Appendix Three - Answers to Questions on Notice – The Treasury
4 March, 2005
Mr Peter Hallahan
Committee Secretary
Senate Standing Committees on Economics
PO Box 6100
Parliament House
Canberra ACT 2600
Dear Sir
TaX LAWS AMENDMENT
(2004 mEASURES no.7) bILL 2004
I refer to the
Senate inquiry into the abovementioned bill which was held on 1 March
2005. During the course of the inquiry a
number of questions were taken on notice.
In response to those questions, I now provide the following responses:
Senator Stephens
Q 1. How many taxpayers are
estimated to be in the STS system after these measures (in schedule one) are introduced?
Answer It is estimated that the population
of STS taxpayers after the commencement of these measures will be approximately 860,000.
Q 2. How many extra taxpayers are
expected to join the STS system as a result of schedule one measures?
Answer It is estimated that the measures in
schedule one will attract a further 440,000 taxpayers into the STS system.
Q 3. Is this increment to the STS
tax base from schedule one measures included in the costings
of the expansion of the STS in schedule two?
Answer Yes, the accruals impact for
entities taking up the STS was factored in to the costings for schedule two.
Q 4. What is the average cost to the
revenue per new STS taxpayer under schedule one measures,
schedule two measures or schedules one and two?
Answer As the accruals impact for entities
taking up the STS as a result of the schedule one measure was considered to be minor the average
cost to the revenue of schedule one measure
is estimated to be $700.
Q 5. What is the average estimated
taxable income of STS taxpayers who are expected to receive the offset?
Answer The average estimated taxable income
of taxpayers who are expected to benefit from the
offset is expected to be approximately $18,000.
Q 6. What is the average estimated
taxable income of STS taxpayers?
Answer The average estimated taxable income
of STS taxpayers is approximately $25,000.
Senator Brandis
Q 1. What is Treasury’s estimate of
the number of small businesses that will benefit from these provisions?
Answer On
the basis of 2002-03 income tax return data, it is estimated that 540,000 small
businesses will benefit from the provisions contained in schedule one.
Senator Watson
Q 1 What is the offset worth for a
taxpayer with $35,000 purely of business income compared
to a person with $35,000 purely of salary and wages?
Answer Assuming the taxpayer’s turnover is
less than $50,000 (ie. is not in the shade-out range) a taxpayer with $35,000 of
net STS income would have an initial tax liability of $6,672. The 25%
offset would be $1,668 leaving a final liability (not including medicare levy) of
$5004. These figures are based on the
2005-06 rates of tax applicable to
resident individual taxpayers.
A taxpayer earning
income purely from salary or wages is not an entrepreneur.
I trust the above
responses will be of assistance to the Committee.
Yours sincerely
Mark O'Connor
Principal Adviser
Individuals and Exempt Tax Division