Tax reform tops Federal Budget 2024 wish list

Megan Breen | March 2024

This article was current at the time of publication.

Comprehensive and “deep” tax reform forms the centrepiece of  CPA Australia’s Federal Budget 2024 submission to the Federal Government. The submission argues that a complete overhaul of the tax system is needed as it can no longer sustain its over-reliance on taxing individuals and companies.  

“We rely too heavily on personal and corporate taxes,” Gavan Ord, CPA Australia’s Policy Investment Manager told the With Interest podcast. 

“Our budget submission makes almost 40 recommendations and one of those is that we need real tax reform [which includes] discussions on GST, stamp duty [and] payroll tax,” he said.

Tax reform

CPA Australia’s submission advocates funding a review of the tax system, including a comparative analysis of how it stacks up against comparable economies. Discussions should also be had between Federal and state jurisdictions about the structural challenges to revenue raising, in particular, the dependence on personal and corporate taxes. 

The submission notes this dependency is out of step with other OECD economies, and advocates for an informed discussion on the merits of reforming the GST by broadening the base and/or increasing its rate, while compensating those most affected by this reform. 

Other key tax reform issues include: reviewing the fringe benefits tax, evaluating the impact of the thin capitalisation regime on investment, and improving payroll tax reporting nationally. 

CPA Australia also advocated for a legislated fixed rated method for determining working from home deductions - similar to the cents per kilometre method for vehicle expenses. 

Economic transformation and improved public finances

As well as recommending a comprehensive review of Australia’s tax system, the submission also makes a case for the need to improve how the Australia Taxation Office exercises its general powers of administration.

It also calls for a change to the punitive nature of the superannuation guarantee charge penalties and argues financial advice fees should be tax deductible. 

Additionally, along with general improvement to the Companies Register, its search fee should be abolished. 

Tackle skills and worker shortages

The current labour shortage is another focus of the CPA Australia submission, which advises a long-term strategy to increase the supply of skilled people into the workforce.

“There's a labour shortage in accounting and it looks like that shortage will persist. We think the government should be doing more to encourage people to study courses like accounting at university, through reducing fees, for example,” said Ord.

The submission also recommends promoting accounting, audit and finance professionals prominently in Australia’s skilled migrant intake and offering subsidised training to older Australians to help them remain in or re-enter the workforce.

Promote the benefits of business to younger Australians

The submission makes the case of setting a target to increase the percentage of Australians under 40 owning a business.

“We should be looking at what we can do to encourage more younger Australians to start their own business or buy an existing business. Our Asia-Pacific small business survey data shows a strong correlation between younger business owners and growth and Australia has the oldest age profile of the 11 markets surveyed,” said Ord.

“If you translate that through, it’s impacting economic growth, job creation, innovation and exporting.”

Action on climate change

One of the other key recommendations in this year's pre-budget submission is around climate change and the impact that it's having on businesses. 

The submission recommends letting the business community know what their contribution should be toward reaching Australia’s 43 per cent greenhouse gas emissions reduction target and argues smaller businesses should be supported with climate-related disclosure.

Businesses are uncertain of what policies the government will be introducing and when. They're uncertain of how long those policies will be in place for. They're uncertain about whether the skills exist to help achieve those targets. 

“The government needs to drill down from the headline target of 43 per cent to outline what is required by industry, and then businesses can work out how to achieve that target,” said Ord.