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Federal Budget 2014-15
As expected, from a business taxation perspective, the Treasurer has continued to reposition existing tax policies with no major surprises or changes. The more important focus for business will be the White Paper on the Reform of Australia's Tax System, which will provide a longer term considered approach to tax reform and which is due prior to the next election.
Targeting, streamlining and reinforcing immigration
The Government is looking to achieve savings over the next five years by modifying the size and composition of the 2014-15 Migration Programme.
The 2014-15 Migration Programme will have 190,000 places and maintain the composition of 128,550 Skilled Stream places, 60,885 Family Stream places and 565 Special Eligibility Stream places. The Skilled Stream allocation includes company-sponsored permanent residents and represents 68% of the entire Migration programme. It will continue to focus on Australia’s longer term skills requirements, including addressing labour shortages in regional areas. This targeted approach to directing skilled migration to areas of need should help employers who might struggle to find qualified individuals to work in regional areas of Australia.
The Government will expand the Offshore Biometrics Programme beyond the 20 countries where it currently operates and introduce user pays arrangements for visa services and biometric collection services with third-party service delivery partners. These measures will have some impact for businesses sourcing skilled labour from countries that participate in the programme, but it is hoped they will help improve processing timeframes. The Government will also provide $2 million in capital funding over two years for biometric systems software and equipment to expand the programme.
The Government will cease the Outreach Officer Programme from 1 July 2014. This programme was designed to help businesses build a deeper understanding of visa arrangements that might affect them.
The Government will also provide funding to further streamline visa processing arrangements that are currently available to students enrolled in bachelor, masters or doctoral degrees at participating universities to students who are enrolled in Advanced Diploma-level Vocational Education and Training (VET) courses at eligible TAFEs and other education providers. This measure is designed to support the growth of Australia’s international VET sector, which is seen as a key potential contributor to Australia’s future economic prosperity.
ATO and administrative measures
ATO efficiency dividends – bringing forward of staffing reductions
As announced in the media prior to the Budget, the Government is bringing forward planned staffing reductions within the Australian Taxation Office (ATO) to achieve savings of $142.8 million over three years from 2015-16. The ATO will accelerate the timetable for reducing the first 3,000 roles of a total planned 4,700 positions.
Third party reporting and data matching
The start date of a 2013-14 budget measure “Tax Compliance – improving compliance through third party reporting and data matching” has been deferred until 1 July 2016. Originally intended to commence from 1 July 2014, the measure proposed to require a range of third parties including fund managers, brokers and financial service and property businesses to report on a variety of financial and transactional data.
The recognition by the Government of the obvious compliance costs involved with this measure is welcome. The deferral of the start date will also allow additional consultation with effected entities, and time for impacted entities to adopt processes and systems to ensure compliance with the proposed measure.
Amalgamation of external merits review agencies
In a measure designed to save $20.2 million over four years, the Government proposes to streamline and simplify the Commonwealth external merits review system. From 1 July 2015, certain Commonwealth external merits review agencies will be amalgamated, including, as relevant to taxation matters, the Administrative Appeals Tribunal (AAT).
Prior to the amalgamation, merits reviews of Freedom of Information matters will be transferred to the AAT. We look forward to working through the new arrangements and welcome in particular the potential for more timely processing of, and greater efficiencies in the Freedom of Information review process as necessary.
Inspector General of Taxation to hear tax complaints
In a change to the mandate of the Inspector General of Taxation (IGOT), the Government will transfer the handling of complaints on specific taxation matters from the Commonwealth Ombudsman to the IGOT.
Given the current role of the IGOT is to review and report on systemic tax administration issues, the Government views this transfer as providing taxpayers with a “more specialised and focussed” complaint handing system.
Having had input into previous IGOT reviews, Deloitte welcomes this transfer and the synergies it offers taxpayers.