New South Wales will receive an additional $3.3 billion in funding from the Government. This additional spending will help fund key projects including:

  • $1 billion for the Sydney to Newcastle Faster Rail Upgrade
  • $352 million for the Milton Ulladulla Bypass
  • $336 million for upgrades to the Pacific Highway.

South Australia 

South Australia will benefit from an additional $2.8 billion in funding bringing the Government’s total commitment in the state to over $13.7 billion since 2013-2014. The increased spending on major infrastructure will include:

  • $2.3 billion for the North-South Corridor – Darlington to Anzac Highway
  • $200 million for Marion Road – Anzac Highway to Cross Road.

Western Australia

The Government will provide an additional $1.7 billion in road and rail funding to Western Australia. The additional funding will focus on key projects such as:

  • $441.2 million for the METRONET
  • $320 million for the Bunbury Outer Ring Road 
  • $140 million for Regional Road Safety Upgrades.

Victoria

The Government will allocate a further $3.4 billion in funding for a variety of road and rail projects in Victoria. Spending on major infrastructure upgrades will include:

  • $3.1 billion for the Melbourne Intermodal Terminal
  • $109.5 million for the Ballarat Corridor Upgrade
  • $23.1 million for the Canterbury Road Upgrade.

Tasmania

The Government will provide an additional $639.9 million in funding for priority road and rail projects in Tasmania including:

  • $336 million for the Tasmania Roads Package 
  • $100 million for Great Eastern Drive Tourism Support.

BDO Comment

The increase in funding will certainly support economic recovery and drive jobs growth in the construction sector. Whether this is a good thing in the currently constrained labour market remains to be seen.
While not providing immediate congestion relief, the focus on improving road and rail networks to help improve supply chain productivity and reliability is welcome. We hope these benefits better connect regional businesses and exporting industries with domestic and international markets.

The Government has announced more than $360 million over the next three years to continue to support a number of initiatives in the Industry, Science, Energy and Resources portfolios, in addition to further funding under the Health and Defence portfolios.

Manufacturing

The Government has provided an additional $328.3 million over five years from 2021-22 to further support the Modern Manufacturing Strategy and National Manufacturing Priorities (NMPs) and address critical supply chain vulnerabilities. The funding includes $250 million over two years from 2022-23 to extend the Modern Manufacturing Initiative (MMI) to support businesses in NMP sectors to deliver high-impact projects.

In addition, there has been $53.9 million allocated over four years from 2021-22 to extend the Manufacturing Modernisation Fund (MMF) to support technology adoption in NMPs. A further $6.9 million has been allotted over two years from 2021-22 to develop Manufacturing Investment Plans to guide government and industry investment in NMPs.

The Government has also committed $60.4 million over four years from 2022-23 in additional funding under the Recycling Modernisation Fund. Such funding will boost Australia’s plastic recycling capability through investment in state-of-the-art technologies and advanced recycling solutions.

Space

The Government had previously announced $1.3 billion from 2021-22 (and $38.8 million per year ongoing) for the Australian space sector and space manufacturing industry. This includes $1.2 billion to establish Australia’s first National Space Mission for the procurement and operation of Australian satellites, delivering sovereign capability in Earth observation. Funding also includes:

  • $65.7 million over five years (and $38.5 million per year ongoing) to support the launch of space assets
  • $12.1 million over five years to remove cost recovery requirements under the Space (Launches and Returns) Act 2019 and undertake a regulatory reform program to streamline interactions with industry
  • $9.5 million over two years to develop a Space Strategic Update to provide direction on future funding opportunities
  •  $3.5 million in 2022-23 to extend the International Space Investment Initiative and continue building relationships with foreign partners.

Defence

As part of its overall defence budget, the Government has announced $151.6 million over five years from 2021-22 to continue existing defence industry support programs for SMEs, including:

  • $84.7 million for the Sovereign Industrial Capability Priority Grants Program
  • $20.3 million for the Skilling Australia’s Defence Industry Grant Program.

Vaccine development and health

The Government has announced:

  • Establishment of sovereign mRNA vaccine manufacturing capability in collaboration with Moderna and the Victorian Government to provide Australians with priority access to mRNA vaccines
  • Commitment of a further $1.3 billion towards the Medical Research Future Fund (MRFF) Ten Year Investment Plan. The updated $6.3 billion MRFF Plan includes a further $604.8 million towards translating medical discoveries into medical practice, $114.9 million to assist researchers tackle complex challenges through investment, leadership and collaboration, $117.4 million to assist patients through the funding of innovative treatment options and clinical trials and $495.4 million to assist medical researchers make breakthrough discoveries and progress their careers in Australia
  • Extension of the Biomedical Translation Fund’s (BFT) initial investment period by three years to assist in the commercialisation of biomedical discoveries.

Resources and energy

The Government will provide $250.5 million over five years from 2022-23 to help early-stage Australian critical minerals projects reach market readiness. This includes $200 million over five years in grants under the Critical Minerals Accelerator Initiative to advance critical minerals projects through the planning to demonstrate phases, and $50.3 million to establish a virtual Critical Minerals R&D centre.

Emissions reduction

Following trends established in the 2020-2021 and 2021-2022 Budgets, the Government is continuing its commitment to invest heavily in new and emerging technologies focused on emissions reductions. This includes a further $446.1 million over five years from 2021‑22 to increase energy security, maintain energy affordability and reduce emissions for households and businesses consistent with Australia’s Long Term Emissions Reduction Plan.

This includes $247.1 million to support private sector investment in low emission technologies such as hydrogen, $148.6 million to support reliable power in rural Australia such as community microgrid projects, and $50.3 million to accelerate priority gas infrastructure projects, and funding to remain available under the Emissions Reduction Fund or Climate Solutions fund.

Export Market Development Grant

An additional $80 million has been added to the Export Market Development Grant (EMDG) scheme to assist Australian businesses re-establish their export markets.

Regional Accelerator Program (RAP)

The Government has announced $2 billion in funding over five years from 2022-23 to drive economic growth and productivity in regional Australia. Whilst it is unclear how the funding will be allocated, it is slated to assist regional businesses and communities better access existing programs including the MMI, EMDG, Recycling Modernisation Fund, Defence Industry Programs, Critical Minerals Accelerator Initiative, and Australian Apprenticeship Initiatives.

BDO Comment

BDO welcomes the additional funding under the Industry, Science, Energy and Resources, Health and Defence portfolios that will continue to support the Government’s six priority sectors, address critical supply chain vulnerabilities, invest in emerging industries such as the space sector and support rural Australia. However, we await further detail on specific incentives for businesses to understand how they will access specific opportunities, particularly under the National Space Mission.

We would prefer to see funding distributed more broadly across the portfolio to reach more entities than just those in the Government’s priority sectors. It is also worth noting the Government is still yet to announce the outcome of several grant programs announced in the 2021-2022 Budget.

The Government has made various minor amendments to legislation in an attempt to clarify the law and ensure its clear operation. The two minor amendments of note are the tax-records education direction and amendments to intangible asset depreciation.

Tax-records education direction

Under the current law, an entity is liable for an administrative penalty where it fails to comply with its record-keeping obligations under a taxation law.

The proposed new law offers an alternative to the payment of administrative penalties, in certain situations. It empowers the Commissioner to issue a tax-records education direction which will require an entity to complete an approved record-keeping course, where the Commissioner reasonably believes the entity has failed to comply with one or more specified record-keeping obligations.

This measure seeks to address instances of non-compliance and knowledge gaps with record-keeping obligations, by assisting businesses to better understand their obligations under the taxation law.

The Commissioner may only issue a direction to an entity which they reasonably believe is not disengaged or deliberately avoiding its record-keeping obligations. 

Intangible asset depreciation

The new law allows a taxpayer to choose to self-assess the effective life of intangible depreciating assets rather than using the statutory effective life specified under the law. This choice can be made in relation to intangible assets the taxpayer starts to hold on, or after, 1 July 2023.

This applies to:

  • A standard patent
  • An innovation patent
  • A registered design
  • A copyright
  • A licence
  • A licence relating to a copyright
  • In-house software
  • A spectrum licence
  • A telecommunications site access right.

The new law allows the taxpayer to recalculate the effective life in later income years if the effective life the taxpayer has been using is no longer accurate because of changed circumstances relating to the nature of the asset’s use.

If the cost of the asset increases by at least 10% in a later income year, the taxpayer must recalculate the effective life of the asset.

BDO Comment

While these measures relate to very separate issues, both attempt to align the application of the law, with the intent behind the law. BDO welcomes the education directive amendment as education is always better than a penalty.

BDO also welcomes the ability for a taxpayer to choose to self-assess the effective life of intangible depreciating assets, as it provides more flexibility for taxpayers to take into account their commercial circumstances.

The Government has announced an extension of the Tax Avoidance Taskforce focussed on multinationals, large corporates and high-wealth individuals. It will further extend the operation of these investigations by two years to 30 June 2025 and provide $325 million in 2023-24 and $327.6 million in 2024-25.

The Taskforce was established in 2016 to undertake compliance activities, detect tax avoidance and protect the integrity of the tax system for all Australians. It also scrutinises specialist tax advisers that promote tax avoidance schemes.

As of June 2021, the Tax Avoidance Taskforce has helped the ATO raise nearly $23 billion in tax liabilities. By extending the measure, the ATO is estimated to increase receipts by $2.1 billion.

BDO Comment

BDO agrees with the approach to increase transparency in the administration of the tax system by extending the measures for large businesses and high-wealth individuals. From BDO’s experience with these assurance reviews, the ATO has worked collaboratively with taxpayers to improve their tax governance procedures.      

However, the extent to which the compliance revenue is a result of the budget measure, resources provided for the Taskforce is uncertain. An Australian National Audit Office review of the Taskforce in 2019 found the ATO could not conclusively demonstrate the Taskforce met the revenue and resourcing commitments set out in the 2016–17 Budget. There is no indication this will change for the current budget cycle.

Further, the ATO’s estimated receipts, as a result of these measures are considerably less, and the related expense is higher in this Budget compared to the Government’s estimate in the 2019-20 Budget.