Tax measures in Mid-Year Economic and Fiscal Outlook

On 29 November 2011, the government announced a number of measures as part of the Mid-Year Economic and Fiscal Outlook stemming from ideas discussed at the October 2011 Tax Forum.

These measures are as follows:

• Fringe Benefits Tax (FBT) reforms to stop individuals from being able to exploit the tax exemption for living-away-from-home allowance and benefits
• Further reduce outdated workforce participation disincentives for spouses without dependent children to take up paid employment by restricting the dependent spouse tax offset to those with spouses born before 1 July 1952
• Deferring the four previously announced tax reforms by one year. These are as follows:
  • Standard deduction for work-related expenses will be deferred until 1 July 2013
  • The 50% tax discount for interest income will be deferred until 1 July 2013
  • Phase down in interest withholding tax for financial institutions will be deferred until 2014-15
  • New tax system for managed investment trusts will be deferred until 1 July 2013.

On the same day, the Institute issued a media release entitled Mini-budget confirms tough conditions facing business. 

The Institute’s tax counsel, Yasser El-Ansary, said the tax reforms that are now being deferred are critically important to the gradual modernisation of the tax system, and the implementation timetable should not slip any further beyond 2013.

The Institute has previously warned against deep cuts to public sector expenditure that may have the effect of making business conditions more difficult for the non-resource sectors of the economy. Appropriate financial strategy suggests that returning the budget to surplus in 2012-13 is less important than continuing to support the slow lanes of the Australian economy.

Article last updated 21 March 2012