The May 2024 Federal Budget should continue the government’s policy of budget repair, to prevent higher interest rates and inflation diminishing Australia’s ability to withstand future economic shocks.

CA ANZ’s pre-budget submission, lodged with Treasury on 25 January, reflects feedback from our members, particularly those in public practice who know the hardships being experienced by small and medium-sized businesses carrying large debt loads. More insolvencies are expected, and this area needs more policy focus and resourcing.

Many members are concerned at the quality and timeliness of government consultations, policy and implementation. They also report noticeable declines in the service standards of key regulators.

What is CA ANZ advocating for?

Short-term recommendations in our pre-budget submission include:

• Develop an overarching sustainability reporting framework to assist the just and orderly transition to net zero through sustainability reporting
• Improve productivity through more targeted skilling and investment in digital, AI, sustainability, accounting and financial capability
• Establish an ATO ‘booking’ service to facilitate resolution of technical issues and tax debt repayments
• Plan for the ageing population and replace annual superannuation contribution caps with lifetime caps
• Enhance technology links between government and business to achieve productivity gains.

In the longer term, we are also calling for:

• Substantive tax reform to relieve the strain on the income tax system and addressing intergenerational equity to fund the costs of an ageing population
• Funding towards the eventual mandatory adoption of digital reporting by listed entities
• Improving financial literacy, through the introduction of a national senior secondary accounting curriculum
• Entitlements that learners can draw upon over their lifetimes to fund continuous learning, reskilling and upskilling.

Substantive tax reform and roadmap needed

More than 90% of tax and superannuation experts believe nationwide tax reform must be undertaken, according to a survey by CA ANZ conducted in February 2024. And CA ANZ says it’s time for a wider discussion about Australia’s heavy reliance on personal income tax collections.

The federal government has gained a lot of revenue from taxpayers over many years because of bracket creep, as Australia does not index income tax thresholds for the impact of inflation.

It is often overlooked that Australia’s top personal tax rate has long been considered high by international standards and applies from a comparatively low income. Policymakers should keep an eye on the international competitiveness of our personal tax system.

CA ANZ also remains opposed to the government’s Better Targeted Superannuation Concessions policy that will see those with more than A$3 million in total superannuation assets face an additional 15% tax.

Among CA ANZ’s many concerns with the policy are the lack of indexation of the A$3 million cap, the taxation of unrealised capital gains and the carried forward allowance of capital losses. This tax will be expensive for individuals, superannuation funds, tax agents, financial advisers and for the ATO to administer, and will raise little net revenue when all these costs are considered.

Take aways

Read more at: caanz.com/AU24 on our pre-budget submission, media and member survey results on the stage 3 tax cuts and tax reform.