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The Commonwealth government announced on 6 November 2013 that it would "scrap" a series of tax proposals introduced under the previous Labor government, including planned changes to the fringe benefits tax and moves to raise taxes on earnings from superannuation pension funds which it described as "unworkable". Treasurer Hockey and Assistant Treasurer Sinodinos said this was the result of an audit of 96 unlegislated and unresolved tax and superannuation reforms dating back to 2001. Four of those proposals were dealt with by the coalition's plan to repeal the carbon and mining taxes, leaving a total of 92 proposals.
Key points:
- government will keep 18 of 92 unlegislated tax proposals
- remainder to be either dumped, amended or reviewed, a cost of $3.1b to the budget
- cap on self-education expenses dumped
- low-income superannuation tax offset linked to mining tax scrapped
- fringe benefits changes for car industry dumped
- government keeping Labor's tobacco excise increase, raising $5.3b for budget
SMSF trustees have welcomed the government’s decision to scrap the cap on tax-free income streams in retirement.
The Association of Superannuation Funds of Australia said dropping the mooted 15 per cent tax on annual superannuation earnings above $100,000 removed uncertainly around the retirement savings system. Critics noted that the decision to scrap this tax along with the Low Income-earners Super Contribution (LISC) unfairly targets Australia's lowest earners see for example the views of Industry Superannuation Association here.
Generally, commentators suggest that a wider review of tax is needed and that it must be tied to a national productivity agenda - see for example the comments from Stephen Martin of CEDA: VIDEO: CEDA's Professor Stephen Martin speaks with ABC News Breakfast (ABC News)
The Institute of Chartered Accountants Australia today welcomed the government’s decision not to proceed with the $2,000 cap on the tax deductibility of self-education expenses. Chief Executive Officer Lee White said today’s announcement was a win for common sense. “The government must be congratulated for having the foresight to see that this was bad policy. Education is the key to our economic prosperity and this cap would have hurt our productivity down the track,” he said.
The Institute said the government’s announcement related to companies looking to establish offshore subsidiaries is welcomed. “The decision not to proceed with the repeal of interest deductions for companies borrowing to expand offshore will help make Australia an attractive place for international business,” Mr White said.
The government has indicated its intention to resolve all policies relating to the tax backlog by 1 December 2013 for inclusion in the Mid-Year Economic and Fiscal Outlook, with a view to legislation passing by 1 July 2014.
Treasurer Hockey also announced that a tax White Paper would be commissioned such that proposed changes would be taken to an election.
