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ACOSS: Australia Should Strengthen Tax Base

Thursday, March 10, 2016

The Australian Council of Social Services (ACOSS) has called on the Government to use the Budget to strengthen the income tax base, reform inefficient tax concessions, and overhaul the capital gains tax (CGT) system.

Publishing ACOSS's pre-Budget submission, the Council's CEO, Cassandra Goldie, said: "Genuine tax reform is not about raising or lowering tax rates: it should begin by limiting unfair tax breaks and unintended loopholes that mainly benefit people who are on higher incomes and erode the tax base. These are well known and include superannuation, investor housing tax concessions, and the use of company and family trusts, which enable people to avoid paying their fair share of tax."

According to ACOSS, "income taxes are the fairest way to raise public revenue and governments should strengthen that tax base, not undermine it." It recommended that that the income base for the Medicare Levy should be broadened to cover "tax-sheltered income" and that the Seniors and Pensioners Tax Offset should be restricted to pensioners.

In addition, ACOSS would like to see superannuation fund earnings taxed at the same 15 percent rate in the "pension phase" as in the "accumulation phase." It argued for private trusts (both discretionary and fixed) to be taxed as companies, and for income tax deductions for expenses relating to investments in assets yielding capital gains to be limited to income received from those assets from January 1, 2017.

ACOSS also called for the removal of capital gains tax (CGT) concessions for small business assets. These concessions include the additional 50 percent discount for the disposal of such gains, the exemption for gains on assets held for over 15 years, and the exemption for gains used for retirement purposes.