Clements Dunne & Bell Melbourne

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The Government's Response to the Henry Review

On Sunday 2nd May 2010 the Government publicly released the long awaited report of Australia's Future Tax System review team (the Henry Review) along with it's initial response.

The Henry Review is in 3 volumes approximating 1300 pages and contains 138 recommendations.  The Government's initial response entitled "Stronger-Fairer-Simpler, A tax plan for reform" deals with less than 50 of the recommendations.  

It is worth noting that the Government has rejected a significant number of these recommendations.  There are also a significant number of recommendations that have neither been dealt with nor rejected.  The Prime Minister and Treasurer have said that these remaining recommendations are not government policy and should be debated further in the coming years.
 
The key measures announced were:

Company tax rate

  • The company tax rate for non small business is to be lowered to 29% in 2014 then to 28% in 2015.

Small business

  • The company tax rate for small business is to be lowered to 28% in 2014.
  • Allowing a write off for assets costing $5,000 or less.
  • Introducing a single "pool" for depreciating assets subject to a 30% depreciation rate.

Superannuation

  • Increasing the Superannuation Guarantee rate from 9% to 12% by 2020 (staggered increases from 2014).
  • Extending the Superannuation Guarantee age limit from 70 to 75 so that people aged 70 to 74 will be eligible to have Superannuation Guarantee contributions made by their employers.
  • The Government will provide a contribution of up to $500 for workers with adjusted taxable incomes of up to $37,000.
  • Setting the concessional contribution cap at $50,000 for persons aged 50 and over, with superannuation balances of less than $500,000.]

Resource Sector

  • Introducing a Resource Super Profit Tax (RSPT) from 1 July 2012 at the rate of 40% on “super profits”.  The RSPT will replace the crude oil excise and operate in parallel with existing State and Territory royalty regimes
  • Establishing a new infrastructure fund initially contributing $700m in the 2013 year.  This fund will be used to invest in infrastructure for resource rich States.
  • Offering a Resource Exploration Rebate of $1.1 billion in the two years commencing on 1 July 2012.  The rebate will provide a refundable tax offset for eligible exploration expenses incurred on and after 1 July 2011 at the corporate tax rate of 30%. 


Click here for a more in depth analysis of the Government's reponse to the Henry Review. Alternatively, more information can be found on the Government's official website (http://www.futuretax.gov.au).