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2010-11 Federal
Budget Summary
12 May 2010
A quicker return to surplus... On 11 May 2010, the 2010- Contents
11 Federal Budget was handed down by the Treasurer, the 2 Managed investment regimes
Hon. Wayne Swan, at a time when the Government was 3 Australia as a financial centre
under pre-election scrutiny. 4 Goods and Services Tax
6 Consolidation and Earnouts
The Treasurer spoke of the resilience and The aspiration to establish Australia as 7 Capital Gains Tax
discipline of the Australian economy and a global financial centre is noble, but no 8 Individuals
forecast that it would return to surplus doubt there will be traps in the detail of
10 Superannuation
in 2013, three years ahead of last year’s all of these changes.
forecast. Real GDP growth is forecast to Of potential concern for business 11 Other measures
be 3.25% in 2011 and 4% in 2012. will be the plan to boost GST audits and 13 Compliance and administration
This has led to major spending investigations. The Government expects
announcements to bolster the country’s to yield $2.7bn over the next four years
expected new economic growth from these efforts.
including: The popular changes were focussed
• $661m for a Skills for a Sustainable on individuals – relief for workers and
Growth Strategy to lift our tax simplification. Savings were a focus,
workforce skills including a 50% discount on tax on the
• $5.6bn for a new Infrastructure Fund first $1,000 of savings income from 1
to fund Federal and State projects July 2011. Simplification will include
• $652m for a Renewable Energy providing individuals with an optional
Future Fund to support renewable $500 tax deduction in lieu of claiming all
energy initiatives work related expenses. This will start in
• $2.2bn to modernise our health and the 2013 year.
hospitals system Revenue from increased tobacco
excise and the already unpopular new
Whilst the taxation measures were resource super profits tax underpins a lot
mainly repeats of what had already of the expenditure measures. The theme
been recently announced, there were of the Government is that the latter
numerous small changes which are represents an equitable exploitation of
outlined in our report. More ambitious is our natural resources.
the proposal for further financial sector However, they will be hoping that
reform and the easing of tax rules that the electorate thinks enough of it all to
restrict the managed funds industry. elect it to a second term.
Managed investment regimes
Managed Investment Trusts
The Government has clarified the capital
account treatment proposed for eligible
Australian Managed Investment Trusts
(MITs) in the 2009-10 Budget.
In summary, this measure is to be
refined by:
• broadening the definition of MITs
• expanding the scope of eligible assets
• preventing amendments of prior
year MIT tax returns by the
Commissioner of Taxation without
the consent of the taxpayer in respect
of the characterisation of assets from
capital to revenue and vice versa, and
• treating the following on revenue rule whereby MITs are able to 2. align the regime with broader
account: carry forward any over or under arrangements for taxing collective
− gains and losses on disposal of distributions into the next year where investment vehicles.
shares and units by eligible MITs they are no more than 5% of the
that do not make an election, and amount in the distribution statement The Government will ask the Board of
− distributions or gains on carried • elimination of double taxation Taxation to:
interest units in MITs. by allowing unit holders to make • review the tax treatment of collective
upward cost base adjustments investment vehicles, having regard
Government response to the Board of to their trust interests in certain to the new MIT tax framework,
Taxation’s Review circumstances, and including whether a broader range of
The Government has announced the • abolition of the corporate unit trust tax flow-through vehicles should be
introduction of a new taxation regime for provisions in Division 6B of the 1936 permitted, and
Australian MITs, effective from 1 July 2011. Act. • examine the treatment of Venture
The new regime was announced on Capital Limited Partnership vehicles
7 May 2010 in response to the Board Introduction of an Investment as part of the review to see if they are
of Taxation’s report on its review of tax Manager Regime all necessary and consistent with the
arrangements applying to MITs. The Government will start consultation Government’s objective of developing
The key features of the new regime on an Investment Manager Regime Australia as a leading financial centre.
include the: (IMR) that will reform and expand
• ability for MITs to elect to use an Australia’s managed funds industry by Detailed Terms of Reference of the
attribution method of taxation removing impediments to international review, including the dates for reporting
in place of the existing present investment. Such consultation will be a to Government, will be released in the
entitlement to income system two stage process to: near future.
• establishment of a de minimis 1. review the scope of the regime, and
2010-11 Federal Budget Summary 2
Australia as a financial centre
Following the release on 15 January Other recommendations made in the of nil withholding. In the Assistant
2010 of the Report of the Australian Johnson Report that the Government has Treasurer’s press release, Senator Sherry
Financial Centre Forum, Australia as commented on include: confirmed that this would apply to:
a financial centre: Building on our • a comprehensive review of Australia’s • Australian subsidiaries and branches
strengths, prepared by Mark Johnson tax laws by the Board of Taxation of foreign financial institutions
(the “Johnson Report”), the Government to ensure that, wherever possible, paying interest to their parent
has provided its response. they do not inhibit the expansion • Australian owned financial
The Government response provides of Islamic financial products in institutions borrowing from related
in-principle or direct support for Australia, and parties overseas, and
nearly all of the Johnson Report’s 19 • an announcement of support for • any financial institution borrowing
recommendations. These include: competition between markets for offshore retail deposits which they
• the lowering of withholding tax trading in listed shares in Australia – on-lend in Australia.
on interest payments by financial effectively competing against the ASX.
institutions As an integrity measure, the reduced rate
• the introduction of the Investment Lowering of interest withholding tax of interest withholding tax will not apply
Manager Regime. The Government has announced that it to interest paid on non resident retail
will lower the rate of interest withholding deposits held in Australia. It will also not
In addition, the Government has asked tax paid by financial institutions to apply to offshore borrowings by entities
Mark Johnson to chair a task force of offshore lenders from the current 10%, that are not financial institutions.
senior financial sector representatives to to 7.5% from 1 July 2013, to 5% from 1
continue its work in promoting Australia July 2014, with an “aspirational target” The withholding tax rates will be:
as a financial centre for the region. The
role of the task force will cover three areas:
Type of borrowing Current IWT Future IWT
• regional engagement and
From 2013-14 From 2014-15
enhancement of Australia’s presence
Financial institution borrows from a foreign financial 10% 7.5% 5%
in Asia institution (where not exempt under a tax treaty)
• engagement with the domestic
Foreign bank branch borrows from overseas head 5% 2.5% Exempt
industry on an informal basis office
• facilitation of industry input into the Financial institution borrows from offshore retail 10% 7.5% 5%
design of several of the key outputs deposits (proceeds used and traced to Australian
that flow from the recommendations operations)
of the Johnson Report. Financial institution borrows through a publicly Exempt Exempt Exempt
offered debenture issue, non equity share or
syndicated loan
Offshore banking unit (borrows and on-lends Exempt Exempt Exempt
offshore)
Financial institution borrows from non-resident retail 10% 10% 10%
deposits held in Australia
2010-11 Federal Budget Summary 3
Goods and Services Tax
Compliance program • GST-free treatment of supplies made compliance and administrative costs
The Government has announced that it to a non-resident but provided to a (especially for small businesses).
will provide the ATO with funding of registered business in Australia, and
$337.5 million over a period of four years • broadening of the non-resident The proposed changes include:
to assist with activities that will promote agency provisions. • changing the $50,000 input tax credit
voluntary GST compliance and a level financial acquisitions threshold to
playing field for Australian businesses. As certain components of the package $150,000 (although no mention has
The Government believes that this will require changes to the GST base, been made in relation to whether the
measure will address issues that relate unanimous agreement from the State and 10% threshold will also be amended)
to fraudulent GST refunds, systematic Territory governments will be required. • disallowing the bundling of services
under-reporting of GST liabilities, non- in order to utilise the Reduced Input
lodgement of GST returns and non- Cross-border transport supplies Tax Credit (RITC) concessions, and
payment of GST debts. Some minor changes will again be made • allowing businesses that account
The ATO will also be provided with to the previously announced 2009-10 for GST on a cash basis to claim
additional capacity to store and analyse Budget measures in relation to cross- upfront input tax credits in relation
data obtained from external parties. border transport supplies. to hire purchases (currently, only
Specifically, the Government aims to entities that account for GST on an
Cross-border transactions reduce GST compliance costs in relation accruals basis can claim back the GST
The Government will implement all to the domestic transport of exported upfront).
of the recommendations of the Board and imported goods by ensuring that
of Taxation from its review of the the place of consignment will always be These changes will apply from 1 July
application of GST to cross-border determined by the place of delivery in the 2012.
transactions. The changes will take effect principal contract.
from 1 July 2012. The measure also aims to ensure that Margin scheme
The Board of Taxation made 14 any services ancillary to the international The Government announced in the prior
recommended improvements to the GST transport of goods receive the same GST year Budget that it had asked Treasury to
system designed to treat cross-border treatment as the transport supply being review the operation of the GST margin
transactions in an efficient and effective facilitated. scheme.
manner, particularly in dealing with The Government has previously Although there were many industry
interactions with non-residents. announced that the amended legislation submissions, options considered
The recommendations included: in relation to the GST treatment of and recommendations made, the
• limiting the connected with Australia cross-border transport services will be Government decided that the costs and
rules and expanding the reverse introduced in the Winter Sittings of risks to revenue integrity associated with
charge rules to reduce the number of Parliament. addressing the perceived gaps would
non-residents required to register in outweigh the potential benefits.
Australian for GST purposes Financial supply provisions Therefore, the Government has
• a low value importation threshold The financial supply provisions in the limited itself to changes that will clarify
• a streamlined registration process for GST law will be amended to clarify how and simplify compliance and reduce
non-residents the legislation should operate and reduce taxpayer/ATO disputes.
2010-11 Federal Budget Summary 4
The changes announced are: Various minor changes Sale of boats for export within 12
• Restructuring the provisions to give The Government has decided to defer months of delivery
prominence to the main principles the start date for a number of measures This measure is an expansion of the
and insert objects clauses to make the previously announced as part of the existing provision that allows for a
intentions of the key principles clear 2009-10 Budget to 1 July 2011. They boat to be sold GST-free if the boat is
• Removal of an anomaly that allowed include: exported by the purchaser within 60 days
an approved valuation of land to be • adopting the income tax self and only used for recreational purposes
used for calculating the margin of assessment regime for indirect taxes whilst in Australia. The amendment
subdivided land and refreshing the period of review will have affect from 1 July 2011 and
• reform of the change of use will extend the 60 day time limit to 12
These measures will take effect from 1 adjustments months.
July 2012. • allowing adjustments for pre- This measure is seen to provide
registration acquisitions recreational boat builders with flexibility
Exempt taxes, fees and charges • clarifying the treatment of tax law to be more competitive with international
The GST law will be amended to replace partnerships manufacturers.
the current mechanism for Australian • simplifying the GST grouping
taxes, fees and charges that are to be membership interest rules and
treated as being exempt from GST. This allowing grouping of non-operating
will provide more certainty to taxpayers holding companies, and
and Government agencies. • introducing a reverse charge for
An Australian tax, fee or charge is supplies of going concerns and
currently only exempt from GST if it is farmland.
listed in a GST determination. The new
mechanism will be a principles-based
legislative exemption which will allow
the GST treatment to be determined with
reference to legislative provisions. This
change will apply from 1 July 2011.
2010-11 Federal Budget Summary 5
Consolidation
The Budget introduced • An entity which pays its contribution
amount under a tax sharing agreement
several measures designed can leave a consolidated or MEC
to improve the operation of group clear of any further liability,
the consolidation regime. effective from the 2004-05 year
• Where there is a change in the
These measures confirm provisional head company during the
current existing practice. year, PAYG instalments paid by the
former head are attributable to the
Calculation and collection of tax group, effective from 1 July 2002
liabilities
• The Commissioner of Taxation can Non-membership Equity Interests Company taxation
recover unpaid PAYG under the The Government intends to modify Commitment to the following was
liability for payment rules that are the consolidation regime so that non- confirmed:
effective from 11 May 2010 membership equity interests issued by an • the phased reduction in the
• The liability for payment rules applies entity are taken into account in the tax company tax rate to 28%
to Multiple Entry Consolidated cost setting rules when the entity leaves • small business asset write-offs
(MEC) groups effective from 11 May or enters a consolidated group, effective and pooled depreciation.
2010 from 10 February 2010.
Sale of business earnouts
We welcome the In October 2007, the ATO released profits emerging basis might be adopted.
a draft ruling in relation to earnout Under this approach proportionate gains
Government’s announced arrangements which adopted a position would be calculated on the disposal
plans to adopt a “look- that had adverse consequences for of the original asset and the earnout
through” approach to purchasers and vendors. The response components to avoid the requirement
has been a long-time coming and there for taxpayers to amend prior year
earnout arrangements has been a lot of uncertainty in between. assessments for any earnouts received.
under business sales, rather We have been involved in consultation Any losses on the earnouts would be able
than the previous approach with the ATO on this matter. to be carried back to any related capital
Whilst there is no detail to the gains.
of treating the earnout as
announcement at present, a “look- With the effective date being the
an asset separate from the through” approach eliminates many date of Royal Assent of the legislation
underlying business. of the issues otherwise raised by the and some provisions applying from 17
draft ruling. What is meant by a “look- October 2007, we hope that the legislation
through” approach is not yet known. is delivered quickly to remove what has
We are under the impression that a for too long been an area of uncertainty.
2010-11 Federal Budget Summary 6
Capital Gains Tax
A handful of Capital Gains Tax (CGT)
amendments have been announced with the
aim of “improving the ability of businesses to
restructure”. The changes will be effective from
7:30pm, 11 May 2010, unless noted otherwise.
CGT roll-over for share sale facilities of water entitlements with one or more
A range of CGT roll-overs will be different water entitlements. The aim
made available to Australian resident is to ensure CGT is not a barrier to any
shareholders. This is specifically for alterations to water entitlements. Extension of rollover for conversion of
situations where an entity undertakes This measure will apply a body to an incorporated company
a restructure in order to deal with its retrospectively from the 2005-06 The Government will amend the CGT
foreign shareholders via a share or income year with transitional provisions rollover rules to allow indigenous
interest sale facility. Currently, such applying until the date of Royal Assent. incorporated bodies to convert to
events, where roll-over relief is not a company incorporated under the
available, may constitute a deemed Limited roll-over for fixed trusts Corporations (Aboriginal and Torres
sale with a resulting capital gain to the Roll-over relief was proposed in last Strait Islander) Act 2006 (“CATSI Act”)
Australian resident shareholder. year’s Budget for transfers between without immediate CGT consequences.
These changes will ensure the trusts with fixed entitlements where the Also, indigenous companies will be able
Australian resident shareholder does not trusts have the same beneficiaries. The to move between the Corporations Act
have CGT consequences until such time Government has refined this further to 2001 and the CATSI Act without CGT
as their shareholding is disposed. ensure the integrity of that measure with consequences.
effect from 1 November 2008.
Extension of current demerger rules
An amendment is intended to remove Scrip for scrip – alignment with
a current defect in the CGT legislation Corporations Act 2001
that has prevented groups from accessing This measure removes an inconsistency
CGT demerger relief. The proposed between the requirements for the roll-
measures will allow access to demerger over as specified in the CGT legislation
relief where the head entity of a to that set out in the Corporations
demerged group is a corporation sole or a Act 2001. Specifically, it proposes an
complying superannuation entity. alignment of the member participation
requirements where there is a takeover or
Water entitlements merger.
This measure will defer any CGT The above measures will take effect
consequences arising from replacement from 6 January 2010.
2010-11 Federal Budget Summary 7
Individuals
Personal tax rates & Medicare
Residents: rates and tax payable from 1 July 2010
thresholds
Taxable income ($) Tax payable ($)
• No changes will occur to the
0 - 6,000 Nil
previously announced and legislated
tax rate changes detailed in the tables 6,001 - 37,000 Nil + 15% of excess over 6,000
to the right 37,001 - 80,000 4,650 + 30% of excess over 37,000
• Resident taxpayers with income of 80,001 - 180,000 17,550 + 37% of excess over 80,000
$180,000 will save $25 per week from 180,001+ 54,550 + 45% of excess over 180,000
1 July 2010
• The Low Income Tax Offset will Non-residents: rates and tax payable from 1 July 2010
increase by $150 to $1,500 for the Taxable income ($) Tax payable ($)
2010-11 year. The offset phases out 0 - 37,000 29%
by four cents in the dollar from 37,001 - 80,000 10,730 + 30% of excess over 37,000
$30,000, with no offset available
80,001 - 180,000 23,630 + 37% of excess over 80,000
above $67,500
180,001+ 60,630 + 45% of excess over 180,000
• The Senior Australians Tax Offset
thresholds will increase accordingly
in the 2010-11 income year: incomes • The 2009-10 Medicare Levy low- trust or managed investment scheme.
up to $30,685 for singles and $26,680 income thresholds increase to $18,488 The Government also intends to
for each member of a couple will not for singles and $31,196 for families, allow the discount in determining
be taxable with the additional threshold per eligibility for transfer payments
• The interaction of the Low Income child increasing to $2,865 and other concessions (e.g. Family
Tax Offset and the Senior Australians • Pensioners below the Age Pension Tax Benefit, the Baby Bonus, Child
Tax Offset will be improved to age will have a Medicare low-income Care Benefit, Education Tax Refund,
prevent inadvertent tax for certain threshold of $27,697 to ensure no Commonwealth Seniors Health Card
taxpayers earning less than $30,000 liability arises on those individuals and the Pensioner Supplement).
• Senior Australians will also see an without an income tax liability
increased Medicare levy phase-in
limit of $36,100 from 1 July 2010 (or 50% discount for interest income The change, which arises out of the Australia’s
Future Tax System Review deliberations
$52,353 for certain eligible couples) From 1 July 2011, individuals will obtain
attempts to align tax relief for investors in
a 50% tax discount on the first $1,000 interest-bearing products with other types of
of interest income earned. This will investment. Other types of investment yield
TIP include interest earned on deposits held that already enjoy tax relief include:
Children under 18 will be tax-free on in authorised deposit taking institutions • dividends: franking credits
the first $3,333 of unearned income (including any bank, building society • rental income: capital allowance
or credit union), bonds, debentures and deductions
for the 2010-11 year. If all income is
fully franked, the first $7,000 will be annuity products. This discount will also • capital gains: 50% discount for assets
be available for interest income earned held for greater than 12 months.
tax-free.
directly as well as indirectly, such as via a
2010-11 Federal Budget Summary 8
Standard deduction for work-related War Widows Pension Proposed changes to Family Tax
expenses Currently war widows (or widowers) are Benefit arrangements
The Government intends to take up not eligible for the War Widows Pension The Government proposes amendments
the recommendation of the Australia’s if, before applying for the pension, to the Family Tax Benefit (FTB) as
Future Tax System Review to move they have remarried since the death of follows:
towards a standard deduction for their veteran partner. This rule did not • More flexible arrangements will
work related expenses and the costs of apply if the widow (or widower), before apply to FTB beneficiaries who have
managing tax affairs. This is to: applying for the War Widows Pension, outstanding income tax returns
• be phased in from 1 July 2012 as had entered into a de facto relationship • Participation in full-time education or
a standard deduction of $500 per following the death of their veteran training will be required by children
taxpayer moving to $1,000 from 1 partner. The Government has announced aged 16 to 20 for families to remain
July 2013 that they will now amend this rule so eligible for FTB-Part A
• allow taxpayers with actual expenses both married and de facto relationships • The annual Child Care Rebate (CCR)
exceeding the standard limit to claim will be treated the same in determining will be capped to the 2008-09 level
on an actual basis, and the eligibility of the widow (or widower) of $7,500 per child from the current
• be part of an overall aim to move to a for the War Widows Pension. The $7,778 per child and indexation will
simplified “tick and flick” system and amendment will state that if the widow be frozen for four years from 1 July
is estimated to cost $410 million once (or widower) is either remarried or in a 2010. The percentage of out-of-
fully implemented. de facto relationship before they apply pocket expenses reimbursed by the
for the pension, they will not be eligible Commonwealth will remain at 50%
First Home Savers Accounts for the pension. However, war widows up to the annual cap.
The current regulations require investors (or widowers) who remarry or enter into
in the First Home Savers Account a de facto relationship after claiming the
(FHSA) scheme to hold their savings pension will not lose their entitlement
for a minimum of four years before under this new measure.
purchasing a home. Where this condition
is not met, the funds are required to be
transferred to a superannuation fund to
maintain the concessional treatment.
It is now proposed that, instead of
transferring to superannuation, after
meeting a minimum qualifying period,
savers will be able to apply the funds
against an approved mortgage. This
measure will commence once the
enabling legislation commences.
Increase in the net medical expenses
tax offset claim threshold
The Government will increase the
threshold above which a taxpayer may
claim the net medical expenses tax offset
(NMETO) from $1,500 to $2,000 with
effect from 1 July 2010. The measure
also allows for the commencement of
annually indexing the threshold to the
CPI, with the first indexation adjustment
to the threshold to take place on 1 July
2011.
The NMETO currently allows
taxpayers to receive a tax offset equal
to 20% of net unreimbursed eligible
medical expenses above $1,500. The
Government states that the motivation
for this measure is to ensure the ongoing
sustainability of the NMETO.
2010-11 Federal Budget Summary 9
Superannuation
The Budget contained very little to impact The following reforms were announced
alongside the release of the Australia’s
superannuation other than reinforcing those Future Tax System Review and are
announcements in response to the Australia’s Future Tax also included in the Budget
System Review. For individuals, the following changes • Increase of the Superannuation
Guarantee Contribution (SGC) rate
are to apply from 1 July 2010. to 12%: this will occur via 0.25%
increases in 2013-14 and 2014-15, and
The Government co-contribution Superannuation Funds will now obtain then 0.5% increases for each of the
for personal non-concessional a deduction for providing Terminal following five years until 2019-20
superannuation contributions Medical Condition benefits • A Government contributions tax
• The matching rate to be permanently • Currently deductions are only rebate for low income earners: the
set to 100% available for the cost of providing rebate of up to $500 per annum will
• Capped at $1,000 benefits in relation to death, permanent apply to those taxpayers earning less
• The income threshold is to be incapacity and temporary incapacity than $37,000 p.a. (adjusted taxable
frozen for two years ending 2011-12 • The change aligns deductions income) and is designed to negate
(incomes of up to $31,920 will receive available for various benefit payments contributions tax on concessional
maximum phasing out at $61,920) and has effect from 16 February 2008 contributions for low income earners
• The higher annual concessional
Excess Contributions Tax Superannuation funds are also expected contributions cap of $50,000
• The Commissioner will be permitted to benefit from reforms to Public Trading available to those over 50 is to be
to exercise discretion prior to the Trust rules. These rules currently require retained (from 1 July 2012), but only
issuing of an excess contributions tax Unit Trusts to be taxed like companies in for those with less than $500,000
assessment to the individual certain circumstances if superannuation superannuation at that time
• Currently the Commissioner is funds and exempt entities hold equity of • Raising the SGC age limit to 75:
only able to exercise his discretion 20% or more in the trust. From 1 July currently, SGC is not required to be
to overlook excess contributions 2011, the 20% tracing rule will not apply paid for those over 70 years of age
or allocate the contribution to a to public unit trusts to the extent that
different income year after an excess units are held by superannuation funds
contributions tax assessment has been and exempt entities that are entitled to a
made refund of excess imputation credits.
Introducing the excess contributions discretion is a welcome change that could benefit tens of thousands
of Australians. Fund members will be able to actively manage excess contributions before the
assessment arrives meaning they do not need to pay needless and unfair tax assessments. It also helps
manage issues while “fresh of mind” rather than potentially years later when the assessment issues.
2010-11 Federal Budget Summary 10
Other measures
Private company benefits distribute the money gathered from
Recent changes to the Division 7A public donations to other charitable
private company rules will be further organisations that also have DGR status.
amended to make it clear that a dwelling The Government has proposed a
provided by the company that is used as new regulatory framework to improve
a main residence by a shareholder or an the integrity of public ancillary funds
associate will not be caught – provided and further boost confidence in the
that the company purchased the dwelling philanthropic sector.
before 1 July 2009 and the company The proposed regulatory framework
meets a continuity of ownership test. would take effect from 1 July 2011 and
will include legislative guidelines similar
Film tax offsets – change in eligibility to those introduced for private ancillary
The Budget contains the following funds from 1 October 2009.
changes to the current eligibility The measures aim to provide trustees
requirements for the film tax offsets of these public ancillary funds with
program: greater certainty as to their philanthropic
• Reduction in the minimum qualifying obligations and provide donors and the
expenditure threshold for the post, charitable sector with greater confidence
digital and visual effects (PDV) offset that donations are being used effectively.
from $5 million to $500,000 In practice this may mean further red
• Removal of the requirement for tape for the trustees of these funds,
films with qualifying expenditure of however the government has promised
between $15 million and $50 million consultation before legislating these rules.
to have at least 70% of the film’s total
production expenditure as qualifying Social security measures
Australian expenditure in order to A number of social security measures
qualify for the location offset were announced in the Budget, including:
• the Government will extend the
The measures are intended to provide a Distance Education Allowance
boost to the Australian film industry and Supplement of $1,084 per annum,
are to take effect from 1 July 2010. per student until 30 June 2011, and
the Additional Boarding Allowance
Public ancillary funds of $1,000 per annum, per student
Many community and fundraising and the consequential ABSTUDY
foundations are set up as public ancillary Boarders’ rate for School Fees
funds and hold Deductible Gift Allowance until 31 December 2011
Recipient (DGR) status. This means • from 1 July 2010, the Community
that all donations made to the funds Development Employment Projects
are tax deductible. These funds then (CDEP) program will be indexed by
2010-11 Federal Budget Summary 11
a Wage Cost Index (WCI) instead of Amendments to Fuel Ethanol Tax
the previous arrangement of being arrangements
indexed by a combination of the CPI The Budget changes will introduce an
and the non-farm GDP deflator energy content-based fuel system, as
• the Government will require follows:
compensation payers, such as • The excise and excise equivalent
insurance companies, to notify customs duty rate for ethanol will be
Centrelink prior to making 25 cents per litre from 2011 phasing
compensation payments to clients down to 12.5 cents per litre by 2015
from 1 July 2011. Centrelink will • Offsetting grant payments to ethanol
then use this information to assess producers will be progressively
the recipient’s ongoing entitlement to reduced from 22.5 cents per liter on 1
receive Centrelink payments July 2011 to zero by 1 July 2015
• Special Disability Trusts – the • There will be no offsetting grants for
government will amend the eligibility excise equivalent customs duty
criteria to make them more accessible
and increase take-up. This will be Business borrowing directly from retail
applicable from 1 January 2011. The investors – simplified process
definition of a beneficiary will be ASIC will allow listed entities meeting
expanded to include people with a appropriate criteria to issue bonds to
disability who can work up to seven retail investors using a simplified process,
hours per week (excluding work in including a shorter prospectus.
an Australian Disability Enterprise) This measure will align the disclosure
The allowable uses for the trust will requirements for retail bond issues with
be expanded to include: the simplified process allowed for equity
− all medical expenses, including issuance.
membership costs for private
health insurance
− maintenance expenses of Special
Disability Trust property
− discretionary spending of up to
$10,000 per year.
2010-11 Federal Budget Summary 12
Compliance and administration
Improvement to the Running Balance ATO Compliance Program - dealing Tax reform funding
Account provisions with the cash economy • $65m over four years for Treasury
The Government will increase flexibility The Government will provide to develop and implement the
in managing taxpayer running balance $107.9m to the ATO over four years Government’s response to the
accounts. It will provide interest to to investigate small business operators Australia’s Future Tax System Review
taxpayers where overpayments arise who use the cash economy to avoid • $1.7m over two years to increase
because of an amended franking deficit their tax liabilities. This is a considerable staffing in ATO call centers
tax. sum directed towards small business, • $3.8m over four years to meet the
following a period of leniency to allow demand for legislative drafting
Capital borrowings – change to small business to survive the economic
benchmark interest rates downturn.
The Government will adjust the
benchmark interest rate that applies to Continuation of standard business
capital protected borrowings from the reporting
RBA indicator rate for standard variable The Government will provide $73.2m
housing loans to the RBA indicator rate over five years to continue to maintain
for standard variable housing loans, plus and operate the standard business
100 basis points. This applies to all capital reporting program. This is an initiative
protected borrowings entered into after to reduce the compliance burden
7:30pm (AEST) on 13 May 2008. experienced by business when reporting
to Government.
2010-11 Federal Budget Summary 13
Contact your local tax service
line leaders
Peter Godber Mark Azzopardi
National Head of Taxation Services Director
Grant Thornton Australia Ltd Grant Thornton Melbourne
T +61 7 3222 0290 T +61 3 8663 6000
E pgodber@grantthornton.com.au E mazzopardi@grantthorntonvic.com.au
Geoff Lloyd Gail Curtis
Director Director
Grant Thornton Adelaide Grant Thornton Perth
T +61 8 8372 6666 T +61 8 9480 2000
E glloyd@gtsa.com.au E gcurtis@gtwa.com.au
Paul Banister Peter Berg
Director Director
Grant Thornton Brisbane Grant Thornton Sydney
T +61 7 3222 0202 T +61 2 8297 2400
E pbanister@grantthornton.com.au E pberg@grantthornton.com.au
2010-11 Federal Budget Summary 14
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Adelaide Brisbane Melbourne Perth Sydney
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67 Greenhill Road Grant Thornton House 215 Spring Street 10 Kings Park Road 383 Kent Street
Wayville SA 5034 King George Square Melbourne VIC 3000 West Perth WA 6005 Sydney NSW 2000
T 08 8372 6666 102 Adelaide Street T 03 8663 6000 T 08 9480 2000 T 02 8297 2400
F 08 8372 6677 Brisbane QLD 4000 F 03 8663 6333 F 08 9322 7787 F 02 9299 4445
E info@gtsa.com.au T 07 3222 0200 E info@grantthorntonvic.com.au E info@gtwa.com.au E info.nsw@grantthornton.com.au
F 07 3222 0444
E info.qld@grantthornton.com.au
www.grantthornton.com.au
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member
firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its
services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation.
