2022 IPA Federal Budget Breakfast Q&A Extract Transcript

30 March 2022, Great Hall Parliament House Canberra.

A strong message to the Australian Taxation Office from Assistant Treasurer Michael Sukkar and Shadow Assistant Treasurer Stephen Jones, who confirmed both parties will address the issue of potential retrospectivity of s100A.

This is big news for taxpayers and the profession regarding the treatment of trusts. At the IPA Federal Budget Breakfast in Canberra this morning, the government signalled that legislation could be used if the issue cannot be addressed administratively.

Shadow Assistant Treasurer Stephen Jones responded: "If the interpretation, administration and application of the Act moves beyond that and has ventured into the territory of retrospective legislation, then obviously we would want to do something about that. Blunt answer to your question - yes, we will work with the profession and stakeholders if we think the ATO has moved into retrospective legislation."

Transcript extracts from this morning's Q&A

Tax Deductibility of Tax Advice

Q: Stephen Jones, another policy that you took to the last election was the limit on the threshold for tax deductibility of tax advice at $3000, is that still in your suite of tax policies that we don’t know much about yet?

Jones: At the risk of being boring, if we haven’t announced we’re not doing it.

Q. When will you announce these things?

Jones. And we won’t be announcing it. I’ve seen them and it’s not on our list.

Q. We’re running out of time, when will we hear some detail?

Jones: About all of our policy announcements, Anthony (Albanese) has a speech on Thursday night, the Budget Speech in Reply, we will be spending the next five weeks from then until the 14th May which is my hot tip for when the election will be, laying out the rest of our policies, certainly well in advance of where we have to do that for the pre-election costings.

Instant Asset Write off beyond 2023

Q. The Instant Asset Write Off. It’s gone from $1000 to $15000, to $30,000 to $150,000 and now happy days it’s unlimited. We think it is great policy. Beyond 2023 there is a lot of uncertainty about the future of the Instant Asset Write Off. Any comments?

Sukkar: The Instant Asset Write Off measure has been an incredibly important par of the pandemic response, however we are keeping a close eye on the supply chain pressures which is impacting a business’ capacity to take receipt of an asset

Financial Advice Reforms

Q: Stephen Jones, if the ALP is the win government, what would you do to make financial advice more affordable?

Jones: I have said that stability and certainty will be the hallmark of Anthony’s (Albanese) government if we win in May. We have identified a few areas that actually we need to lean in to. In my own portfolio, the payments space is absolutely in need of reform. These touch and go devices have transformed our payments system. The second area that is absolutely in need of reform is financial advice; the market is cooked. Five years of failed reforms by the government; they’ve made an absolute mess in the financial services space, it needs to be reformed. People have never retired with more money but less capacity to get more advice. So there’s about three or four things we need to do. We’ll be looking at it through the prism of what’s in it for the customer, there’s some things we need to do at the profession side of things; I see that as low-hanging fruit, which is sorting out the qualifications mess, giving some clarity around remuneration, easy stuff to do and we should do that very quickly. That will sort the problem for high-net-worth individuals, basically and those on the cusp of high net worth. At the other end it’s financial counselling. But in the middle, where the vast majority of Australians live, we need new solutions, new market designs and we want to put regulations in place which encourage that and working with the profession and industry to do that.

S100A – Discretionary Trusts

Q: Are you aware of current ATO activity on discretionary trusts and the controversy about a provision enacted by John Howard in the late 1970s. I am wondering if the two parties are prepared, presumably after the election, to consider a policy solution rather than have the ATO inform small businesses around Australia what the ATO thinks is meant by ‘ordinary family and commercial dealings’?

Sukkar: I am very well aware of the issues associated with s100A and the interpretations of the ATO. At first instance, as Minister responsible for the ATO, we always try to achieve and encourage the independent ATO to arrive at sensible outcomes for taxpayers. We’re looking at it very closely, I think any change, not that the ATO would describe it as a change, any change of interpretations that has an adverse impact on legacy structures and legacy transactions we would be minded to address. I don’t want to make that commitment rock solid this morning other than we are looking very closely at it and to remove some of the unintended consequence of that change in interpretation, as I’ve told many people in the audience, we’re minded to address how ever we need to, if that can’t be done administratively, as you suggest, then potentially legislatively and I am looking at it very closely.

Jones: And from our point of view, yes, we are aware and we have received a bunch of correspondence on it. Yes, the ATO would be able to operate in an independent fashion, but if the interpretation, administration and application of the Act moves beyond that and has ventured into the territory of retrospective legislation, then obviously we would want to do something about that. Blunt answer to your question, yes, we will work with the profession and stakeholder if we think the ATO has moved into retrospective legislation.