Tranche 2 needs extended consultation to avoid hefty correction costs: CPA Australia

CPA Australia has expressed its concerns with the brevity of the consultation period for Treasury’s second tranche of its CGT and negative gearing draft legislation opened on 6 August in its latest submission to Treasury, saying that the consultation period of around two and a half weeks is inadequate for the scale of these proposals, which could bring about significant correction costs.

The body recommended that the consultation period for the second tranche be no less than four to six weeks due to its technical complexity.

CPA Australia said that a longer consultation period is crucial to allow practitioners the time to properly digest the materials and share their thoughts with Treasury.

It stressed that practitioners must be given adequate time to “apply the rules against real client structures” to provide meaningful feedback.

In its submission, the body said that it is concerned with the consultation time frame, consultation on remaining tranches, particularly for the tax consolidation time frame, and the need for adequate consultation on the remaining tranches.

“Given the fixed commencement of 1 July 2027, it is essential that the tranche dealing with consolidation and rollovers is released early enough, and consulted on for long enough, to allow proper analysis and system readiness,” the submission read.

It also recommended that Treasury publish a timetable for all remaining tranches and provide an extended consultation period for the tranche dealing with tax consolidation and CGT rollovers, and defer the 1 July 2027 commencement if the remaining tranches are not settled with adequate lead time.

“The material is highly technical. It introduces, among other things, ‘deferral realisation events’ and ‘deferral exemptions’, a compounding apportionment methodology, membership testing periods for trust beneficiaries and members, an apportioned indexation factor for individuals with mixed residency, and a substantial body of amendments integrating attribution managed investment trusts into the regime,” the submission read.

The alternative, the submission said, is the risk that technical defects go unidentified until after enactment, when correction costs are higher.