This content is from: Australia

Australian Economic Statement reveals extra funding for ATO

Australian Treasurer Chris Bowen last week released his Economic Statement which details the economic outlook for Australia. The statement reveals extra funding for the tax authority, as well as outlining reforms to corporate tax incentives.

The Economic Statement says the Australian Taxation Office (ATO) will be given additional resources to address the level of tax debt and unpaid superannuation.

“The government is providing the ATO with an additional A$99 million ($89 million) over four years to address the levels of unpaid tax and superannuation in the community,” said Bowen in a joint media release with Senator Penny Wong, Minister for Finance and Deregulation. “This measure will return A$45 million in superannuation to Australian workers and ensure a level playing field for Australian businesses.”

Despite going through a turbulent time politically, with Kevin Rudd replacing Julia Gillard (the woman who ousted him in 2010) as Prime Minister at the end of July, Australia has been at the forefront of international efforts to reform tax rules.

“The scoping paper [on risks to the sustainability of Australia’s corporate tax base] also seeks to announce to the international community the prominent role that Australia sees itself playing in the OECD/G20 BEPS project as a self-proclaimed “middle power” and 2014 chair of the G20,” said Leon Mok, of Baker Tilly Pitcher Partners.

The country is also aiming to increase investment through changes to the tax code. In July, David Bradbury, Assistant Treasurer, released a statement regarding a new tax incentive to drive private investment in infrastructure.

“This measure was lobbied for to ease the issue of significant losses in early years,” said Richard Snowden, of King & Wood Mallesons.

The Economic Statement confirmed the move to incentivise private investment and pledged a review of other measures too.

“The government is also improving incentives to support up to A$25 billion in nationally significant infrastructure spending by the private sector, by preserving the real value of tax losses over time and making it easier for investors to access these losses,” said Bowen

“The government has also acted to promote greater fairness and sustainability in the tax system by removing outdated or poorly targeted tax concessions,” he added.

Another tranche of this reform effort relates to research and development, and with an election looming (Rudd has announced the election date as September 7), the Labor government will be doing all it can to keep taxpayers happy and manage the budget by attracting greater levels of investment.

“The government is supporting investment in R&D by doubling the rate of assistance for SMEs and improving cash flow by providing a 45% refundable tax offset,” said Bowen.

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