INTHEBLACK April/May 2024 - Magazine - Page 20
F E AT U R E
“Australia’s tax system is complicated. You have two
different rates for companies depending on how
large you are. As we look at the future with a declining
population paying tax, the burden on individuals is
becoming increasingly unfair.”
ELINOR KASAPIDIS, CPA AUSTRALIA
Australia’s 10 per cent GST rate sits well
below the OECD’s global average 19.5 per cent
consumption tax rate, with the standard GST
rate in more than two dozen countries
now between 20 and 25 per cent.
“Revenue should be raised through
reducing exemptions in the goods
and services tax base and consideration
should be given to raising the rate.
To offset any regressive effects, compensation
to low-income households should be
provided,” the OECD report says.
LISTEN
to an audio
recording of
this story
READ
an INTHEBLACK
article on payroll
tax reform
READ
an INTHEBLACK
article on
the Malaysian
Budget 2024
20 INTHEBLACK April/May 2024
BROADEN THE TAX BASE
The Intergenerational Report 2023 from the
Australian Treasury highlights the need for
tax reform. The report notes that structural
changes to the economy are projected
to increase pressure on Australia’s revenue
base over the coming decades.
Treasury predicts that changing consumer
preferences, rapid technological advances,
global efforts to decarbonise and a more
complex global strategic outlook will
reshape the economic environment over
the next 40 years.
For example, tax receipts from
traditional revenue sources such as fuel
excise and tobacco excise are expected
to decline over time. Global demand
for bulk commodities, and, therefore,
reliance on them as a source of company
tax revenue, is also expected to fall.
Treasury notes that, in the absence
of policy changes, its projections show
an increasing reliance on personal income
tax. However, the report also predicts that
the percentage of Australians paying tax
will decline as the population base ages.
“Only 12 per cent of Australians aged
70 and over pay income tax, and this age
group now makes up 12.2 per cent of
the total population. This age group is
expected to increase to 18.1 per cent
of the total population in 2062–63,”
the report says.
In the Federal Budget 2023–24,
the Australian Government
announced plans to implement
key aspects of Pillar Two of the
OECD/G20 Two-Pillar Solution
to address the tax challenges arising
from the digitalisation of the economy.
Pillar Two introduces a global minimum
effective tax rate where multinational
enterprises with consolidated revenue
of €750 million (A$1.24 billion) are subject
to a minimum 15 per cent tax on income
arising in low-tax jurisdictions.
STAGE 3 AMENDMENTS
Another major change to Australia’s tax
payment structure will come into effect
in July 2024. The amendments made by
Labor to Stage 3 tax cuts will change the
legislated rates by reducing the 19 per cent
tax rate to 16 per cent for taxable incomes
between A$18,201 and A$45,000. They will
also reduce the threshold to which the
30 per cent tax rate applies from A$200,000
to A$135,000.
The existing 37 per cent rate, which
Stage 3 was to abolish, will instead be
retained and will apply to incomes between
A$135,000 and A$190,000. The top rate
of 45 per cent will remain for incomes above
A$190,000, rather than the A$200,000
level envisaged under Stage 3.
