Delivering a fairer tax
system that ...

The Government will deliver fiscal restraint while putting fairness and integrity back into the tax system. Income testing arrangements for government assistance will be made more comprehensive and the fringe benefits tax and employee share scheme provisions tightened to address unintended outcomes.

Australia needs a broad based and fairer tax system.

Income testing

Income testing arrangements for accessing government financial assistance have not kept pace with the range of remuneration and investment structuring options available to Australians. This has enabled some high income earners to manage their affairs to access Government benefits.

The Government will improve fairness by broadening what is defined as income to include certain salary sacrificed contributions to superannuation, net financial investment and rental property losses and reportable fringe benefits.

Fringe Benefits Tax (FBT)

FBT improves tax fairness by taxing non‑cash remuneration. Tax planning arrangements and changes in technology have eroded the fairness and integrity of the FBT system, which will be addressed by:

  • subjecting 'meal card' type arrangements to FBT — where an employer pays for meals provided to an employee for consumption at the employer's premises, as part of a salary package arrangement
  • removing the FBT exemption for work related items used mainly for private purposes such as laptops
  • removing the double benefit from employee depreciation deductions on FBT exempt items used mainly for work purposes
  • ensuring that FBT applies to employee arrangements involving jointly held assets.

Employee share schemes

A loophole in the rules for choosing when shares and rights are assessed will be closed to restore the intended outcome and prevent inappropriate tax minimisation.

Luxury Car Tax

The rate of tax on luxury cars will be increased from 25 per cent to 33 per cent.

Chart: Composition of the $8.5 billion revenue saving from tax expenditure measures

Composition of the $8.5 billion revenue saving from tax expenditure measures