There are currently 92 unlegislated and unresolved tax and superannuation changes which were announced by the former Labor Government.
On 6 November 2013, the Treasurer Joe Hockey announced how the Federal Government will deal with 25 of these changes. Seven of the changes will not proceed and 18 will proceed, three of which will be significantly amended.
This announcement was part of the Coalition’s pledge to ‘provide a stable and predictable Government’ which should also provide ‘certainty to business and significantly reduce red tape and associated costs’.
We have reviewed the seven changes that have been discarded, and consider the three most significant changes for our clients to be:
1. Self-Education Expenses cap – The Government will not proceed with Labor’s announcement to put a $2,000 cap on the amount people can deduct as self education expenses, including training and educational courses, textbooks and other accreditation expenses. Advice to the Government was that there was ‘no credible evidence of substantial abuse of this deduction’.
2. Fringe Benefits Tax (FBT) changes to car fringe benefits – The Government will not proceed with Labor’s July 2013 announcement to abolish the ‘statutory method’ for determining FBT liabilities for car fringe benefits.
3. Tax on superannuation pensions – the Government will not proceed with Labor’s announcement which would have taxed people’s superannuation pension earnings above $100,000 in pension phase.
The Government expects that the fiscal impact of the majority of the remaining 64 measures will be minimal. A large number of these announced but unlegislated tax measures, however, are likely to impact small to medium businesses and privately held businesses. These issues may not make the headlines, but they impact significantly on the functioning of a key sector of the economy.
Announced but unlegislated tax measures create confusion and complexity for private businesses. They inject considerable uncertainty into longer term investment and decision making and are an impediment to what is one of the drivers of the Australian economy.
William Buck would support a review of the remaining measures.