The Government’s white paper on tax reform will set in motion a number of changes for Australian people and businesses, including implications for Dealers.
Due for imminent release, the Federal Government’s White Paper on tax reform will pave the way for what may become the most comprehensive tax reform Australia has seen in decades.
Whilst ongoing changes and adjustments to Australia’s tax and transfer system are needed, the white paper will set the precedent for nation-wide changes on a broader scale than Labor’s comprehensive Henry tax review published in 2010.
Changes are needed to fund Government services, investment in infrastructure, education, health, aged care and pensions.
According to the Government, Australia’s reliance on income and company taxes has barely changed since after World War II when it was conceived. Prime Minister Tony Abbott signed off on the paper’s terms of reference in December, reportedly stating that he will only support reforms with bipartisan backing or where all states are in agreement.
Some of the more controversial reforms expected to occur include erosion of tax bases, increasing the rate and broadening the base of the GST, as well as increasing taxes on superannuation. The Business Council of Australia estimates that the States control 15 per cent of the total tax collected in Australia, but are responsible for around 40 per cent of expenditure.
AADA believes any reforms should be based on the traditional tax policy objectives of simplicity, efficiency and equity as well as sustainability and consistency.
The implications for Dealers and their businesses as a result of the reform will likely be vast. From the setting of company tax rates, to GST and of course, the future of the Luxury Car Tax (LCT) – Dealers will probably experience many changes as a result of the tax reform over the next few years.
AADA will lodge a submission to the Government on behalf of members, covering a number of issues. Whilst the main focus will be the abolishment of the LCT, we will also examine how tax reform could impact other areas of the dealership business.
Generally, most industry observers agree that a comprehensive reform of Australia’s tax system is necessary and could provide plenty of good outcomes for the economy and future growth of the country. This has been echoed in a report on the PricewaterhouseCoopers (PwC) website which states that ‘there is a clear need for comprehensive tax reform – done the right way.’
According to PwC, ‘the “right way” means increasing those taxes that have the least effect on investment and employment, and at the same time reducing reliance on taxes that distort incentives to work, invest and transact business. It also means addressing those factors which increase the complexity of the tax system and the cost of compliance.’
The AADA eagerly awaits the release of the white paper report, including the opportunity to make a submission for the benefit of Dealers.
Watch this space for progress.