MY MONEY

Why it's time to review Australia's tax system

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What sort of tax system do we as a nation want? Is the tax burden fair? Is the system too complex?

These are some of the big questions asked by Treasurer Joe Hockey in late March as he launched the government's long-promised review of our tax system. The centrepiece of the exercise is a lengthy discussion paper, titled Re:think, which outlines the way the system works and flags areas of potential reform.

To help frame the debate, 66 questions are asked in the discussion paper, seeking community feedback on almost every aspect of the tax system.

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Among the topics raised are many that have the potential to impact on the lives of all of us as we move through the workforce, buy and sell assets and head towards retirement:

- Should the benefits of negative gearing be restricted or removed altogether?

- Is the current 50% capital gains tax (CGT) discount still appropriate?

- Does the rate of GST need to be increased, or the scope of the tax broadened, or possibly both?

- Is our super system too generous?

Should we still receive a tax credit on every dividend paid to us by Australian companies?

Is our system of tax deductions for things such as self-education and workplace expenses too generous? Would some form of standard deduction be fairer and simpler for us all to understand?

You can read the discussion paper at the website bettertax.gov.au and contribute to the conversation by emailing a submission to bettertax@treasury.gov.au. You have until June 1, 2015, to get your submissions in.

Later in the year, the government will issue a green paper setting out its preferred options for change. There'll be another opportunity to get involved in the conversation at that point before a set of final proposals is issued in a white paper early next year. Those proposals will then be taken to the 2016 federal election for us all to vote on.

So if you have strong views about our tax system, now is the chance to speak up and be heard.

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Mark Chapman is director of tax communications at H&R Block, Australia's largest firm of tax accountants, and is a regular contributor to Money. Mark is the author of Life and Taxes: A Look at Life Through Tax.
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