The Australian Institute of Company Directors’ Louise Petschler provides a monthly round-up of the Advocacy team’s key projects and issues.
Enterprise Tax Plan Bill
The Australian Institute of Company Directors (AICD) provided a submission to the Senate Standing Committee on Economics’ enquiry into the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (Cth). Through our submission, we restated our view that if meaningful changes are to be made, government must pursue holistic tax reform across a range of channels, not just through company tax.
The AICD considers tax reform to be a priority issue for the nation. Tax reform was a central component of our national reform document Governance of the Nation: A Blueprint for Growth released earlier this year.
We propose lifting the rate of the goods and services tax (GST), substantial compensation for low and middle income earners to offset the GST boost, new incentives to drive reform of inefficient state taxes, fairness measures to reduce excessive benefits currently flowing to high income earners, across-the-board reductions in personal income tax rates and a staged reduction in company tax rates over time.
On balance, our submission supported the passage of the Bill which, among other things, proposes a reduction in Australia’s company tax rate which is uncompetitive by international standards.
Charity Annual Information Statement
The AICD has provided a response to the Australian Charities and Not-for-profits Commission’s (ACNC) consultation on the format of the Annual Information Statement (AIS). While some of the changes proposed represent legitimate opportunities to clarify questions and improve the information collection process, others presented reason for concern. The ACNC has proposed including a declaration which would require charities to declare their compliance with the ACNC’s governance standards. The AICD expressed concern that such a declaration would be difficult, if not impossible, for the preparer of the report to make and would impose unnecessary and excessive regulatory burden on the sector. Further, such an addition would be inconsistent with the ACNC’s established regulatory approach and the intent of its enabling legislation.
Many of the proposed changes relate to data collected for the 2014 reporting period. However, significant changes have been made in the 2016 AIS, the benefits of which have not yet been fully realised. On these grounds, the AICD is concerned that some of the proposals may be premature or otherwise not based on current data.
The AICD is also concerned that a number of the proposals go beyond what is within the ACNC’s power to collect. The ACNC only has the power to collect information from charities where the questions meet a set of particular criteria, and the ACNC has not been able to demonstrate in its consultation that these criteria apply.
Communicating audit findings
The AICD recently responded to the Australian Securities and Investments Commission (ASIC) on their consultation paper: Communicating audit findings to directors, audit committees or senior managers.
The paper sets out proposed criteria that ASIC would apply in determining which findings from its review of audit files it would communicate with directors, audit committees or senior managers of the entities concerned, to operationalise a legislative power that has existed, unused, since 2012. ASIC also outlined its proposal to inform the directors of an audited entity if the regulator is conducting a routine review of the firm’s audit files, with ASIC encouraging directors to seek information from auditors on any issues that may arise. The AICD expressed general support for the policy aims of the consultation. As ASIC intend to develop a “regulatory guide”, the AICD identified several areas that may warrant further review, and could be explored in roundtables with stakeholders:
- Greater clarity on ASIC’s priorities in applying the proposed criteria;
- Formalising a process for liason with auditors on proposed communication, which we envisage would occur prior to contact with directors or officers;
- Expectations on timeliness of communication, versus the timing of the audit inspection program and company reporting cycles;
- Interaction with continuous disclosure obligations where relevant; and
- ASIC’s proposed approach to circumstances where a disagreement exists between the regulator and an auditor.
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