May 10: Twelve key tax measures were announced in the 2010-11 Budget, identified by Australia’s Future Tax System Review and ranging from removing unintended tax incentive for people to drive more, to improving small business tax rules and establishing the new Tax System Advisory Board. However, reaction to the announcements have been mixed, with a number of tax industry experts announcing that the Federal Government should, in line with the aim of returning the budget to surplus within two years, look to uncover more major tax reforms in the future.
Following these announcements, industry experts share their instant views on what implications the budget will have on the taxation sector:
ROBERT JEREMENKO, SENIOR TAX COUNSEL, THE TAX INSTITUTE
"The government has hinted at the edges of tax, but hasn’t embraced real tax reform … But it has projected a surplus in two years time which is a position you need to be in to address real tax reform/
"The Federal Government needs to put a long term tax reform plan now ahead of the Tax Summit in October."
"They are predicting a budget surplus in two years time, which will be a prime opportunity to have a good look at the current tax system and get rid of some of the anomalies."
TRISTAN WEBB, TAX DIRECTOR, CROWE HORWATH
"I’ve got no confidence that is going to happen any time soon (tax reform). They commissioned Ken Henry to do his report into the tax system. They only accepted nine of his recommendations.
"The other thing with the budget is you can see they clearly poured over the Henry report again and have gone through and picked out things that will contribute to the bottom line.
"Overall, I still have no confidence that we will se the really big ticket changes that we saw particularly going back to the Keating Govewrnment.
"It’s as I expected. I’ve called all the budget so far “steady as she goes”. This is no change really."
On changes to the Fringe Benefit Tax – and the disincentive over driving long distances: "We were looking at the Fringe Benefit Tax and the change for cars, it’s kind of strange - being a labor government - that they didn’t do that earlier. It seemed a no brainer, to simplify … simplify the tax, also your green credentials because you’re not providing an incentive for people to keep driving.
"We think it was a good change. We didn’t realize that by making that change they were going to generate another billion to the bottom line. It seems to us they’ve been lobbied quite heavily by the car industry. They’ve decided to come out with that and then at the same time provide the 5k sweetener for small businesses to purchase cars."
Need the complete details on the budget implications for Taxation?
For more details on our industry-specific Budget Briefing Papers, listing every announcement with links to the full text budget releases, click here.
Alternatively, to find out how you can order next-day delivery of your full set of budget papers, click here.