1. Index personal tax rates

The taxpayer-friendly threshold changes in this year's budget were well received but the problem of bracket creep remains. Linking tax thresholds to the consumer price index (or an average wage) would ensure the benefits do not dissipate over time and provide taxpayers with further incentive to declare all personal income.

2. Reduce operational rules and clarify policy intentions.

Tax law additions have clouded overall objectives. Rules that overlap, are non specific, have been made redundant by new developments or are never enforced should be deleted. Tax legislation could receive big reductions without altering its purpose. Simplifying tax laws in ways that are not revenue-neutral should also be considered.

3. Foster innovation by encouraging business spending on research and development.

Providing tax concessions for research and development costs would boost the competitiveness of the manufacturing sector by increasing the incentive for long-term investment.

4. Reconsider the tax treatment of corporate losses.

Business competitiveness would improve if company losses were treated with less severity by the tax office. Relaxing continuity-of-ownership rules relating to tax loss would encourage investment and promote innovation.

5. Reduce the gap between the corporate tax rate and the top personal rate.

Removing the incentive to split income is an important part of reducing the tax system's complexity.

6. Develop a better understanding of the costs of tax compliance.

No one knows exactly how much it costs business to comply with tax law. A better understanding of the underlying costs (for example, payments to accountants, lawyers and others) would ensure that the tax burden is no more onerous than necessary.

7. Reduce State taxes.

The introduction of the GST in 2000 permitted the reduction of state taxes but much more needs to be done. Stamp duty and payroll tax remain serious concerns. Abolishing stamp duties would provide a big boost to efficient asset allocation and businesses' competitiveness.

8. Reform capital gains tax.

Investors are charged the same rate of tax regardless of how long they have owned an asset. Implementing a sliding scale (with the amount of CGT decreasing over the period an asset is held) would encourage long-term investment and increase the value of retained earnings.

9. Develop a better system for testing new tax laws and reviewing existing ones.

Improved processes for determining the appropriateness of new tax laws will reduce the amount of guesswork required. Increase the Board of Taxation's responsibilities to review new laws after their implementation.

10. Assess alternatives for funding future tax rate cuts.

Seriously consider plans such as the removal of the dividend imputation scheme to offset losses in revenue from tax cuts. A change of policy regarding the size and sustainability of future budget surpluses would also be appropriate

Source : Accountants Survey - BRW, 26 October 2006