Accounting and professional services firm BDO has prepared an excellent guide to the 2014-15 Federal Budget Time to Pull on the Reins, which notes “The budget measures continue to tinker around the edges of real tax reform.” This was a major theme at BDO’s Budget Breakfast at the Brisbane Convention Centre which I attended yesterday morning. In answering a question about the GST I asked from the floor, BDO Tax partner and one of Australia’s leading taxation experts Mark Molesworth answered that GST exemptions (e.g. fresh food and some health and education items) should be examined as part of a holistic review of the tax system. I’ve previously commented that the GST base should be broadened (see Dr Parkinson right that the GST should be broadened). Of course, as noted by one panelist at the Breakfast yesterday, any changes to the GST would need to be accompanied by compensation to low-income earners to compensate for the GST’s regressive impact.
In his presentation, Mark made several insightful points, including:
- super contribution limits appear even less desirable now that there will be a large gap between the age you can access super and the pension age; and
- the Government’s stated justification for trimming the R&D tax incentive (i.e. the company tax rate is being reduced as well) is inconsistent with the rationale for the current version of the R&D tax incentive, which was designed to deliver an incentive to companies that is independent of the rate of company tax. This is a pretty technical point, but demonstrates Treasury is struggling to maintain its corporate knowledge.
Well done to BDO for an excellent and informative Budget Breakfast, and thanks in particular to Paul Rafton for inviting me along.
As a final comment, I’d note that this has been an excellent year so far for business breakfasts in Brisbane. Indeed, next Monday morning, the Queensland branch of the Economic Society (of which I’m Deputy Secretary) is hosting the head of the RBA’s Economic Analysis Department Jonathan Kearns at a breakfast at the Polo Club where Jonathan will discuss Current Economic Conditions. It’s probably not too late to book a place if you get in touch with the Society today.