CPA Australia Calls For Tax Reform Changes

by Mary Swire, Tax-News.com, Hong Kong

12 February 2002

CPA Australia, one of the country's leading accountancy firms, has issued a number of proposals for changes to the Australian tax system in a report entitled 'Tax Reform- The Road Ahead.

The report, which will be presented to Prime Minister John Howard and Revenue Minister, Helen Coonan, suggests that the gap between personal and company taxation levels should be closed in order to stop taxpayers from evading tax through the creation of trusts and companies.

Senior Tax Counsel with CPA Australia, Paul Drum observed over the weekend that the government is losing significant amounts of revenue as a result of the discrepancy between the 47% top personal income tax rate and the 30% company tax rate: 'If you make the alignments, people won't start looking for options to alienate income through things like companies and trusts,' he argued.

The CPA Australia report also recommended the reduction of the number of income tax brackets from five to three in order to alleviate the impact of bracket creep.

However, the accounting group warned that the government's programme of tax reform is in danger of stalling due to a lack of co-ordination within the government itself, and communication with Australian businesses.

'We need to see an enunciation of the basic principles driving the federal tax reform agenda,' explained CPA Australia's Chief Executive, Greg Larson. 'We need to see these basic principles translated into policy proposals supported by the government, and we need to see real co-ordination and project management in what is an enormously complicated task.'

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