360 Degrees: Your thoughts on 2019 and predictions for 2020
Q. What was the standout event for you as an accountant in 2019? What reforms would you like to see on the table in 2020?
Lisa Tait director, Absolute Business Solutions
Without sounding too political, I would have to say Labor’s federal election loss and the subsequent public rejection of its proposed taxation changes to CGT and negative gearing, as well as ditching franking credit refunds, was the best thing that the Australian public could do this year.
As a nation, we already tax our citizens at one of the world’s highest rates (being 47 per cent). This essentially encourages people to do anything to minimise the amount of tax they pay, and this is usually done via a negatively geared investment property.
However, in a world of historically low interest rates, these losses are now, more often than not, being reduced or turned around to a positively geared situation, which means that the investor doesn’t save as much in tax, but is still contributing to the rental market (along with the risks involved with that).
We need to continue to encourage taxpayers to invest in our nation in order to keep the economy going. Without investors, there would be no properties available to rent and not everyone is ever going to afford to purchase a property in their lifetime – that’s just a fact! As an alternative reform, in my opinion, rather than continually “take from the wealthy to give to the poor” per say, I would like to see an increase to the GST amount, like NZ has done.
To me, this is a fairer way to tax citizens, as the old saying goes “the more you earn, the more you spend”.
Kylie Parker director, Lotus Accountants
Looking back on the physical events I have attended in 2019, I wonder how I ever get any work done. They include Xero Roadshow, MYOB Incite, Microsoft Ignite, AcounTEK.Global Golf day, AWS Summit, IP Australia Summit, Accounting Business Expo, Gocardless Distilled Event, Microsoft 365 Business Summit, UiPath.
Together, Australian Accounting Awards, AFTRS Screen Business Essentials, Easton Wealth SMSF training days, launch of Ivy.co, ALTA.LAW sandbox events, Class Conference, Xerocon, with Accountech.Live and Screen Producers Association still to go. The standout event for me was Xerocon. This year I was invited as media and so was able to speak with people in a different capacity and share learnings around software programs.
The industry reforms I’d like to see are around the AFSL regulations in unlicensed accountants giving tax and accounting advice to trustees of SMSFs. I applaud IPA for their leadership in this area. With so much changing during the digital revolution this is the perfect time to also redesign our tax system.
The taxing point of a company being based on the physical presence of a permanent establishment is now out of date with so many online transactions occurring; the OECD proposal on tax reform should be read given the need to shift taxation from production to consumption.
Ashley Carmichael director/senior client manager, Sky Accountants
Political leanings aside, the standout event of 2019 is the federal election.
For the first time in a long time, there were some significant differences in the tax and economic policies of the two major political parties. In particular, the ALP had developed a number of controversial policies that would affect investment properties and persons/entities in receipt of franked dividends.
It was very much the case that the election result has had far reaching implications for the future direction of tax and economic policies in Australia. With the domestic economy faltering despite multiple interest rate cuts, I would like to see a slowdown in the pace of reform in order to restore confidence and encourage investment and commercial endeavour.
This climate of rapid and sustained change has created considerable uncertainty and a feeling of change fatigue that is further feeding the deterioration of economic conditions. The situation is being exacerbated by domestic events such as the Hayne royal commission and global events such as Brexit.
While there are a number of reforms that I would ultimately like to see, I believe that the best course of action for 2020 is to slow pace of change and to resist “tinkering” with tax laws to reverse this erosion of confidence.
Mitchell Moroney principal, Moroney & Associates
There were many ups and downs as well as uncertainty during the previous 12 months, from the potential fallout from Brexit and the US-China trade war to the unprecedentedly low interest rates by the RBA, but the standout event of the year would be the federal election.
It was pegged as an easy win for the Labor Party; however, Scott Morrison pulled a rabbit out of a hat and led the Liberal Party to a convincing win. I know I, like many other accountants, was on the edge of my seat come election night with the outcome having significant impact on our industry and on all Australians.
Over the next 12 months, I hope that the professional bodies lobby government to review the GST agreement of 1999 between the federal government and the states to abolish all state taxes.
It is now coming up to 20 years after the agreement and yet no state has completely abolished the state taxes as they agreed. As well as a breach of the agreement, it also means that Australians are paying substantially more tax than they should be, and certain state taxes (payroll tax) are directly stifling economic improvement and job creation.