The tax and accounting interface: How to build a transformational tax system for small businesses using technology as a pathway to reform

Abstract

From time to time there are calls for the alignment of taxable income with accounting income in order to reduce some of the complexity and compliance costs associated with the Australian tax system Such calls are usually rejected. This paper examines whether, in light of the advances in technology and digital take up rates, the benefits and compliance cost savings of applying accounting income to determine tax liabilities for small business now outweigh previous arguments that rejected such proposals. This change would see income tax based upon information taken directly from the digital accounting packages rather than the current practice of requiring small businesses to make complex income tax calculations.