Announced but unlegislated changes -"Restoring integrity in the Australian tax system"
07 Nov 2013
In a joint media release issued 6 November 2013, the Treasurer, Joe Hockey, and the Assistant Treasurer, Senator Arthur Sinodinos, announced how the Coalition Government proposes to deal with the 96 tax and superannuation announcements that remain unlegislated following the defeat of the former Labour Government at the recent general election.
The Ministers said that soon after the Government was elected, it was advised that 96 tax and superannuation announcements, with one dating back as far as March 2001, had not been legislated. Four of these have been dealt with as part of the carbon and mining tax repeal packages.
The Ministers said that the Government is determined to resolve all policies relating to the other 92 measures by 1 December 2013 for inclusion in the Mid-Year Economic and Fiscal Outlook (MYEFO).
Of the 92 unlegislated and unresolved tax and superannuation changes, the Government will proceed with 18 initiatives, including:
- Tobacco Tax Changes (Announced as part of the 2013-14 Budget and the 2013 Economic Statement)
- Net Medical Expenses Tax Offset (NMETO) phase out (Announced as part of the 2013-14 Budget)
- Managed Investment Trusts
- Farm finance – Support for farmers
A further 3 initiatives will be significantly amended, including:
- Thin Capitalisation Changes – relating to tax structures that seek to shift profits through debt loading. (Announced as part of the 2013-14 Budget) - The Coalition will not proceed with Labor's proposal to deny deductions made under s 25-90 of ITAA 1997.
- Offshore Banking Unit (Announced as part of the 2013-14 Budget) - The Government will not proceed with the part of this measure that excludes all related party transactions but have a targeted integrity measure to provide certainty for the industry.
- 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 (Announced as part of the 2013-14 Budget, and delayed for one year in the 2013 Economic Statement)
- Labor's $1.8 billion Fringe Benefits Tax hit on the car industry. (Labor announced the measure on 16 July 2013 and documented it in the 2013 Economic Statement)
- Tax on Superannuation Pensions – tax on earnings on super assets supporting retirement income streams (Announced in April 2013 and documented in the 2013-14 Budget)
The Assistant Treasurer, 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 2 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 Government is advised that the fiscal impact of the vast bulk of the remaining 64 initiatives is expected to be minimal.
There will be legislated protection for any taxpayer who has self-assessed with announced changes that the Government will not proceed with.
Details of some measures are set out in the Attachment to the media release.
The Ministers also held a press conference at which the issue of trusts was raised. This is what was said:
"JOURNALIST: Trusts was the other area that people wanted clarity over. Can you give us a sense of what you will do in that space?
ASSISTANT TREASURER: There's work going on through the Board of Taxation and we are actually speaking to them about when they might report on that. I'm not pushing them to report prematurely, because what underlies your question is the complexity of trust arrangements. As a veteran with scar tissue of changes in 2000-2001 when there was an attempt to tax trusts as companies I know how complex the area gets.
TREASURER: We have both got scar tissue.
ASSISTANT TREASURER: Yes, scar tissue on scar tissue. The point is we are doing further work in that area, but that is separate to this exercise. The Board of Taxation has a number of remits that it is pursuing separate to all of this."
For a transcript of the press conference, go here