The latest economic statement released by Treasury details the short and medium-term economic outlook for Australia, the challenges ahead, and the path back to surplus – which is now forecast for 2016-17.
Lance Cunningham, national tax director at audit, tax and advisory firm BDO commented that forecasts are exactly that – and they seem to be a moving target.
In this latest statement, Cunningham said there’s not a lot to excite small business. “What’s in this update is a lot of stuff that’s already been announced really. The fact that there’s going to a floating carbon price earlier than previously planned will reduce the cost of energy substantially so that’s certainly going to be a help towards business, reducing costs for business and consumers alike. That has to be a good thing for Australian business, both small and large,” Cunningham said.
“[Cuts] to the fringe benefits tax is going to affect some certain businesses more than others, and will affect certain employees more than others. And that’s something that the electorate will take into account when they look to see that they’re getting a reduced energy bill, but others may feel that they will lose in relation to the benefits they’re receiving for cars,” he added.
BDO was however very welcoming of Treasury’s proposal to defer the start date of the self-education deduction cap of $2,000 for one year, so the government can enter further consultation. “We hope that through that consultation process that either they don’t introduce the cap or there is a dramatic change in the way it’s introduced. But to have just a straight $2,000 cap on all self-education is really ill-thought through by the government,” Cunningham said. He added that there may well have been some people who were rorting system in relation to self-education, but they were few and far between.
“The vast majority of people claiming self education expenses were doing so because they needed to incur those costs for their employment or their business, and to put a disincentive on people to improve their knowledge in relation to their work is just counterproductive to the government’s stated aim of increasing the knowledge of the workforce,” Cunningham said.
The Tax Institute also welcomed the deferral of starting the self-education deduction cap.
“The government has demonstrated that it is starting to listen to community concern by announcing a 12 month deferral to the start date of the proposed $2,000 cap on self-education expenses,” Tax Institute president Steve Westaway said in a statement.
“The Tax Institute has been deeply concerned for some time now by the intention of the government to use such a blunt policy instrument to target certain perceived excessive claims since the measure was first announced in April this year,” Westaway said.
“It has been especially concerning as there are potentially much more suitable alternatives, such as tightening the Tax Office’s administration of the existing law, that could be used to target the so-called excessive claims causing concern to the Government,” he added. “A blunt instrument like the proposed cap unfairly penalises Australians who are endeavoring to improve their qualifications for work or business who are not incurring unnecessarily excessive costs. The decision shows it is starting to listen to the valid concerns of the community,” he said.