The OECD recommendations involve providing urgent tax relief to businesses and individuals to redress short to medium-term cash flow problems, and extending latitude to taxpayers regarding compliance and payment obligations. The measures adopted by the Australian Government are broadly consistent with the OECD recommendations.
OECD tax policy recommendations
The tax policy recommendations include:
- Indicating that the travel restrictions currently imposed as a result of COVID-19 should not, of itself, result in the creation of a permanent establishment or a change in residency of a corporate entity or individual;
- Temporarily providing more generous welfare payments and income support;
- Waiving or deferring social security contributions and payroll related taxes;
- Providing concessions for workers in health and other emergency related sectors;
- Deferring or waiving taxes that are levied on a tax base that does not vary with the immediate cycle, such as recurrent property taxes or business turnover taxes;
- Deferring payments of VAT (i.e. GST), customs or excise duty for imported items;
- Increasing the generosity of the loss carry forward provisions; and
- Adjusting required advanced payments on the basis of a revised and expected tax liability.
The overall effect of these measures appears to create a timing benefit for taxpayers through the deferral of taxpayer obligations.
The OECD has also recommended that although the current focus is on liquidity and income support, governments should prepare for the balance of fiscal stimulus and fiscal consolidation once the pandemic subsides.
OECD tax administration recommendations
A central theme in the OECD tax administration recommendations is that taxpayers should be afforded latitude in the current social and economic climate.
The OECD has recommended that taxpayers be granted additional time to deal with their tax affairs, including:
- An extension of deadlines to file tax returns and make payments;
- Remitting penalties and interest;
- Deferral of tax payments;
- Greater access to debt payment plans and extension of existing debt payment plans; and
- Suspension of debt recovery procedures.
The OECD has recommended the revenue authority:
- Provide quicker refunds to taxpayers;
- Suspend existing audit and debt recovery activities; and
- Provide enhanced services to and communication with taxpayers.
The purpose of temporarily easing the administrative burden imposed on taxpayers should reinforce the positive effects of the OECD policy measures previously outlined.
Australian Government response
The measures adopted by the Australian Government and administered by the Australian Taxation Office (ATO) are largely consistent with the recommendations made by the OECD. Download the guide that compares the measures adopted by the Australian Government against the OECD recommendations .
Federal government COVID-19 measures
View a summary of the federal government's COVID-19 stimulus package is at Latest COVID-19 Government stimulus package: new support for business.
