Login
iscover
The federal government’s temporary Budget Repair Levy will simply encourage high-income earners to defer tax payments, according to national accounting and advisory firm William Buck.
Newsletter
William Buck warns of tax avoidance
15 May 2014
•
8 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The temporary levy will mean that from July 1, earnings over $180,000 per year will incur a tax rate of 49 per cent for the next three years, up from 47 per cent.
However, Greg Bonthorne, tax director for William Buck, said the introduction of the repair levy may actually decrease the amount of tax that high-income earners will pay over the next three years.
“Approximately $3.1 billion is expected to be generated from this levy over four years; however, this figure could be greatly reduced,” said Mr Bonthorne.
“We believe this levy will encourage high-income earners to seek clever ways to decrease their tax bills by deferring dividend payments and seeking the use of more complex tax structures to reduce their tax liability.”
Moreover, the levy will increase the discrepancy between the corporate tax rate and the highest marginal tax rate for individuals, which, according to Mr Bonthorne, will encourage tax avoidance.
“In my opinion, this is simply unworkable and will encourage tax avoidance. Policies that share the burden such as a broader consumption tax need to be the focus,” he said.
==
==
“Australia has one of the highest personal income tax rates in the world. This new levy encourages high-income earners to focus on clever tax structuring and planning rather than business growth,” Mr Bonthorne said.
From July 1, the discrepancy in tax rates will increase to 20.5 per cent, up from the current 16.5 per cent.
You are not authorised to post comments.
Comments will undergo moderation before they get published.