Media Release

Mini-budget confirms tough conditions facing business

The federal government’s mini-budget handed down today confirms that businesses outside of the resource sector are finding it tough to navigate Australia’s multi-speed economy, according to the Institute of Chartered Accountants in Australia (the Institute).

Federal treasurer Wayne Swan announced a significant $20 billion write-down in tax revenue collections over the forward estimates, which has been partially offset by several cuts to existing and planned future tax reforms.

Some of the reforms being deferred as a result of the savings measures relate to specific tax concessions such as, tighter restrictions on eligibility to the living-away-from-home-allowance, and a one year deferral to the start date of the 50 per cent interest savings discount, the standard work-related expenses deduction, as well as the new managed investment trust and interest withholding tax regimes. These reforms will now come into effect from July 2013, instead of the previously scheduled 2012 start dates.

The Institute’s tax counsel, Yasser El-Ansary, says 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.

“We need to get on with the implementation of these changes because they are important building blocks on the pathway towards realigning the structure of our tax system. They formed part of the government’s response to the recommendations of the 2009 Future Tax System Review and those commitments need to be delivered,” he says.

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 29 November 2011