BDO Tax Partner Mark Molesworth said: “The government is setting out its priorities by where it’s spending its money but one of those priorities is not looking after the revenue side of the equation.”

“The Treasurer is banging on about consecutive surpluses, but he’s really banking on the benefits of high commodity prices and not using those funds as a bridge to reforming the tax system,” he said.

“Any reform of the tax system is potentially going to have a period of reduced revenue, particularly if you’ve got to compensate taxpayers who will be worse off under that reform. He could be choosing to use some of this additional collected revenue as a bridge to that reform, but has chosen not to.”

Instead of tax reform, the government has turned its attention to a tax crackdown, with foreign investors set to face new capital gains tax rules.

“It looks like they’re going to change the definition of what taxable Australian property is and what non-residents actually pay Australian capital gains tax on,” Molesworth said.

“There are also additional notification requirements. At the moment, if you’re selling land, you’ve got to tell the Tax Office before you sell, but if you’re selling shares or units in a unit trust, you don’t have to tell the ATO in advance. Now, if you’re selling shares for more than $20 million, you will have to tell the ATO that you’re doing it in real time.”

Wealthy individuals, small businesses, multinationals and blatant tax evaders can also expect more visits from the Tax Office, with the government extending a range of compliance programs to claw back additional revenue.

“Instead of tax reform, we get a tax crackdown,” Molesworth said.

“The key message is that the ATO is here to stay in your life. Having to deal with the Tax Office is just a cost of doing business. Everybody should be expecting to see them.”

If the Government is committed to positioning Australia for “lasting transformational change”, should a tax system that operates in the best interests of all Australians, with a reduction in red tape, not be part of the change?

Read more of BDO’s Federal Budget 2024 expert analysis and commentary:

The backdrop for this year’s budget

Amid global inflationary pressures, the Australian economy has experienced a period of price instability and low growth. As inflation in most advanced economies remains above central bank targets, fiscal measures used to apply downward pressure on the price of goods have strained disposable incomes, as everyday Australians experience a cost-of-living crisis. Read more.

A Future Made in Australia

Whilst FMIA has some welcome initiatives, in particular the PTC, its principles are a stark contrast to the open market-based economy espoused by the Hawke/Keating Labor Government. Read more.

Temporary extension of the instant asset write off

Australian businesses require consistency and certainty to plan and invest in the future. BDO urges the Government to legislate a permanent increase in the instant asset write off threshold rather than this band-aid approach of ever-changing temporary threshold increases. Read more.

Small business support measures

Small business owners are the backbone of Australia’s economy and BDO welcomes support for these taxpayers. While these measures do not provide significant reform, we recognise they will help equip small business owners with the tools to become more resilient and improve the options available to help recover outstanding debts and improve cashflows. Read more.

Stage 3 tax cuts

There is nothing new and exciting to see here as all the measures discussed are in line with previous announcements. While the cuts will lead to more money in the pockets of every Australian who pays tax, the relentless nature of bracket creep means we will be here again soon – unless the Government commits at some point to index the tax thresholds as well as HECS debts. Read more.

Superannuation contributions to apply to Paid Parental Leave

The announcement of this Budget measure was previously released by the Government on 7 March 2024. It was announced alongside the release of the Working for Women strategy, which focuses on achieving gender equality. BDO is pleased to see the announcement of this measure, which will reduce the impact on retirement incomes for women who take time out of paid work to care for children. Read more.

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