This budget includes major tax reforms in superannuation, personal income tax and business tax and is supported by measures to improve the integrity of the tax system. It is a major step in structural tax reform that commenced with The New Tax System in July 2000.
The reforms undertaken by the Government over the past 10 years have ensured that Australia remains a low taxing country — the eighth lowest in the OECD. Tax reform has enhanced our prospects for higher employment and productivity growth, improved the equity and fairness of the tax system and reduced tax system complexity. The reforms have been undertaken while improving the sustainability of Australia's budget position and eliminating government debt.
The next stage of the Government's tax reform agenda, announced in this year's budget, builds on these principles and includes:
- a plan to simplify and streamline Australia's superannuation system, which represents the most significant change to the superannuation system in nearly 20 years;
- major tax relief for all taxpayers, with $36.7 billion in personal tax cuts over the next four years which have been designed to improve incentives to work and enhance the international competitiveness of our top tax rates;
- a continued commitment to families with an increase in the income test threshold for the maximum rate of Family Tax Benefit Part A (FTB (A)) to $40,000 a year and extending eligibility for the Large Family Supplement to families with three or more children;
- enhanced tax depreciation arrangements which will provide a benefit to business of $3.7 billion over four years and improve investment incentives and resource allocation, improving prospects for higher productivity and higher growth;
- additional reductions in taxes on small business worth $435 million, to simplify and improve the alignment of thresholds and eligibility for a range of small business tax arrangements, and improve access to the small business capital gains tax arrangements; and
- tax integrity measures estimated to raise $2.3 billion in revenue, to help ensure an equitable tax base is maintained.