New Government announces progress on outstanding tax changes

The Federal Government has made a major announcement regarding the future of 92 outstanding tax proposals from the former Labor government.
Recognising the uncertainty caused by the lack of progress on so many revenue amendments, the Treasurer announced that:

  • 18 announcements would proceed as announced
  • 3 announcements would proceed with further amendment
  • 7 announcements would not proceed
  • 64 announcements would be passed to the Board of Taxation for further consultation.

Proposals that will not proceed

Some of the key proposals the Government has announced will not proceed include:

  • Removal of the statutory formula method to calculate the taxable value of car fringe benefits – the statutory formula method (with transitional transfer to flat 20% statutory percentage) will remain
  • Tax on investment earnings in excess of $100,000 per annum for superannuation funds that are in pension mode
  • $2,000 cap on allowable deductions for work related self education expenses.

Proposals to be reviewed further

The balance of the proposals considered by the Treasurer will be passed on for further review. The review will be conducted by the Assistant Treasurer in conjunction with members of the Board of Taxation and other tax experts. The review will be conducted in the next few weeks, as described by the Treasurer, it will have “a disposition not to proceed with the remaining 64 measures”.

It is pleasing to hear the Treasurer view these outstanding matters as such, especially when he describes the review as, “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”.

Of the measures passed on to the review, the following key measures have been included:

  • Bad debts – providing symmetry for bad debts by requiring a borrower to return assessable income equal to the amount written off by the lender as a bad debt (May 2012 Federal Budget)
  • There are a multitude of minor CGT amendments including testamentary trusts and deceased estates, restructure rollovers, and business restructures
  • There are a multitude of superannuation amendments including fund mergers, penalties and additional tax for the illegal release of super benefits, introduction of identity checks for rollovers to SMSFs.

For any advice or assistance with these legislative changes, call the office on 03 9585 7555 oremail Noel

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