After nearly 2 years in the making the Rudd Government delivered its report as prepared by Ken Henry (Treasury) into the reform of the Australian Tax system.
Key Changes are:
- Gradual increase in Super Guarantee ( SG) to 12% currently 9%. We see this as positive change as increased savings will be essential with Australia’s issues of longevity and ageing population.
- Increase in SG age limit to 75 currently 70. This means employers did not have to contribute the 9% for employees over 70 years of Age. (The only exemption was for those under EBA ag’ts). This will be helpful for those working beyond 70. It has been recommended as this demographic is increasing.
- $500 contribution for employees who contribute voluntarily to Superannuation this is only for employees with income under $37,000. This is a nice gesture but can those on under $37,000 afford anything but bare essentials?
- Over 50’s can contribute up to $50,000 in super provided their Superannuation balance is under $500,000 at the time of making the contribution. This is good however the question is why not for all over 50?
- A reduction in the company’s tax rate from 30%-28%. Yes has to be a 2% reduction as a minimum in order to pay extra % into superannuation.
- 100% write off for assets under $5,000 small business (refer comment above).
- A Resources super profits tax of 40% from 1st July 2012. This the government see’s as necessary in order to afford the other measures as detailed above, the resources sector will see it as a slug! What will be the effect? Less investment? Impact on employment ? Overseas investors in these companies will they sell? Why not the Banks?? There is much debate to happen on all these proposed changes and importantly changes in the tax system would need support of independents under current Senate structure.
This will become a significant election issue in 2010, and ultimately the people of Australia will have their say………..