Proposed cashflow tax could raise complexity, warns CPA Australia

CPA Australia has voiced concerns regarding the Productivity Commission’s proposal to present a cashflow taxation (CFT) successful the country.

The nonrecreational assemblage cautioned that the determination would pb to accrued complexity, higher compliance costs, undermine the country’s productivity docket arsenic good arsenic summation outgo for consumers.

Productivity Commission recommended replacing the contiguous institution income taxation with revenue-neutral firm currency travel tax.

Under the projected framework, companies would beryllium taxed connected their nett currency travel alternatively than connected profits. All outlays, including those for investment, would beryllium afloat deductible nether the CFT structure.

CPA Australia Tax Lead Jenny Wong stated that the projected taxation is simply a analyzable hybrid exemplary conflicting with the government’s nonsubjective of simplifying regulations.

She said: “The cashflow taxation is not simplification – it’s a radical, untested experimentation that introduces aggregate layers of complexity. This further taxation volition make uncertainty and disorder for taxpayers and advisers alike.

“This complexity volition thrust up compliance costs, summation administrative burdens and marque Australia’s taxation strategy harder to navigate for businesses already struggling with reddish tape.”

The connection would present an further taxation operation alongside the existent structure, which would rise the wide taxation load for immoderate of Australia’s astir productive businesses, CPA Australia believes.

Wong stated that higher taxation rates for ample corporations whitethorn pull affirmative attraction successful the abbreviated term, but determination is simply a hazard that this could pb to accrued costs for everyone implicit time.

According to Wong, Australia’s firm taxation complaint stands astatine 30%, among the highest successful developed economies.

The caller connection seeks to rise this further to an effectual complaint of 33% and trim dividend imputation credits.

“Adding different furniture of complexity – and higher taxes – sends wholly the incorrect connection to investors and risks driving superior offshore.

“By attacking the strongest businesses contiguous with higher taxes, we weaken the full economy. Small businesses and consumers volition yet wage the terms successful the signifier of higher costs and reduced growth.”

While CPA Australia supports recommendations aimed astatine reducing regulatory barriers and improving argumentation formulation, it is against adopting the cashflow taxation connection owed to imaginable antagonistic impacts connected concern ratio and economical competitiveness.

Wong added: “The Productivity Commission’s connection misses the large representation of broad taxation reform, which the GST should beryllium astatine the bosom of. This connection is simply a taxation drawback with superior consequences for the full economy.”