BDO: Re-election kills reform
03 May 2016
The Government has written an election manifesto dressed up as a budget as it looks ahead to the double dissolution on 2 July.
“A year ago there was a lot of optimism that this budget might begin the process of genuine tax reform, but political expediency has reduced it to more tinkering at the edges,” BDO Tax Partner Mark Molesworth said.
“This is very much a budget from a Government whose first, second and third priorities are getting re-elected.
“It’s now more than a decade and a half since our tax system has seen any meaningful reform and it’s hard to feel too positive about the chances of anything significant occurring in the near future.”
Mr Molesworth said although measures like further cutting taxes for small business, winding back superannuation concessions and progressively moving the corporate tax rate to 25 per cent were positive, they didn’t do enough to address the broader structural issues facing Australia’s tax system.
“Providing further tax relief to small businesses – and raising the eligibility for that relief to turnover of up to $10 million – is admirable, but a more holistic approach to tax could have achieved so much more,” Mr Molesworth said.
“Certainly no business is going to say no to a tax cut, but that doesn’t mean we haven’t missed an opportunity to truly address the way our tax system holds business back.”
Mr Molesworth said while some of the Government’s changes to reduce superannuation concessions were positive, others will disadvantage those who have planned their retirement around the existing rules.
“Limiting the amount of pension assets to $1.6 million is understandable,” he said.
“But lowering the concessional contributions cap to $25,000 and introducing a lifetime cap on non-concessional contributions to $500,000 will be huge blow to many who are close to retirement, especially given the lifetime cap is being backdated to 2007.”