"Restoring integrity in the Australian tax system" – Dealing with the backlog of backlog of 96 tax and superannuation measures announced but unlegislated
On 6 November 2013, the Treasurer, Joe Hockey, and the Assistant Treasurer, Senator Arthur Sinodinos, announced how the Government will deal with the backlog of 96 tax and superannuation measures proposed but unlegislated at the time of recent general election. The announcement stated that soon after Government was elected, it was advised that 96 tax and superannuation proposed measures (one dating back as far as March 2001) had not been legislated. Four of the 96 have been dealt with in the Government's mining tax and carbon tax repeal packages..
Of the 92 initiatives remaining, 64 further initiatives are going to be consulted on by the Assistant Treasurer. The Treasurer stated that they have a disposition not to proceed with those 64 further initiatives. However, a decision will be made by 1 December this year and the final outcome will be put into the Mid-Year Economic and Fiscal Outlook statement to be released by Christmas. The Treasurer stated that the backlog has created significant operational uncertainty for businesses and consumers.
Of the 92, the Coalition Government is going to definitely proceed with 18 including:
· Anti smoking strategy Tobacco Tax increases announced in the 2013-14 Budget.
· Net Medical Expenses Tax Offset (NMETO) phase out announced in the 2013-14 Budget.
· Managed Investment Trusts – Introduction of a new tax regime for managed investment trusts which will increase certainty and reduce compliance costs.
· Farm management deposits scheme. Increases the off-farm income exclusion threshold and facilitates consolidation of deposits.
· Research and development tax incentive. Denies access to the R&D tax incentive for large companies with incomes of $20 billion or more.
A further 3 initiatives will be significantly amended, including:
· Thin Capitalisation Changes – addressing aggressive tax structures that seek to shift profits by artificially loading debt into Australia - proceed with amendments - The Coalition will not proceed with Labor's proposal to deny deductions made under s 25-90 of ITAA 1997.
· Offshore Banking Unit Regime - addresses integrity issues associated with related party dealings and better targets the regime to genuine mobile financial sector activities. The Government will not proceed with the measure to exclude all related party dealings but instead will develop targeted rules to address integrity concerns.
· Measure to restrict GST refunds - proceed with amendments. Restricts refunds of overpaid GST. Amendments will address a recent AAT finding it doesn't have jurisdiction to consider refund matters.
The Government will not proceed with 7 initiatives, including:
· Self-Education Expenses Cap - will not proceed with introducing an annual $2,000 cap on work-related self-education expense deductions.
· Fringe Benefits Tax changes on cars – will not proceed with an amendment to the fringe benefits arrangements for cars.
· Superannuation Pensions – will not proceed with a tax on investment earnings above $100,000 p.a. on superannuation assets supporting retirement income streams.
· Low value import threshold to be set by regulation - will not proceed with the separation of the low value import threshold for customs duty and GST purposes as the Government has not yet considered the business case on the low value import threshold.
Assistant Treasurer Arthur Sinodinos, with assistance from the Board of Taxation will undertake consultation with tax experts, including a number drawn from the Board's advisory panel over the next two weeks with a disposition not to proceed with the remaining 64 measures.
It will be an expedited and thorough review with industry, focusing on whether there are any unintended consequences from not proceeding with the measures or whether there are compelling reasons why the measure should proceed. The Treasurer stated that the fiscal impact of the vast bulk of the remaining 64 initiatives is expected to be minimal.
In addition, there will be legislated protection for any taxpayer who has self-assessed with announced changes that the Government will not proceed with. Taxpayers that have complied with previous announcements that will no longer proceed, and have paid additional taxation, will be entitled to a refund.
To view the Media Release which includes details of some measures set out in an Attachment go here. The Treasurer and Assistant Treasurer also held a joint media conference to announce the details. A transcript of the media conference can be accessed here.