The Federal Treasurer announced today that the Government will not proceed with a number of proposed initiatives which had been announced by the former Labor Government as part of the 2013-14 Budget.
Among the initiatives which have been discontinued are:
- Offshore Banking Unit – the Government will not proceed with the part of this measure that excludes all related party transactions but has a targeted integrity measure to provide certainty for the industry. This should help Australian banks compete on a level playing field overseas, through access to a competitive tax rate, and attract activity to their Australian operations. Consultation with stakeholders in the industry will be undertaken soon to develop targeted rules to address the integrity issues with the current rules in this area.
- Tax on superannuation pensions – this proposed initiative which would have taxed people’s superannuation pension earnings above $100,000 in the draw-down phase will not be implemented due to the expected compliance costs.
- Self-education expenses cap – the proposed cap of $2000 will not be implemented.
- $1.8 billion Fringe Benefits Tax hit on the car industry – the abolition of this proposed initiative that would have made it harder for people to have a company or salary sacrificed vehicle was part of the election campaign for the Coalition and today it has confirmed it will not proceed.
The Federal Government will, however, proceed with a number of other proposed measures including:
- Managed Investment Trusts – the new tax regime for Managed Investment Trusts (MITs) along with the third tranche of the Investment Manager Regime will proceed on the basis that these measures will make Australia’s financial services industry more attractive in foreign markets by establishing MITs in their own right with a transparent framework, aimed at driving demand.
- Farm finance – the non-primary production income eligibility threshold for Farm Management Deposits will be increased from $65,000 to $100,000.