Parliamentary report calls for ‘push return’ tax system
A parliamentary inquiry has recommended that the tax office work towards a transition to a “push return” tax system, but one association believes that conversation is premature without considering holistic tax reform.
The House of Representatives Standing Committee on Tax and Revenue’s inquiry into the Taxpayer Engagement with the Tax System has laid out 13 recommendations in a bid to simplify the Australian tax system.
One of the recommendations calls for the ATO to improve its technical initiatives such as pre-filling, simplified electronic lodgement systems for business and individuals, and online assessment tools to facilitate Australia’s transition to a “push return” tax system, which is essentially a pre-filled statement of tax activity for a taxpayer to approve.
The committee lists Denmark, Sweden and Norway as other countries that have successfully adopted a “push return” approach, while noting that taxpayers in New Zealand do not have to lodge a tax return.
Standardising workplace deductions have also been highlighted as an area that would help enable “push returns” while still allowing taxpayers to claim above the set amount by providing full substantiation.
Speaking to Accountants Daily, the Institute of Public Accountants (IPA) general manager of technical policy Tony Greco said the comparison with other jurisdictions needed to be analysed from a broader tax perspective.
“New Zealand did their reforms early on and they traded off income tax against GST and made deductions a thing of the past, so that’s the sort of thing that we could move to if we engaged in wholesale tax reform, but we’re not having those conversations; we’re dealing with piecemeal reforms again and that is not going to fix anything,” said Mr Greco.
Mr Greco also believes a move to a standard deductions scheme could come at a cost by giving your average salary and wage earner a “free kick”.
“The issue for us is that you’ve got people in an employment situation where everything is paid for and they get a free kick, so where is the equity in that?” the GM asked.
“Then you’ve got people who get nothing reimbursed and they’ve got to fight to maintain their deductions.
“If you are going to give everyone a free kick, then you have to address the cost associated with that; you got to ask yourself a big question about the merit of putting something like that in when you’re giving people who aren’t entitled to anything a deduction.”
Further, Mr Greco said that while he is supportive of pre-fill data, the current level of data being provided would not enable a “push return” system unless it was for a taxpayer with simple tax returns.
“The issue there is pre-fill doesn’t cover everything; it doesn’'t cover AirBnB, it doesn’t cover the gig economy. Where is the system capturing deductions? Where is it capturing capital gains? It doesn’t. There are lots of gaps,” the GM said.
“As systems get more sophisticated and more third-party data is captured, then you can foresee a time when ‘push returns’ can happen, but at the moment, there are too many gaps in the systems to contemplate that other than for very simple taxpayers.
“Most seasoned tax practitioners have been hearing this for many years that I-returns will eventually be a thing of the past, but we’re still finding the value proposition around deductions is what people are looking for when it comes to engaging a tax agent and making sure they are doing all the things that are required of them.
“We’re a country of outsourcers and people have their lawns mowed, their cleaning done, their ironing done and this is just another service that is valued by the consumer. The consumer wants to sleep at night knowing that they’ve done what is right.”
courtesy of Accountants Daily
we have a 'flat tax ' it is called GST
the government's addiction to spending is only part of the problem
if a flat tax was fair the super-rich would have to pay some .. that could affect political donations
the GST was supposed to replace several taxes ... look at how well that worked
would you trust them to get it right the next time ?? ( i wouldn't )
Tax is what pushes away the people to start their own small businesses, but we shouldn't forget that small businesses are the main part of the whole economy and small businesses are what the government should fight for. Honestly, I was never so good at the economic part, as I prefer to focus on the technical part, but as a businessman, I must improve the qualities that are required in case you decide to run a business. Like everyone who launches a business, I was afraid of taxes and how I will deal with them, but after stumbling on asite that allows calculating tax online, my life became easier, and the business became a hobby, which I like.
I think Australia's tax and transfer systems are highly progressive, supporting fairness. But for many people, individuals' income tax does not significantly alter their workforce participation. However, it can be more distorting for particular groups of taxpayers, such as low-income earners or the second income earner in a family or high-income earners with the ability to plan their tax affairs. Maybe it would have been much simpler if it had been a flat tax. There wouldn't be so many forms to filling. I personally can't do anything without the application https://www.thepaystubs.com/. It helps me to keep track of all documents, such as salary information, taxes paid, overtime pay, and more.