May 9, 2017

Thomson Reuters releases Checkpoint special report analysing “very safe” 2017 budget

Analysis highlights "big ticket" tax reform has taken back seat to budget economics

CANBERRA – Thomson Reuters has released a special report overnight providing accountants, tax advisors, financial planners and businesses with a detailed analysis of Australia’s 2017-18 Federal Budget.

This year’s budget did not announce any big ticket fundamental tax reforms, with the report analysis highlighting how "big ticket" tax reform has taken a back seat to budget economics – again.

Ben Scull, Managing Director, Tax & Accounting, Australia & New Zealand at Thomson Reuters, said: "This year's federal budget is too safe and there is nothing in it to encourage investment for large corporations. The reality is we need corporations to invest in Australia to ensure we can be competitive in the global market and we would have expected the Federal Budget to reflect this.”

"For example, consider the recent win by the Australian Taxation Office (ATO) over Chevron on transfer pricing. Chevron stated that this outcome will stifle investment in Australia and other large corporates will likely have a similar view. At Thomson Reuters, we believe that Australia strongly relies on professional services as a key area of differentiation - especially considering the previous reliance on mining and resources. The economy relies on businesses wanting to operate in Australia, however, the budget handed down does not address this at all. There was no mention of any corporate tax rate relief either.”

"The other side of the coin is the individual tax rate. This remains extremely high and not competitive when looking at other countries. This means that both companies and individuals are being taxed too high, making it very difficult to encourage investment. Overall the Federal Budget is not stimulating real economic reform, real growth or real competitiveness with any of its measures."

The major revenue measures announced in the budget included:

  • A new major bank levy from 1 July 2017 for ADIs with licensed entity liabilities of at least $100bn;
  • The instant asset write-off ($20,000 threshold) for small business entities (SBEs) will be extended by 12 months to 30 June 2018;
  • The small business CGT concessions will be restricted to assets used in a small business or ownership interests in a small business from 1 July 2017;
  • The multi-national anti-avoidance law (MAAL) will be amended to negate the use of foreign trusts and partnerships in corporate structures effective from 1 January 2016;
  • Additional ATO funding for black economy audit and compliance programs;
  • Changes to the GST treatment of digital currencies (from 1 July 2017) and changes for payments on sales of new residential premises (from 1 July 2018);
  • The Medicare levy will be increased by 0.5% to 2.5% from 1 July 2019; and
  • Faster higher education repayment and threshold changes from 1 July 2018.

Thomson Reuters Checkpoint is the industry leader providing intelligent information to tax and accounting professionals in Australia and worldwide — including expert research, guidance, cutting-edge technology and tools, learning, and news in a variety of formats. Checkpoint is relied on by thousands of professionals around the world to understand complex information, make informed decisions and use knowledge more efficiently.

To register for a copy of the Thomson Reuters Checkpoint Special Budget Report, please click here.

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Silke Marsh
Head of PR, Asia Pacific, Thomson Reuters
Tel: +61 404 763 797