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BDO has expressed disappointment at a persistent lack of political commitment to genuine tax reform, following the prime minister’s National Press Club address yesterday.
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BDO laments lack of political commitment
03 February 2015
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8 minute read
In the address, Prime Minister Tony Abbott announced a 1.5 per cent small company tax cut but confirmed there are no immediate plans to change the GST. Mr Abbott told the Press Club that the base and the rate of the GST will not change this term or the next unless it is supported by the likes of Bill Shorten and the state Labor premiers.
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BDO national tax director Lance Cunningham suggested the prime minister’s unwillingness to take a firm stance and show leadership on the GST base and rate is in contrast with the wishes of many within the business community.
“The results of BDO’s 2015 Tax Reform Survey – released less than a week ago – revealed that 90 per cent of respondents agreed that the GST must be considered in any tax reform discussion,” Mr Cunningham said.
“The business community has called loudly and clearly for the GST to be addressed, so it is disappointing that politics is getting in the way of tax reform.
“Putting any amendments to the GST rate and base on hold until at least 2020 is a terrible indictment of the state of political debate in this country.”
In response to the prime minister’s announcement of a small business company tax cut on July 1, BDO tax partner Mark Molesworth called for a more holistic approach to be taken.
“A small company tax rate cut is not the same thing as a small business tax rate cut,” Mr Molesworth said.
“It assumes that all small businesses are run through companies and that in the ones that are, the companies will be able to retain profits, rather than distributing them to owners as wages and dividends.
“Such a tax cut also has negative implications for shareholders in large companies, such as shareholders in listed companies.
“It will adversely affect the rate at which dividends from large companies can be franked (thereby penalising shareholders) but the tax rate for the companies concerned will not reduce (thereby penalising the company as well).
“We await with interest the other small business tax measures which may very well ameliorate these issues, as this particular measure on its own highlights the dangers in not having a holistic approach to tax reform,” Mr Molesworth said.
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