This appendix contains an overview of the cost of tax expenditures provided to taxpayers through the tax system.
Tax expenditures provide a benefit to a specified activity or class of taxpayer. They can be delivered as a tax exemption, tax deduction, tax offset, concessional tax rate or deferral of a tax liability. The Government can use tax expenditures to allocate resources to different activities or taxpayers in much the same way that it can use direct expenditure programmes.
The data reported in this appendix are consistent with tax expenditure data reported in the 2007 Tax Expenditures Statement published in January 2008. The data does not include the impact on tax expenditures of decisions made in this Budget, and does not include tax expenditures related to GST (which will be included in the next tax expenditures statement consistent with the Government's move to report GST as an Australian Government tax in this Budget).
Care needs to be taken when analysing tax expenditure data: see Section 2.1 of the 2007 Tax Expenditures Statement for a detailed discussion.
Table G1 contains estimates of total tax expenditures for the period 2004‑05 to 2011‑12.
Table G1: Aggregate tax expenditures
| Year | Superannuation $m |
Other tax expenditures $m |
Total $m |
Tax expenditure as a proportion of GDP (%) |
|---|---|---|---|---|
| 2004‑05 (est) | 17,353 | 20,718 | 38,071 | 4.2 |
| 2005‑06 (est) | 23,065 | 23,376 | 46,441 | 4.8 |
| 2006‑07 (est) | 24,985 | 25,135 | 50,120 | 4.8 |
| 2007‑08 (proj) | 26,845 | 24,565 | 51,410 | 4.6 |
| 2008‑09 (proj) | 27,466 | 25,036 | 52,502 | 4.3 |
| 2009‑10 (proj) | 29,391 | 27,498 | 56,889 | 4.4 |
| 2010‑11 (proj) | 31,807 | 29,945 | 61,752 | 4.6 |
| 2011‑12 (proj) | 33,908 | 31,206 | 65,114 | 4.6 |
Table G1 shows that, in the 2007 Tax Expenditures Statement, measured tax expenditures as a proportion of GDP were projected to fall from 4.8 per cent in 2006‑07 to 4.6 per cent in 2007‑08 and 4.4 per cent by 2009‑10, mainly as a result of the impact of personal income tax rate cuts.
Table G2 is a list of the major tax expenditures in 2007‑08.
Table G2: Major tax expenditures 2007‑08
| Tax expenditure | Estimate $m |
|---|---|
| Large positive tax expenditures | |
| Superannuation — concessional taxation of superannuation entity earnings | 13,600 |
| Superannuation — concessional taxation of employer contributions | 10,150 |
| Capital gains tax discount for individuals and trusts | 6,870 |
| Exemption of Family Tax Benefit, Parts A and B, including expense equivalent | 2,480 |
| Superannuation — capital gains tax discount for funds | 1,550 |
| Application of statutory formula to value car benefits | 1,490 |
| Concessional taxation of non‑superannuation termination benefits | 1,400 |
| Tax offset for recipients of certain social security benefits, pensions or allowances | 1,200 |
| Exemption from interest withholding tax on widely held debentures | 1,030 |
| Senior Australians' Tax Offset | 1,010 |
| Exemption of certain income support benefits, pensions or allowances | 1,000 |
| Exemption of 30 per cent private health insurance refund, including expense equivalent | 1,000 |
| Concessional rate of excise levied on aviation gasoline and aviation turbine fuel | 905 |
| Deduction for gifts to approved donees | 870 |
| Superannuation — deduction and concessional taxation of certain personal contributions | 780 |
| Income tax exemption for municipal authorities and other local governing bodies | 770 |
| Exemption from excise for 'alternative fuels' | 750 |
| Exemption from the Medicare levy for residents with a taxable income below a threshold | 670 |
| Large negative tax expenditures | |
| Customs duty | ‑3,682 |
| Higher rate of excise levied on cigarettes with less than 0.8 grams of tobacco | ‑1,375 |
| Accelerated depreciation allowance for plant and equipment | ‑800 |
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