BDO Calls for a COVID Recovery Reform of the Tax Systems

02 February 2021

BDO Australia has used its pre-budget submission to call on the Government to use the COVID-recovery period to undertake tax reform particularly around Capital Gains Tax (CGT), Fringe Benefits Tax (FBT), Corporate Tax rate cuts and tax incentives for small and medium-sized businesses.

BDO responded to the invitation from the Assistant Treasurer and Minister for Housing to submit ideas and priorities for the 2021-22 Federal Budget.

BDO Australia National Tax Director Lance Cunningham said: “We are calling on the Government to return to the task of reigniting the tax reform debate with a focus on looking for ways to simplify some of outdated measures such as CGT and FBT as well as fast track corporate tax rate cuts which could provide the economic kick we need.”

“Tax reform is not just about tax cuts, it entails a rational identification of how all aspects of the tax system interact with each other and with the economy and to identify how to ensure the appropriate amount of tax is collected from the right entities without causing much distortion to the economy.”

“Our overarching request is for the Government to view tax reform not as a one-off but as an ongoing process.

“We’ve also identified four other areas for action:

  1. Australia’s company tax rate is no longer competitive compared with other countries. The introduction of a flat 25% income tax rate for all corporates would encourage businesses to employee and invest more, which would provide the economic stimulus needed as other measures such as JobKeeper are wound down.
  2. Investment allowance/instant asset write off rules should be permanently included as a feature in tax legislation with the ability to easily tweak rates and thresholds as the economic conditions change.
  3. Savings & Capital Gains discount – provide a 25% discount for savings and capital gains as part of overall review of CGT discount, CGT small business concessions and the Imputation system.
  4. FBT – replace existing measures with a simplified system with benefits included in an employees’ assessable income but only taxing genuine remuneration benefits.”

The BDO submission includes 21 recommendations. View the full submission at www.bdo.com.au/en-au/insights/tax/submissions/bdo-2021-22-pre-budget-submission