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Federal Budget 2012-13: The Major Tax Measures


The Treasurer, the Hon Wayne Swan MP, has just delivered the most highly anticipated Budget speech for a long time. As promised, the 2012-13 Budget forecasts a surplus of $1.5 billion. Whether this forecast will be delivered on will not be known for another year, unless the position is sufficiently clear by the time of the Mid-Year Economic and Fiscal Outlook due in November 2012. Taxand Australia discusses what the major business tax measures in the Budget that may impact the Budget bottom line could be.

So what are the major business tax measures in the Budget that impact the Budget bottom line? Company tax cut scrapped, tax loss carry-back, managed investment trust withholding, removal of capital gains tax discount for non-residents, changes to the scrip-for-scrip CGT roll-over relief, related party bad debts and others.

Businesses won't be thrilled with the Budget but should be relieved that a number of other changes floated in the lead up ended up on the cutting room floor. These include changes in relation to:

  • the immediate deduction for exploration expenditure
  • the deductibility of financing costs under the thin capitalisation rules
  • statutory effective life caps that enable accelerated depreciation in the oil & gas, agriculture and transport sectors
    the research and development tax incentive

Taxand Australia analyses the key tax measures likely to have most impact on businesses in more detail

Taxand's Take

Lower than expected collections from the Minerals Resource Rent Tax have the potential to blow a big hole in this Budget. The Government estimates the MRRT will bring in $10.6 billion in the first three years but most commentators expect the actual figure will be a fraction of that. Already, the Budget Papers predict that collections in the first year will be down by $850 million due to lower coal prices and the high exchange rate.

In the current economic climate, it won't take much to wipe out the whole $1.5 billion surplus.

Your Taxand contact for further queries is:
Jonathon Leek
T. +61 8 9460 1616

Taxand's Take Author