Henry Review to grapple between simplicity and significant change
The Henry Review could grapple between the goal for a simpler Australian taxation system and making significant changes that might split labour and salary income from investment and saving income.
Referring to a speech made by Ken Henry in October 2009, tax expert Tony Frost of Greenwoods & Freehills said there is a sense Treasury is keen to see significant change in the system of "taxing all income in a bucket".
"What they might do - perhaps - is have a system where labour income and salaries is taxed in one bucket, and income from savings and investments is taxed in another bucket," Frost said.
Frost noted that Henry said the review would look more closely at simplicity in the taxation system. He said Henry is aware that simplicity has received little attention in previous reviews and asserted that as a result the Australian taxation system is out of control.
"We have been saddled with a system that for our size is over-complex. There is a sense that they would like to simplify it. But if you are going to do that, how does simplicity fit in with going to two systems of income tax?" Frost noted.
"There's an inherent tension between trying to make the system simpler and then trying to tackle income in different ways."
He noted, however, that history had shown that any significant recommendations take some time to be implemented. Referring to the last comprehensive review of the taxation system, which was the Asprey Review in 1975, Frost said, "A lot didn't happen until 2000".
He added that reviews of this kind were significant undertakings.
"I expect that there will be a lot of recommendations and realistically you can't expect any current government to do much more than start on it."
Recommended for you
Scarcity Partners believes the dynamics playing out in the managed account and outsourced chief investment officer market are “here to stay” based on positive developments in financial advice.
Former executive chairman of failed stockbroker BBY, Glenn Rosewall, has been charged with aiding, abetting, counselling or procuring BBY’s dishonest conduct in relation to a financial service.
Fidelity International research has revealed Australian investors are significantly more optimistic about the market outlook and feeling more comfortable than their APAC peers, despite ongoing market volatility.
MLC has partnered with TAL and Challenger on a retirement solution, the first in a series of retirement income offerings for advisers to be launched over the next 18 months.
