The NTAA recently contributed to a joint submission by the peak professional accounting, tax and superannuation bodies in Australia to the Senate Standing Committee on Economics regarding the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 (‘the Bill’).

The Bill makes changes to the Luxury Car Tax Act 1999, extends the mandatory notification period within which the ATO must notify a taxpayer of their decision to retain a business activity statement refund, and (most concerningly) denies tax deductions for the general interest charge (‘GIC’) and shortfall interest charge (‘SIC’).

A copy of the joint submission is on our website — click here.

The joint submission discussed the proposed non-deductibility of the GIC and the SIC, and it outlined in detail various concerns in relation to this proposed measure.

In fact, the joint submission stated at the outset that Schedule 2, which makes SIC and GIC non-deductible, should be removed from the Bill.

As noted in the joint submission, the argument for making SIC and GIC non-deductible is that it increases the cost of tax debt, thus encouraging the likelihood of tax being paid on time and/or increasing incentives for all entities to correctly self-assess their tax liabilities.

The joint submission nevertheless also noted that it is unlikely that increasing the cost of SIC will impact an entity’s ability to correctly self-assess their tax liability, and the current cost of GIC means that many taxpayers already have a strong incentive to pay tax on time. Making SIC and GIC non-deductible will inappropriately increase the compliance costs of honest taxpayers. It will also disproportionately impact small businesses.

We will continue to keep members informed in relation to this important development.

Editor: As stated in the November 2024 edition of Voice, we had also previously made a separate written submission to Treasury, in which we outlined in detail our concerns in relation to the (then) exposure draft legislation denying deductions for the GIC and the SIC.

Unfortunately, it appears the Government has not taken our most recent concerns on board, as detailed on page 4 of this edition of Voice.