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STRONGER, FAIRER, SIMPLER?

The long-awaited review of Australia’s tax system has not gained significant support from the Federal Government despite Treasury Secretary Dr Ken Henry’s panel offering 138 reform recommendations.

On May 2, in response to the Henry Review, Treasurer Wayne Swan announced the Government would adopt only a handful of changes. The Government did not comment on most of the recommendations, and rejected nearly 30, saying that they were not Government policy.

Mr Swan also made several announcements on tax-related issues that were not mentioned in the Henry Review.

The key changes to the Australian tax landscape are:

Corporate tax rate

  • Lowering the company tax rate for large companies from 30% to 29% for the 2013-14 income year and to 28% for the 2014-15 income year

Small business concessions

  • Reducing the company tax rate for small business companies from 30% to 28% effective from the 2012-13 income year
  • Allowing an instant write off for small businesses who buy assets with a value of up to $5,000
  • Enabling small businesses to calculate all other depreciation deductions by allocating all depreciating assets to a single ‘pool’.  The pool will be subject to a 30% write off.

Resource Sector

  • Introducing a Resource Super Profit Tax (RSPT) from 1 July 2012 at the rate of 40% on “super profits”.  The RSPT will replace the crude oil excise and operate in parallel with existing State and Territory royalty regimes
  • Establishing a new infrastructure fund initially contributing $700m in 2012-13 income year.  This fund will be used to invest in infrastructure for resource rich States
  • Offering a Resource Exploration Rebate of $1.1 billion in the two years commencing on 1 July 2012.  The rebate will provide a refundable tax offset for eligible exploration expenses incurred on and after 1 July 2011 and at the corporate tax rate of 30%.  The rebate will be available to all qualifying companies, but will be of particular benefit to smaller exploration companies who are in tax loss positions as they can obtain a refund equal to 30% of their eligible expenditure.

Superannuation

  • Increasing the Superannuation Guarantee rate from 9% to 12% by 2020 (with staggered increases starting in the 2013-14 income year)
  • Extending the Superannuation Guarantee age limit from 70 to 75 such that people aged 70 to 74 will be eligible to have Superannuation Guarantee payments made on their behalf
  • The Government will provide a contribution of up to $500 for workers with incomes of up to $37,000
  • Enabling older Australians to make superannuation catch up payments whereby people aged 50 and over, with balances of less than $500,000, can contribute up to $50,000.

BDO provided a submission to the Henry Review Panel on behalf of its clients, and also contributed to tax reform representations through the Institute of Chartered Accountants of Australia.

Though BDO is disappointed some key reforms were not taken up by the Government, any improvements to the tax system are worthwhile, and it sees the Henry Review as the latest step in a long journey towards a fairer, simpler and more equitable tax system. Many vital Henry Review suggestions remain on the table.

BDO regards tax reform as above politics. The firm and its partners will continue to be advocates for change, and will keep clients up to date with news on tax issues.

PDF Download

Please find attached an Adobe Portable Document Format (PDF) version of the BDO Australia response to the Henry Tax Review 2010. If you would like a copy of this document in another format, or are having trouble downloading the document, please email admin@bdo.com.au.

Download: BDO Australia Henry Review 2010 Response

Recommendations Not Addressed

The Henry Review made a number of other recommendations that the Government has failed to implement and/or address at this stage. These include...» more

Key Issues

Read in detail the key issues as outlined by BDO Australia from the 2010 Henry Tax Review. » more

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Greg Thompson
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greg.thompson@bdo.com.au
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Vince Tropiano
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