In response to the Assistant Treasurer and Minister for Financial Services’ call for ideas and priorities for the 2024-25 Federal Budget, BDO has advocated for meaningful holistic tax reform.

In line with its 2023-24 Pre-Budget Submission, BDO has also detailed key recommendations that could be implemented in the existing tax system in the interim.

BDO’s National Leader for Tax, Neil Billyard, said these recommendations have been compiled after careful assessment of Australia’s tax landscape.

“Tax reform is a complex issue, but we need to have a meaningful conversation around it and there is no better time than the present,” he said.

“There is an opportunity here to ensure that the tax system in Australia is fit for purpose in collecting sufficient tax revenue to fund necessary government activities and ensuring that tax is collected from the most appropriate sources.”

The need for tax system reform in Australia

Australia, like many other countries, is heavily reliant on income tax.

Holistic tax reform goes beyond the debate on income tax rates for different groups of individuals; rather, it is a review of the tax system in its entirety to ensure it is unambiguous and provides a fair and efficient means of revenue for the Australian federal and state governments.

Individuals bear a very high burden for the funding of our tax system and a larger look needs to be taken at the sources of tax, the rates and tax mechanisms, in order to maintain Australia’s attractiveness as a business and investment destination and incentivising growth in business and employment activity. By doing this, the Government would also reduce the burden on individuals, with positive impacts on the cost of living.

 Key recommendations for the 2024-25 Federal Budget

BDO has focused on areas of tax reform that specifically affect its clients, who represent a broad cross-section of Australian households, businesses and industry. These include:

• Lowering the corporate tax rate
• Finalising the rewrite of the provisions of Division 7A
• Review of superannuation caps
• Review and revision of the Imputation System
• Review of trust taxation rules
• Review of the suite of small business income tax concessions and small business capital gains tax concessions
• Abolishment of Fringe Benefit Tax (FBT)
• Amendment to Capital Gains Tax (CGT) events in relation to unit trusts.

These recommendations are effective measures to encourage:

• Increased economic activity
• Prosperity of our country
• Reduced barriers to international businesses, increasing competitiveness
• Job creation.

To learn more about this submission or enquire about tailored tax advice, read about BDO’s available tax solutions and reach out to any of our team should you have any questions.

Interested in Federal Budget insights? Stay up to date with the 2024 Federal Budget, and subscribe to receive our expert commentary.