Australian Government, 2013-14 Budget
Budget

Statement 5: Revenue (Continued)

Appendix E: Tax expenditures

This appendix contains an overview of the size 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, reduced tax rate or deferral of 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 programs.

The data reported in this appendix are consistent with the data reported in the 2012 Tax Expenditures Statement (2012 TES) published in January 2013. The data do not include the impact of decisions in this Budget on tax expenditures.

Care needs to be taken when analysing tax expenditure data: see the 2012 TES for a detailed discussion.

Table E1 contains estimates of total tax expenditures calculated on a revenue foregone basis (see 2012 TES) for the period 2009‑10 to 2016‑17.

As shown in Table E1, superannuation is forecast to become the largest group of tax expenditures. The Government has announced a range of policies designed to reduce the growth of superannuation tax expenditures over the next 10 years, including reducing the concession on contributions for very high income earners in the 2012‑13 Budget, and better targeting the tax exemption for earnings on superannuation assets supporting retirement income streams in this year's Budget.

Table E1: Total measured tax expenditures
  Year  Housing
$m
 Superannuation
$m
Other tax
expenditures
$m
 Total
$m
Tax expenditures
as a proportion
of GDP (%)
2009‑10 (est) 40,000 24,089 49,842 113,931 8.8
2010‑11 (est) 35,500 27,450 52,032 114,982 8.2
2011‑12 (est) 31,000 30,262 50,072 111,334 7.5
2012‑13 (proj) 30,000 31,846 53,174 115,020 7.6
2013‑14 (proj) 29,500 34,645 55,436 119,581 7.5
2014‑15 (proj) 30,000 39,615 58,881 128,496 7.7
2015‑16 (proj) 30,500 44,815 61,961 137,276 7.8
2016‑17 (proj) 31,000 50,655 64,792 146,447 7.9

Table E2 shows estimates of large measured tax expenditures for 2012‑13.

Table E2: Large measured tax expenditures in 2012‑13
Tax expenditure   Estimate
$m
Large positive tax expenditures  
C6 Superannuation — concessional taxation of superannuation entity earnings 17,100
E6 Capital gains tax main residence exemption — discount component 16,500
E5 Capital gains tax main residence exemption 13,500
C5 Superannuation — concessional taxation of employer contributions 13,150
H29 GST — Food; uncooked, not prepared, not for consumption on premises of sale  
  and some beverages 6,200
E17 Capital gains tax discount for individuals and trusts 4,180
H16 GST — Education 3,550
H19 GST — Health; medical and health services 3,000
H2 GST — Financial Supplies; input taxed treatment 2,850
A43 Exemption of Family Tax Benefit, Parts A and B 2,050
I6 CPM uncovered sectors — Agriculture 1,970
B16 Exemption from interest withholding tax on certain securities 1,730
A21 Exemption of 30 per cent private health insurance rebate, including expense  
  equivalent 1,570
C3 Concessional taxation of non-superannuation termination benefits 1,500
D14 Philanthropy — Exemption for public benevolent institutions (excluding public and  
  not-for-profit hospitals) 1,410
B91 Statutory effective life caps 1,335
A20 Exemption from the Medicare levy for residents with a taxable income below a  
  threshold 1,300
A64 Philanthropy — Deduction for gifts to deductible gift recipients 1,120
D11 Philanthropy — Exemption for public and not-for-profit hospitals and public  
  ambulance services 1,100
I1 CPM uncovered sectors — Deforestation 1,090
C8 Superannuation — deduction and concessional taxation of certain personal  
  contributions 1,050
H21 GST — Health; residential care, community care and other care services 960
H3 GST — Financial Supplies; reduced input tax credits 940
D19 Application of statutory formula to value car benefits 930
F8 Concessional rate of excise levied on aviation gasoline and aviation turbine fuel 930
H6 GST — Water, sewerage and drainage 880
B93 Deduction for capital works expenditure 825
H5 GST — Child Care Services 820
B101 Research and development — Non-refundable tax offset 800
B4 Income tax exemption for local government bodies 720
H10 GST — Importation threshold 650
A32 Senior Australians' and Pensioners' Tax Offset 610
Large negative tax expenditures  
F25 Customs duty -2,960
F10 Excise levied on fuel oil, heating oil and kerosene -555

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