... closes loopholes and
improves equity

The Budget confirms a number of tax changes that enhance tax fairness and productivity, by closing loopholes, encouraging better investment decisions, and getting a fairer return on Australia's non‑renewable assets. Realigning excise on 'ready‑to‑drink' alcoholic beverages (RTDs) with full strength spirits is consistent with Government initiatives to reduce binge drinking.

Tax savings

This Budget will reduce the drain on tax revenue from tax concessions by around $8.7 billion while promoting fairness.

This builds on the Government's election commitments which produced tax savings of over $6 billion, including deferring tax cuts for high income earners and increasing Tax Office compliance work on high wealth individuals and large corporations.

Condensate production

The Government will remove the crude oil excise exemption for condensate — a light crude oil extracted from natural gas — so that it is treated like crude oil.

This will increase the return to the community from extracting this non‑renewable resource, without affecting fuel prices.

Better investment decisions

The Government will remove tax concessions for some assets.

The interest expense apportionment rules for capital protected borrowings will be changed to more accurately reflect the interest component.

Capital expenditure on computer software will be depreciated over four years, the same period as computer hardware.

'Ready‑to‑drink' beverages

The Government is concerned about the growth in RTD consumption, particularly among teenagers, and has closed the loophole where the spirits in pre‑mixed drinks were taxed at a lower rate than bottled spirits.

By restoring the alignment between the rates of excise on RTDs and full‑strength spirits, the Government is sending a clear price signal consistent with its other initiatives to reduce binge drinking. A proportion of this revenue will be redirected to preventative health through the National Health Prevention Strategy with the States.

Chart: Revenue gains from tightening tax expenditures in the 2008-09 Budget

Revenue gains from tightening tax expenditures in the 2008‑09 Budget