Federal government tax policy

• Treasurer Scott Morrison will be looking for extra revenue in the May 2017 Budget if it is to achieve MYEFO forecasts. Expect surprises and tax policy u-turns.     
• Those state and territory governments experiencing economic pain will quietly agitate for GST reform. 
• The Black Economy Taskforce will recommend tax and innovative non-tax solutions. Policy changes to the PAYG instalments system could be on the cards, with the aim being to get new businesses into the tax payment system earlier, with cash flow-tax alignment and better tax reporting systems.   
• Parliament may only pass the first stage of the ten-year company tax rate reduction plan (ie 27.5% if business turnover less than A$10m). Expect growing complaints that Australia has uncompetitive company tax settings and is no longer, “open for business”.

The ATO

• The ATO will actively seek to test before the courts the revamped, Multinational Anti-Avoidance Law-enhanced Part IVA and expanded transfer pricing rules. 
• The ATO will prosecute some individuals identified by the Panama Papers as major league tax evaders. The targets will be those who had a once only, never to be repeated opportunity to make a voluntary disclosure during Project DO IT in 2014.
• Large companies and high-wealth individuals can expect even more ATO face to face engagement (“come in for a chat” scenarios) as the ATO’s Tax Avoidance Taskforce flexes its muscles to give the government a return on its A$679m investment.
• The Diverted Profits Tax and increased tax penalties on big business will sail through Parliament unopposed, but will put pressure on the ATO, multinational companies and their tax advisers to quickly establish safe harbour structures and transfer pricing frameworks so that inbound investment decisions are not unduly hampered.

International tax politics

• If US President Donald Trump manages to get his ambitious tax reforms through Congress, watch for major restructuring and revised tax planning from US multinationals. Treasury thinking on the sustainability of the Australian corporate tax base will be tested.  
• The Trump administration may prove to be an obstruction to the successful global implementation of the OECD’s Base Erosion and Profit Shifting (BEPS) agenda.  
• Multinational companies may contemplate re-domiciling to the US or the UK, both of which promise ultra-low company tax rates (the UK is already at 20%, with a target of 17% by 2020). Alternatively, new investment funding may flow to subsidiaries in those jurisdictions.

Tax technology 

• The ATO’s online services will continue to expand at a rapid pace, although it will need time to recover from the December 2016 major systems outage.
• Expect to hear lots about Single Touch Payroll, e-invoicing, and BAS and PAYG instalment simplification.
• Tax agents and software developers may need to step-up to new ATO cyber-security requirements.    
• Accountants and others will need to adjust to mandatory reporting of cyber breaches impacting clients.

The tax profession

• When it comes to the ongoing “Accountants versus ATO Online Self-serve” battle for consumers of tax services, those offering long-term, wealth building, trusted personal relationships with a bespoke service offering suited to their clients’ individual needs will win. Try getting that level of service from your computer.  
• The busiest tax practitioners in 2017 will be those specialising in international tax, transfer pricing and superannuation. Business skill growth areas for accountants include negotiation and conflict resolution skills, tax accounting systems, data analytics and cyber security.  
• The diversification of accountants with private client skills will continue well beyond tax. For example, think about the role accountants could play in helping guard against elder financial abuse. We will continue to reinvent ourselves as a profession.