At the end of the Labor Government term in Federal Government the concern about the deficit became so important that the government proposed a range of new taxes to try and plug the hole.
As we all know surplus and deficits will come and go but once a tax is introduced it never goes away. Perhaps the carbon tax will prove me wrong.
However last week the Australian Government announced its formal position with respect to a large number of previously announced tax, superannuation and related changes that have not been legislated.
The bulk of legislation to be progressed should be passed by Parliament by 1 July 2014.
- Measures to proceed include: Protecting the corporate tax base from erosion and loopholes; improving compliance through third party reporting and data matching; phasing out the net medical expenses tax offset; transferring lost member accounts to the ATO; implementing Managed Investment Trust and regimes; finalising farm deposit changes, and progressing tobacco excise and customs duty regimes.
- Measures to be amended include: Thin cap – debt loading measures (the Coalition will not proceed with proposal to deny deductions made under s 25-90 of the ITAA 1997) and OBUs (the Coalition will not proceed with the part that excludes all related party transactions but have a targeted integrity measure to provide certainty for the industry)
Taxes proposed but will not proceed include the following:
- Self-education expenses $2,000 cap. This is a big win for the professional services industry. In our industry we easily spend over $4000 per annum per adviser to maintain professional qualifications. This does not include any fancy trips overseas or built-in holidays.
- FBT changes to company cars. Anyone who owns shares in McMillan Shakespeare a company who provides leasing for company cars would remember when this was announced. The share price fell $12 on the day of the announcements wiping out $900 million of investor value. The share price has started to recover but is still down on the pre-announcement value.I for one welcome the announcements last week from the Government. I am sure many Australians paid little attention to these announcements however it is these type of measures being taken but he LNP which will provide the foundation for Australia to get back on to its feet.
- Tax on super pensions earnings above $100,000 in pension phase. This is the one, which would have affected our clients. It would also limit the amount people would put into super. With this tax now officially gone investors can once again be comfortable that their strategy to invest in Super.
The last two big ones are the Carbon Tax and Mining Tax. If this promise is kept Australia will be back on the road to economic recovery.
It is a long road but at least we will be on it.