Australia Refining Its Tax System

May 11, 2011 Taxation in Australia

Australian BudgetThe government of Australia has released its 2011 – 2012 budgetary plan, saying that the included measures and tax changes will bring the country back to a budgetary surplus by next year.

The Treasurer of Australia Wayne Swann released the country’s 2011 – 2012 budgetary plan on May 10th, outlining several refinements to the country’s economic policies and tax systems. It is planned that the changes will lead to the government seeing a budgetary surplus no later than 2013. The new measures are also intended to drive more Australians into the workforce, whilst creating a larger number of jobs and economic growth opportunities. The budget plan contained several reforms to the country’s tax system, which were aimed to complement the government’s aim to boost economic prosperity.

To fulfill its goal of spurring business growth and investment, the government is changing current tax regulations to allow national infrastructure projects to carry forward losses with an uplift factor, in an effort to grant investors greater levels of certainty for positive returns. Small businesses will also receive a boost, with a new incentive tax package being introduced, which contains multiple tax deductions to aid newly founded enterprises.

The tax treatment of families will undergo a series of overhauls, including an increase to the payment rates for the Family Tax Benefit for parents with children aged 16 to 19 who are enrolled in trade or higher education courses. Inefficiencies in tax benefits for families will also be addressed, with the government working to reduce overlap between Family Tax Benefit and Youth Allowances. Further tax incentives will be established to encourage welfare recipients to participate in the workforce.

Following the series of natural disasters in Australia in recent years, the government will soon establish the Australian Charities and Not-for-Profit Commission, which will aim to improve regulations and cut out systematic inefficiencies surrounding taxation issues for not-for-profit organizations. The definition of the term “charity” will also be refined in national tax regulations, in an effort to instill greater certainty in the sector.

In an effort to monitor the effectiveness of the tax system as a whole, the government will establish a new Tax System Advisory Board to oversee and comment on tax issues. Additionally, the national Board of Taxation has also been granted powers to conduct its own reviews into Australian tax policy and regulations. The government added that any redesigns to the tax system will now be conducted with the aid of the Boards, and be carried out with a “principles-based” approach.

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