The Coalition Government inherited 96 announced but unlegislated tax and superannuation measures. It has now decided which of those measures will proceed (some with amendment).
Of the 96 measures, 4 have been dealt with as part of the Government’s carbon tax and mining tax repeal packages. The summary below identifies the 18 announcements that will be enacted, 3 announcements that will be amended and 7 announcements that have been abandoned altogether by the Coalition. The remaining 64 announcements may not proceed but the Government will undertake consultation before making a final decision1.
Initiatives to proceed as announced
- Staged increase in excise on tobacco and tobacco-related products. 12.5% increases in tobacco excise on 1 December 2013 and 1 September 2014, 2015 and 2016.
- Restricting the immediate deduction for the cost of acquiring mining rights so that it is only available for genuine exploration activities.
- Denying access to the R&D tax incentive for large companies with income of $20b or more.
- Phasing out the net medical expenses tax offset.
- Indexing tobacco excise to Average Weekly Ordinary Time Earnings (AWOTE) instead of CPI, from March 2014.
- Closing loopholes in the consolidation regime and preventing entities claiming double deductions.
- Improving compliance through third party reporting and data matching.
- Increasing the threshold below which lost member superannuation accounts are required to be transferred to the ATO from $2,000 to $4,000 and then to $6,000.
- Addressing issues associated with administering Australia’s foreign capital gains tax regime and clarifying the operation of Australia’s taxing rights over indirect Australian real property interests.
- Introducing a new tax regime for managed investment trusts which increases certainty and reduces compliance costs.
- Closing a dividend washing loophole to prevent sophisticated investors ‘double dipping’ on franking credits.
- Increasing the off-farm income exclusion threshold for farmers involved in the farm management deposits scheme.
- Updating the list of specifically listed deductible gift recipients to include Bali Peace Park.
- Updating the list of specifically listed deductible gift recipients to include the National Arboretum Canberra.
- Working towards signing and enacting a treaty status inter-governmental agreement with the US to enable the financial sector to comply with US Foreign Account Tax Compliance Act (FATCA) reporting rules.
- Giving force of law to the revised Australia-Switzerland tax treaty.
- Allowing foreign pension funds access to the managed investment trust withholding regime.
- Extending the conduit income measure to exempt foreign managed funds from tax on gains from the disposal of foreign non-portfolio investments. It also exempts those funds from tax on gains from the disposal of certain portfolio Australian financial arrangements.
Initiatives to proceed with amendment
- Tightening and improving the thin capitalisation rules and changing the exemption for foreign non-portfolio dividends will proceed as previously announced. Abolishing the s 25-90 deduction will not proceed. The government will consult on a targeted integrity rule to address certain conduit arrangements.
- Closing loopholes in the Offshore Banking Unit regime. The Government is not proceeding with the part of the measure that excludes all related party transactions. It will instead develop targeted rules to address integrity concerns.
- Restricting refunds of overpaid GST. Amendments address a recent AAT finding it doesn’t have jurisdiction to consider refund matters.
Initiatives not proceeding
- Amending the fringe benefits tax regime in relation to cars which made it harder for people to have a company or salary sacrificed vehicle.
- Imposing a tax on superannuation pension earnings above $100,000 on assets supporting retirement income streams in the draw-down phase.
- Imposing a $2,000 annual cap on the amount deductible for work-related self-education expenses.
- The creation of the Super Council or the Charter of Superannuation Adequacy and Sustainability.
- Introducing amendments to allow public museums and other eligible entities to import cars free of the luxury car tax.
- Updating the specifically listed deductible gift recipients to include the Tasmanian Centre for Global Learning.
- Separating the low value import threshold for customs duty and GST purposes.