Snapshot: Impact of the Henry Tax Review

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The Government yesterday announced the results of the Henry Tax Review. They unveiled plans for a Resource Super Profits Tax and said that the extra income would go to generate more superannuation savings for working families, lower tax for all companies and investment in infrastructure, particularly for mining states.
What will and what will not be taken up by the Government, is still a little hazy and may not be announced until after the next election but this is what we do know:
All business:
A phased cut in the company tax rate to from 30% down to 28%
Small business:
Head start on the reduced tax rate which will apply from 2012
New instant write off for assets worth up to $5,000. Depreciation for other assets will be simplified.
Individual tax and super contributions
Super guarantee (SG) up from 9% to 12%. The SG rate will increase incrementally, with initial moves of 0.25% on 1 July 2013 and 1 July 2014, before moving 0.50% higher each year until the 2019/20 fiscal year, when it will be at 12%.
Compulsory super payments for those aged over 70.
Over 50s with lower super balances will be given more generous contributions caps to allow them to make catch up contributions.
Proposed but not accepted, yet
Dr Henry recommended expanding the land tax base as a replacement for stamp duty. This would mean non-taxable landholders such as charities and churches would be taxed on commercially used land they owned. Henry suggested that over time (but certainly not before the next election), land tax should apply to all land, but Treasurer Swan has said it would not be levied on the family home.
The report questions why, at a time of growing cost to the taxpayer, the aged-care system subsidises accommodation costs for people who could afford to pay for their everyday living costs. People in nursing homes ”should generally pay for accommodation and living costs provided through aged care, with user charges equal to the cost of their provision, as these costs are personal responsibilities outside the aged-care system”, the report said.
It also cautiously points to the possibility of big changes to the private health sector. It says that in light of earlier reform proposals, tax arrangements for private health insurance and the Medicare levy surcharge need to be assessed in light of an overall review of this sector. The review warns that means testing risks inaccurate assessments of income and could lead to debts.
For more information on the Henry Review, visit www.futuretax.gov.au

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