It is no secret that Australia has a complex tax system. This was highlighted in a discussion paper released by the government in 2015.
Discussing Its complexity, it stated, "Australia's tax system has become increasingly complex over time. Previous government reviews, tax professionals and other stakeholders have expressed
frustration and concern about its sustainabilily".
The discussion paper continued, "There is compelling evidence that simplifying the system would provide Significant benefits to both the economy and the taxpayer experience".
I have outlined a few areas that. In my view, could benefit from simplification:
Taxation of trusts
Several discussion papers were issued in 2011 and 2012 by Treasury identifying the issues and possible options for reform. However. we are yet to see any major reform.
Division 7A would have to be one of the most common issues tax advisers deal with on a daily basis. Its complexity has Increased over the years with patches and fixes added to the initial legislation, thereby adding to the significant compliance burden for taxpayers.
Allowing wholly-owned corporate groups to lodge one consolidated tax return rather than a return for each company in the group sounded good in theory. What we ended up with is a complex set of rules which instead increased the compliance cost for taxpayers who opted in.
This article appeared in the December 2017/January 2018 edition of the IPA Journal.