It would seem over the last few months, tax and finance has stormed to the forefront in the aftermath of COVID-19.  Tax has been at the front and centre of many governments around the world for some time as they grapple with the reality of determining a fair distribution of tax between countries.  With this comes increased government transparency and liaison between tax authorities around the world, so what does this mean for the future?

The Australian Taxation Office (‘ATO’) has been investing heavily in technology in order to improve transparency.  They have done this in order to enhance automation, improve the accuracy and visibility of their tax data and unlock its strategic value.  As our clients often say, the ATO know everything, so there is no point in not being transparent.

However, the work environment and demographic is changing, so how do the younger generation view tax, if at all?

The sad reality here is, much the same as everyone else, that is:  they often don’t think about it until after the fact.  Most have no idea how they will be taxed and how to deal with the money they are receiving.  You see Youtubers, Tik Tokers and Instagramers some making a decent income so it’s little surprise they are considering dropping their textbooks and picking up cameras.  But that doesn’t alter the fact that most of them have no idea that no matter how you earn income, the ATO cannot be escaped.

It doesn’t matter whether you are, a musician, celebrity, or influencer, in Australia, you must pay tax.  The newly introduced ‘Instagram Tax’ from 1 July 2019 is an influencer tax on income made through sponsorships and endorsements including non-cash benefits.  There was loopholes in the former tax system where influencers were minimising their personal assessable income by licensing their fame or image to third party companies and entities.  As their image is used for profit in which they only earn a small percentage (if any), influencers can count this as a loss and lessen the percentage of tax payable.  Within the new tax regime, influencers would not be able to discount this revenue.  It would be added to their taxable income and taxed accordingly.

The Future of Tax is very much focusing on the digital as the ATO together with other revenue bodies around the world focus on the collection of taxes from their various populations (made worse by many countries’ handouts provided as a result of the COVID-19 shutdowns).  As the younger generation become the main source of tax revenue, it is important for them to understand their role in the economy.  Whilst preparing their tax return may be becoming quicker and easier, understanding the laws making up those returns, in order to ensure the information provided within them is correct continues to be paramount.

This is reflected by the ATO’s own data.  With the revamp of MyGov, preparing your own tax return has become even easier.  For the 2020 financial year the ATO received a record circa 740,000 income tax returns on July 1, a record 640% increase on the same period in 2019.  And most of these were submitted using MyGov.  The problem?  Many of them were incorrect as a result of incomplete or unfinalised information.  And this brings us to the material point, understanding the underlying laws, or utilising the expertise of someone who understands the underlying laws can save a lot more than just a few dollars in your refund.  Knowledge brings power (and we aren’t talking the world domination variety here).  This type of financial training is not taught in schools or tertiary education institutions, so how do people learn?  Openly discussing your finances with your children or grand children is an excellent place to start.  Ultimately the question has to be posed:  do young people understand enough about the tax system to be able to fully engage as taxpayers in the debate to see where the future of tax will go, well we really hope so.

Perhaps taking them with you to your next accounting appointment may be a way of igniting some interest.

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