Question:
The ridiculous cost of our tax system
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Jessica Irvine of the Sydney Morning Herald estimates the cost of complying with our tax system at 2.1% of our Gross Domestic Product (or equates that to 12% of the tax revenue collected). On that basis and noting that for the year ended June 2011, the Australian Bureau of Statistics measures our GDP at $1.39 trillion, the cost of tax compliance in Australia is $29 billion. Wow!
The complexity of our tax system confuses individual taxpayers, business people, company directors and tax professionals themselves. It can consume inordinate amounts of time just trying to work out what needs to be done.
Ms Irvine provides some other useful statistics:
+ 1.2 million to 1.5 million individual taxpayers fail to lodge a tax return;
+ Of that large estimate, only 98,700 people receive a failure to lodge penalty;
+ The Tax Office employs 20,000 public servants or 15% of the Australian public service;
+ Estimated Government expenditure for 2011-12 is $366 billion; and
+ Of that, one third or $122 billion is spent on social security and welfare.
It is suggested that the …The annual drudgery of tax returns is a missed opportunity to engage people with where their tax dollars go. A small thank you note on lodgement would go a long way…
Thank you, madam, for your completing your annual tax return. Personal income taxes account for about 45% of total Federal Government revenue and assist us greatly in the work that we do.Business chips in about another 20% through the corporate tax rate and another 15% comes from the GST, so thanks for that too. The rest we get from a bunch of customs duties, excise on fuel, tobacco and some other itty-bitty taxes too small to mention here.
You might be wondering where it all goes. Rest assured we usually spend every dollar we get (sometimes less, sometimes a bit more). By far our biggest expense is in welfare payments to individuals and families. Of every dollar we collect in tax this year, we expect to spend about a third on social security and welfare. About 16% will be spent on health, 8% on education and 6% on defence.
We hope you think that's money well spent. If not, please alert us at the earliest possible election. Many thanks for your time. Now please do go sit in the sunshine and read a newspaper
The Sydney Morning Herald, 29 October 2011, p3, The taxman's little ray of sunshine
