On the 2 May 2010 the Government released the long awaited results of the review into the future of Australia’s taxation system. All in all the review comprised approximately 1300 pages and 138 recommendations.
The Government called this the “Root & Branch review” and the “A plan for the future”. The Government split up the recommendations into 3 approaches – now, later, never.
All in all the Government adopted 10 recommendations now and only a few in the future but also ruled out around 20 all together. The balances of the recommendations were not discussed at all.
Many commentators are saying that it was a lost opportunity for significant tax reform and that the Government’s commitment to genuine tax reform must be questioned. Clearly it was the wrong time to seek a review into Australia’s tax system considering it is an election year.
Below is a very brief summary of the recommendations split into the approaches:
“Now” recommendations
- Introduction of new Resources Super Profits Tax (“RSPT”) at 40%
- Increase Super Guarantee to 12% by 2020
- Increase Super Guarantee age from 70 to 75 on 1/7/2013
- Low income earners to receive a maximum amount of $500 from the Government in super from 1/7/2012
- Concessional super contributions of $50,000 for those >50 yrs after 1/7/2012 if their account balance is <$500,000
- Reduction in company tax rate to 28% from 1/7/2012 for small businesses and phased in for other companies
- Small business immediate write-off for assets <$5,000
- New Infrastructure fund for the States (Roads, Rail, Ports)
“Future” recommendations
- Make individual tax returns easier
- Improve incentives to save
- Improve the governance and transparency of the tax system
“Never” recommendations
- Changes to Capital Gains Tax (Pre 1985 and 50% discount)
- Remove negative gearing
- Changes to dividend imputation
- Introduction of an estate tax
- Aligning preservation age with age pension age
- Changing the rate of GST
- Abolishing the Luxury Car Tax
- Making the family home part of means testing
- Introducing a land tax on the family home
- Remove Medicare
- Remove tax free component of super lump sums and pensions for those >60
- Alter the alcohol tax rate
- Implementing a proposed savings income discount (60%)
Please note these recommendations/announcements will be subject to normal parliamentary process.
