The centrepiece of the Australia’s Future Tax System (“AFTS”) Review (also known as the Henry Review) released on 2 May 2010 is a new resource super profits tax (“RSPT”). The government has also accepted a number of recommendations relating to company and small business taxes and superannuation. However, the delivery of these other changes is contingent on the implementation of the RSPT. The government has indicated that this is intended to be the first step in a 10 year tax reform agenda.
The AFTS made a total of 138 recommendations. Besides the recommendations specifically accepted, the government also specifically rejected some. The government indicated some areas which it flagged for future reform, however many were not discussed at all as part of the government’s response.
The following are the highlights of the government’s response.
- A Resource Super Profits Tax (RSPT) will be introduced on 1 July 2012 at a rate of 40%on profits made from the exploitation of Australia’s non‐renewable resources.
- The States and Territories will be provided with new, ongoing infrastructure funding, with an initial total amount of $700m in 2012/13.
- A refundable resource exploration rebate will be provided to companies, set at the prevailing company tax rate, for exploration expenditure carried out in Australia from 2011/12.
- The company tax rate will be reduced to 29% from 2013/14, and to 28% from 2014/15.
- The company tax rate for “eligible small business companies” will be reduced to 28% from 2012/13
- The immediate write-off for assets of small businesses will be extended to assets valued at less than $5,000 from 1 July 2012.
- The superannuation guarantee charge (SGC) will be increased by annual increments until it reaches the plateau level of 12% by 2019/20
- The entitlement to the SGC will be broadened by lifting the maximum age threshold from 70 to 75 years of age
- The concessional contributions cap will be raised to $50,000 per year for workers who are 50 and over and who have superannuation balances of under $500,000
- A new government superannuation contribution will be created which will pay up to $500 for workers with adjusted taxable incomes of up to $37,000
The government’s response can be downloaded from the Treasury website – http://www.futuretax.gov.au/pages/default.aspx .
The Henry Report itself can be accessed from the AFTS website – http://www.taxreview.treasury.gov.au/content/Content.aspx?doc=html/pubs_reports.htm .
Further details of the report can be viewed here -http://www.cch.com.au/AU/MarketingPromo/MarketingPromo.aspx?PageTitle=CCH-Henry-Review-Report-2010&ID=263