Support for removing individual tax returns, according to Deloitte surveyDOWNLOAD
In anticipation of changes that might be introduced in the Henry Tax Review and accepted by the Government, financial services industry respondents to a Deloitte survey have, when given eight possible reform options, supported removing the need for Australians to lodge tax returns (18% of respondents), retaining the imputation credit system (17%) and reducing tax on interest from bank deposits (just under 17%).
The survey, conducted during April by professional services firm Deloitte, sought to establish the expectations of senior management from more than 220 financial services organisations, in advance of the Henry Review (2 May) and the Federal Budget (11 May).
“The least supported possible response was the removal of the CGT exempt status of the family home (3%),” said Neil Ward, Deloitte Financial Services Tax partner. “Obviously our respondents believe that interfering with the family home would be political suicide!
“15.5% of respondents also supported offering people over 65 years of age tax incentives to remain in the work force,” he said.
Survey author and Superannuation Tax partner, Noelle Kelleher, pointed out that almost 90% of survey respondents also believe retirement incomes will be inadequate despite Australia’s compulsory superannuation contribution regime.
The most popular option to combat this shortfall was for Government to increase the maximum superannuation guarantee rate from the current 9% in a sliding scale according to age. This option was followed by reducing tax on superannuation.
“The desire to see tax on superannuation reduced is in direct contrast to a possible 15 to 30% increase in the tax contribution rate mooted to be accepted by the Federal Government in response to the Henry Tax Review,” Kelleher said.
The Henry Review’s terms of reference also included enhancing the taxation arrangements on consumption (including excise taxes), property (including housing), and other forms of taxation collected primarily by the states.
“A substantial portion of the Henry Review report is expected to focus on state tax issues,” said Ward. “The report may well address the rationalisation and harmonisation of state taxes, as well as how to consolidate the administration of state taxes through a more streamlined process such as a national administration office, like the ATO.
“It is possible that respondents think the removal of state taxes will be a long and difficult process or that the Henry Review and the Government will support the removal of some of the main business state taxes such as commercial property stamp duty and payroll tax. Henry may even recommend the removal of state taxes on insurance products.
“The majority of respondents, however, believe that the reform of state taxes will not have a significant impact on their operations, while 32% are unsure,” he said.