The defeat in the Senate of the Government’s Bills to repeal the carbon tax and the mining tax mean the related repeal of the associated income tax changes is also on hold, creating uncertainty for taxpayers. The defeated Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 had proposed the following tax-related measures:
- repeal company loss-carry back – following the changes, companies would only be able to carry their tax losses forward to use as a deduction for a future year;
- repeal the low income superannuation contribution – the contribution would be not payable in respect of concessional contributions made after 1 July 2013;
- repeal the geothermal expenditure deduction. If a geothermal exploration right is exchanged for a geothermal energy extraction right relating to the same, or a similar area, then a CGT roll-over would apply to defer the liability until the sale of the extraction right;
- repeal the income support bonus;
- repeal the schoolkids bonus;
- delay the superannuation guarantee (SG) charge percentage increase – proposed to delay by 2 years till 2021 the phase-in of the increase in the SGC to 12%. The SG charge percentage would pause at 9.25% for the years starting on 1 July 2014 and 1 July 2015, and increase to 9.5% for the year starting on 1 July 2016, and then gradually increase by half a percentage point each year until it reaches 12% for years starting on or after 1 July 2021.
The Government’s defeated Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 had proposed to cancel the carbon tax-related income tax cuts that were legislated to commence on 1 July 2015, and repeal the associated amendments to the low-income tax offset. The Bill’s amendments would have meant that:
- the tax-free threshold would have remained at id=”mce_marker”8,200 (instead of increasing to id=”mce_marker”9,200 from 1 July 2015);
- the second personal marginal tax rate would have remained at 32.5% (instead of increasing to 33% from 1 July 2015);
- the maximum value of the LITO would have remained at $445 (instead of falling to $300 from 1 July 2015) [LITO = ‘Low Income Tax Offset’];
- the withdrawal rate of the LITO would have remained at 1.5% (instead of falling to 1%); and
- the threshold below which a person may receive LITO would have remained at a taxable income of $66,667 (instead of increasing to $67,000 from 1 July 2015).
Some announcement on the fate of all the above changes would be welcome. It is possible they could be re-introduced and passed after 1 July 2014.
[WTB 20, 13/5/14]