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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.

 

Simpler tax rules urged

A parliamentary committee has called on the Federal Government's tax review to consider the case for scrapping tax deductions for work-related expenses as part of changes to reduce the need for people to lodge tax returns.

In a report released yesterday, on the last sitting day before Parliament's winter break, the Joint Committee of Public Accounts and Audit said a 2004 survey found that, in page numbers, Australia's tax laws were the third-most voluminous among the world's 20 biggest economies.

The committee urged the review, chaired by Treasury secretary Ken Henry, to focus on simplifying the tax laws to reduce the number of taxpayers who need to lodge a return. Among the ways to achieve this, the all-party committee suggested the Henry review consider:

  • The costs and benefits of making work-related expenses deductible.
  • Whether tax offsets, rebates and benefits should be delivered instead as direct welfare payments.
  • Increasing the tax-free threshold and reducing the number of marginal rates.
  • Improving the accuracy and coverage of withholding tax.
  • Giving structural adjustment grants to tax agents made redundant by a simpler set of tax laws.

It was the last report penned by Senate tax experts Andrew Murray (Dems, WA), John Watson (Lib, Tas) and Grant Chapman (Lib, SA) before they retire next week. Committee chairwoman Sharon Grierson (ALP, NSW) said the MPs and senators were impressed by the professionalism of the Tax Office, but found its ability to do the job "is constrained by the complexity of the tax laws".

"Complex tax laws increase the chance of taxpayer error and increases their risk," Ms Grierson said. The committee said self-assessment with such complex rules forced taxpayers to use agents and imposed significant compliance costs.

"A simpler system will deliver savings to both taxpayers and government, and allow entrepreneurs to focus on growing their business, rather than complying with arbitrary tax rules," it said. It also suggested that Treasury and the Henry review consider "basing the tax system on financial relationships and economic outcomes, ahead of legal forms".

Tim Colebatch June 27, 2008

The Sydney Morning Herald

 


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