Is Australia’s tax system still the third most complex in the world?

Written by Mark Thomas

25 September, 2019

Changes to the way GST is paid for certain property transactions will impact purchasers, suppliers and their representatives. From 1 July 2018, most purchasers will be required to pay a withholding amount from the contract price at the date of settlement.

This is an example of marginal changes to the tax system.  The ATO will be presenting on these and other tax changes at the upcoming Property Buyer & Investor Expo.

Widespread, wholesale tax reform in Australia has not occurred since the introduction of the Goods and Services Tax in 2000. The Henry Tax Review (2008-2010) identified 138 areas for significant reform to Australia’s tax system over the next 10 to 20 years.  

Some have suggested that “less than justice” was done to the Henry review and called for bold ideas beyond a focus on piecemeal reform through company tax cuts.

Australia’s tax system is very complex, making the process of self assessment tricky, if not dangerous, for the average person to remain compliant.

The Sydney Morning Herald recently reported “Australia has more than 125 taxes at a state and federal level, but 90 percent of revenue is raised through just 10 of them. The pressure is now on to tear up the system and start again.”

So what’s being done about it?

The PricewaterhouseCoopers’ tax plan released in October 2018 kicked off a discussion over the future of income tax in Australia as the population ages and there are less people working.

The Henry review found in 40 years’ time there would be just 2.7 people of working age for each person aged 65 years or older, compared with 5.0 people today and 7.5 people 40 years ago.

Consequently, a broader discussion amongst Australia’s top economists began arguing that increasing the GST base, death taxes, and a transition to land tax from stamp duty should all be on the table.

“After 27 years of uninterrupted economic growth, Australia has become complacent,” said Business Council of Australia chief executive Jennifer Westacott.

Former second tax commissioner Richard Highfield said in the eight years since the landmark Henry tax review, structural issues have not been resolved and costs are growing, with lost revenue blowing out to $8 billion a year, according to the Australian Tax Office.

 “We have a very poor mix and too many taxes, which result in enormous compliance costs and a lot of administrative pain for little gain.” Mr Highfield said.

No real reforms have been made since then.

Core to the problem is that these complex tax laws increase the chance of taxpayer error in self-reported tax assessments such as those done by Australian taxpayers.  

We have arranged for ATO Director of GST Property Risk, Loretta Bishop-Spalding to speak at the Property Buyer & Investor Expo on October 26th & 27th.

Get the facts on your property tax at the upcoming Expo

This year, the ATO have experts at the ready to help you out with your property tax queries. 

Want to know: 

  • if GST at settlement applies?
  • how capital gains tax works?
  • if you’re eligible to use the margin scheme?
  • if you need to register for GST when selling property?
  • what you can and can’t claim for rental properties?
  • tax rules for foreign investors?

 “It doesn’t matter if you’re an experienced investor, developer or a first time buyer or someone who helps people through these processes like a conveyancer, it’s best to know what your tax obligations are before making decisions,” says ATO Director of GST Property Risk Loretta Bishop-Spalding. 

Come along and talk to the ATO at the upcoming Property Buyer & Investor Expo. Get your tickets here.