Revised tax policies ‘wishful thinking’ as budget announcement looms

Tax professionals have little to no clarification on the inclusion of holistic tax policies or measures in the federal budget ahead of tomorrow’s announcement.

BDO tax partner Mark Molesworth said when asked by clients about potential tax policies, his answer was: “I’ve got to tell you, about tax, there is almost nothing that has been pre-announced.”

Molesworth said based on the uncertainty surrounding tax in the upcoming budget, it was unlikely for measures of any sort to be announced.

“It seems really unlikely that the government is going to use this budget to lay out a comprehensive tax policy that they will then take to the electorate,” he said.

“This is neither renovate nor detonate. This is slapping a coat of paint on what we’ve already got and get it ready to sell. In that vein, we expect to see re-announcement of measures that have already been announced such as, the release of payday super legislation, late last week. Or the provision of further financial help to the masses.”

Despite a lack of communication from either party towards tax reform or the introduction of new measures and policy, the tax professional said they would continue to push.

In its pre-budget outline, The Tax Institute said the key to good tax policy in 2025–26 relied on dedicated funding and better consultation.

Julie Abdalla, head of tax and legal at The Tax Institute, said the budget needed to highlight the value of consultation and the crucial role that adequate government funding played in good policy design.

“The continuous maintenance and development of the taxation system is of utmost importance and should be accounted for accordingly as a focus in the federal budget 2025–26,” she said.

“It is essential that the Treasury and the ATO receive sufficient permanent funding to design and implement the systems necessary to efficiently develop and administer the law and improve the experience for all taxpayers and practitioners dealing with the tax system.”

According to The Tax Institute, adequate funding outlined in the budget would ensure the Treasury was equipped to address the extensive list of announced but unenacted measures (ABUMs) and future arising policy priorities.

It would also ensure the Treasury could provide the needed advice and analysis on various fiscal policy measures.

Abdalla also said additional funding for the ATO under the law design and practice branch was more important than prioritising taskforce-based funding.

This would extend and boost review and audit programs, technology teams, and other crucial teams.

“An increase in permanent funding would provide the Treasury with the resources required to respond to evolving economic and stakeholder circumstances and would better enable the ATO to implement and provide more timely guidance on new measures,” she said.

“ABUMs that linger for years are bad for the system, creating uncertainty and fostering inefficiencies. As a matter of good system maintenance, the government should commit to progressing or abandoning each ABUM in this budget, as part of a holistic review of the tax and superannuation systems.”

Furthermore, The Tax Institute outlined the need for better public consultation following significant implications from lack of consultation in the proposed amendments to the Treasury Laws Amendment Bill 2023.

The changes, first proposed by Greens senator Barbara Pocock on 8 November 2023, looked to insert a series of new breach reporting rules for registered tax practitioners.

The measures were not released in exposure draft form for public consultation, and the amendments were tabled and passed without an accompanying explanatory memorandum, and the usual process of public consultation foregone.

Abdalla said the measure caused enormous angst for tax professionals, the majority of whom sought to uphold the highest ethical standards.

“Unintended implications have resulted from the lack of engagement with affected stakeholders that could have been addressed through consultation,” she said.

“Public consultation should be undertaken for all significant changes to the law. Poor tax law design and a lack of consultation often leads to poor or unintended outcomes for everyone involved.

“Any amendments to the law must be considered holistically and be based on sound and considered policy.”