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One of the few surprises last week will have to be examined for unintended consequences once the details are released, says Gavan Ord of CPA Australia.
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Budget: Share buy-back change ‘needs scrutiny’
01 November 2022
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Changes to the treatment of off-market share buybacks was one of the few surprises in the budget and the tax profession is keen to ensure it avoids unintended consequences, says CPA Australia senior policy manager Gavan Ord.
But speaking on the latest Accountants Daily podcast, Mr Ord said the tax profession could welcome a range of funding measures to finesse regulation, in particular extra funding for the TPB and the Modernising Business Registers program.
Mr Ord said there was insufficient detail to assess the off-market share buy-back proposal, which aligns their tax treatment with on-market buy-backs by ruling out a dividend component. The measure, which applies from budget night last week, would reap $550 million over four years.
“This was one of the surprises in the budget and in the lockup, it was a point of conversation — ‘Where did this come from?’”
“There’s very little detail to date … hopefully we will see detail very soon. But I would say from what we can read it is an integrity measure, which means possibly the Treasury or the ATO have got some concerns about off-market share buybacks.
“That's reflected in the announcement that the policy actually begins on budget night – it's pretty traditional for an integrity anti-avoidance measure to begin on the day of announcement.
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“We hope that over the next few weeks and months to learn more about this measure and what it means and how it could impact the larger businesses and super funds. We want to make sure that whatever they put forward doesn't have unintended consequences.”
Mr Ord said the money directed to ATO compliance programs were extensions of existing programs rather than fresh initiatives and would help the office meet declared goals on the shadow economy, rental claims and the widely flagged crackdown on multinationals.
But he highlighted the relatively small amounts directed at regulatory bodies — including the AASB, MBR and TPB — as important positives. The significance of the $31 million directed at the TPB went beyond the $82 million it was expected to raise over four years, he said.
“That's to us a positive because in the past, the ATO used to do that work. This is a clear delineation between the role of the TPB and the ATO, and that's something we've been pushing for quite some time. The TPB is a regulator of tax agents, not the tax office.
“And, obviously, we do want those high-risk agents under closer scrutiny and we do want those unregistered agents out of the system.”
The $7 million directed at the Australian Accounting Standards Board to develop climate reporting standards for large business was also a “positive” he said, while the $166 million over four years towards the MBR program would hopefully help more directors complete the process of getting their IDs, due by November 30.
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