EMBARGO:7.30pm Tuesday, 20 August 1996

1996-97 Budget Revenue Measures

The Government Meeting Its Taxation Commitments

With the release of 1996-97 Budget, the Government has implemented all of the taxation measures announced in Meeting our Commitments which provide direct relief to families and small business.

Press releases I have issued tonight provide details of the implementation of the following taxation election commitments announced by the Coalition during the election campaign:

• Family Tax Initiative (PR no. 63);
• Capital Gains Tax Rollover Relief for Small Business (PR no. 64);
• Capital Gains Tax: Extending the Principal Residence Exemption (PR no. 65)
• Capital Gains Tax: Exemption on Retirement (see PR no. 87);
• Capital Gains Tax: Equity Investments in SMEs (PR no. 66)
• Income Tax Rebate for Low Income Aged Persons (see PR no. 87);
• Employee Share Schemes (PR no. 67);
• Fringe Benefits Tax Exemption for Remote Area Housing in the Primary Production Sector (PR no. 68);
• Taxation of Alcohol (PR no. 69); and
• Gift Deductibility for Community Medical Scholarship Schemes (PR no. 70).

A separate press release Superannuation Reform details commitments relating to CGT exemption on retirement and income tax rebates for low income aged persons.

The Minister for Health has issued a separate press release detailing implementation of the Government's taxation incentives to encourage the take up of private health insurance.

These commitments provide direct assistance to families and business of $5.9 billion over the next four years. This is in addition to other taxation election commitments which the Government has already implemented, or is in the process of implementing, including:

• the reduction in the provisional tax uplift factor from Labor's 8 per cent to 6 per cent;
• an increase in the Fringe Benefits Tax minor benefits threshold to $100; and
• the Small Business Deregulation Taskforce, which includes in its terms of reference examination of taxation compliance with particular reference to the administration of FBT and a range of other taxes.

As announced during the election campaign, the government will give consideration to its other FBT election commitments after the Task Force has reported; including entertainment, car parking and the issue of aligning the FBT and income tax years.

In another boost to small business, the Government has announced that it will not be proceeding with amendments to the PAYE provisions of the tax law proposed by the previous Government.

Other press releases outline the implementation of anti-avoidance measures detailed in Meeting our Commitments which were foreshadowed by the previous Government during the election campaign:

• Thin Capitalisation (PR no. 72);
• Foreign Companies Claiming Australian Residence (PR no. 73);
• Measures to Address Tax Avoidance Through Tax Exempt Entities Distributing Funds Offshore (PR no. 74); and
• High Wealth Individuals (PR no. 75).

Other measures I am announcing tonight deal with a range of issues addressing taxation compliance, avoidance and anomalies. These are contained in press releases relating to:

• Withholding Tax Avoidance (PR no. 76);
• Deductions Allowable to a Co-operative Company for the Repayment of Government Loans (PR no. 77);
• Exemption of Income Derived By Bona Fide Prospectors (PR no. 78);
• Income tax: Trust and Company Losses (PR no. 79);
• Capital Gains Tax and Company Revenue Provisions (PR no. 80);
• Capital Gains Tax: Liquidation of a Group Company (PR no. 81);
• Capital Gains Tax: Modified Application of Section 160ZZS (PR no. 82);
• Luxury Car Leasing (PR no. 83); and
• Tax Evasion on Computer Equipment (PR no. 84)

The Minister for Industry, Science and Tourism, John Moore, and I have also jointly announced tonight a major new funding initiative for research and development (R&D). This measure is being announced in conjunction with a reduction in the premium rate of tax deduction for research and development expenditure from 150 per cent to 125 per cent. The package of R&D measures announced in the Budget will ensure that total Commonwealth Government budget support for R&D in 1996-97 remains in excess of $3.5 billion dollars.

This announcement is detailed in the press release 'Research and Development Tax Concession: Reduction in the Premium Rate of Deduction to a Maximum of 125 per cent : Start: A Major New Research and Development Funding Initiative.' (PR no. 85)

CANBERRA 20 August 1996

The full Press release (55 pages) is available to download in Adobe Portable Document Format (PDF) or Word6 format (click on either icon below to download);