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Flagpost is a blog on current issues of interest to members of the Australian Parliament

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Changes to the Foreign Investment Review Board tax conditions

In February 2014, Treasurer Joe Hockey stated that the tax affairs of foreign investors would be taken into account when foreign investment proposals were considered by the Foreign Investment Review Board (FIRB). In February 2016, the Government announced that conditions aimed at ensuring ‘multinational companies investing in Australia pay tax here on what they earn’ would be applied by the FIRB to foreign investment proposals. Following consultations between Treasury, the Australian Taxation Office (ATO) and industry, in May 2016 the Government revised the tax conditions that will apply to certain foreign investment proposals. The revised conditions addressed concerns raised by... Read more...

Budget impacts of negative gearing

‘Negative gearing’ has been a topic of frequent debate. This flagpost summarises some of the estimates of the impact of negative gearing on the Commonwealth Budget. Read more...

The millionaires who pay no tax

In 2011–12 some people with incomes of over $1 million had taxable incomes less than $6,000, meaning they paid no tax. How did they reduce their incomes so much for tax purposes, and how are their affairs different from others with equally high incomes, but who paid tax on most of their earnings? And does this raise issues relevant to the Government’s aim to create ‘a better tax system that delivers taxes that are lower, simpler, fairer’? Read more...

Who exempts what from consumption taxes?

At the time the Goods and Services Tax was introduced, health, education and financial services and some food items (mainly fresh food), amongst other areas, were exempted from its reach.  Recently, several Coalition members and senators, as well as some economists, have called for the GST to be extended to some of these areas.   Read more...

Would Broadening the GST Necessarily be Regressive?

In his recent Sir Henry Parkes Commemorative Dinner speech the Prime Minister called for a review of Commonwealth/State financial relations in the context of either raising the States’ revenue base or passing some of their responsibilities to the Commonwealth.  Changing the Goods and Services Tax (GST) is one of the options being considered by a Commonwealth/State officials group considering this matter. A number of Coalition members and senators are taking public stances in support of changing current GST arrangements.  Read more...

Offsetting business costs associated with the increase in fuel excise—Schedules 4 and 5 of the Tax and Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014

Fuel excise increased on 10 November 2014 as a result of the Government’s tariff proposals (the Excise Tariff Proposal (No. 1) 2014 and Customs Tariff Proposal (No. 1) 2014) that were introduced in the House of Representatives on 30 October 2014. The tariff proposals increased the fuel excise by specific amounts (0.457 cents per litre for liquid fuels on top of the existing 38.143 cents per litre) and also provide for biannual indexation to the consumer price index for excise from 1 February 2015. The tariff proposals are consistent with the announcement in the 2014–15 Budget of the re-introduction of biannual indexation to fuel excise. To have permanent effect a... Read more...

Australia tops the charts... in tax deductions

In the International Monetary Fund (IMF)’s recently released ‘Reforming Tax Expenditures in Italy: What, Why, and How?’, Australia was found to forgo more revenue as a proportion of GDP than all other OECD nations. Although tax expenditures result in the government forgoing revenue, they have not been widely scrutinized and cannot be comprehensively measured. As a method through which specific groups, sectors, regions and activities receive a ‘myriad of discounts in the tax code’, tax expenditures continually arise as the subject of debate. Read more...

Announcements end superannuation budget speculation?

Following recent media speculation about possible changes to superannuation in the upcoming 2013–14 Budget and concerns about the inequity of tax concessions for superannuation, on 5 April 2013 the Government announced a range of measures to superannuation tax, contribution and age pension arrangements. The Government’s overall intent in making these changes was to ‘improve the fairness, sustainability and efficiency of the superannuation system’. So what are the major changes proposed by the Government and how do they contribute to fairness?In general, arguments about ‘fairness’ in the superannuation system primarily stem from concerns that superannuation tax arrangements allow higher incom... Read more...

Fuel tax credits: are they a subsidy to fuel use?

Recently there has been debate over the nature of the rebate of the excise paid on fuels, paid under the fuel tax credits scheme. This FlagPost clarifies the purpose of the rebate.The excise on petrol and diesel is a tax on business inputs as well as on final use by households. Businesses using petrol and diesel as inputs into production processes pay excise of 38.143 cents per litre. Under the fuel tax credits scheme, eligible businesses can claim a rebate—in full or in part—of the excise that they have paid. In 2010-11, the value of these credits amounted to $5.1 billion. The main recipient industries were mining ($2.031 billion), transport, postal and warehousing ($988 million), and ag... Read more...

Carbon pricing mechanism—personal income tax reform

As part of its Clean Energy Future package, the Government has announced a series of personal income taxation reforms. This will involve increases to the marginal taxation rates in 2012-13 and 2015-16, as well as changes to the tax free threshold and low income tax offset. The Parliamentary Library has prepared a brief on the proposed changes, which is available on its climate change website. The brief presents the details of the proposed tax reform, compares it to the personal income tax reform proposed by the Australia's Future Tax System review, and presents the changes to the marginal income taxation rates and thresholds since 1983-84. Read more...