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Sept. 1 — Australian Treasurer Scott Morrison introduced legislation to slash corporate tax rates over the next decade, but the Senate is likely to reject much of the bill.
Morrison said Sept. 1 the cuts, which would reduce taxes on the largest companies to 25 percent from their current 30 percent by 2026, are needed to “make Australian companies more internationally competitive in a tough global market place.”
The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 aims to deliver on ambitious corporate tax reduction promises made in the May federal budget.
The corporate rate cuts are likely to founder in a tough Senate. The government lacks a majority in the Senate and the Labor opposition in conjunction with the Greens can block its bills.
Both parties have previously signalled their opposition to tax breaks for large businesses, although Labor is open to providing additional cuts to smaller companies.
The cuts proposed in the legislation would be implemented gradually through 2026-27, with smaller companies receiving them first.
Currently businesses with turnover under $2 million are taxed at 28.5 percent, while a 30 percent rate applies to all other businesses.
With effect from July 1, 2016, the bill would reduce the corporate tax rate to 27.5 percent for businesses with turnover under A$10 million.
Over successive years, larger companies gradually would gain access to the 27.5 percent rate, so that by 2021-22 the rate would apply to companies with a turnover of under A$500 million and by 2023-24 all companies would be taxed at that rate.
Then, in 2024-25, the corporate tax rate would fall to 27 percent and by 2026-27 it would drop to 25 percent.
For individuals, Morrison Sept. 1 also introduced a bill to raise the highest personal income tax threshold so that the top rate of 37 percent applies for income above A$87,000, up from the current level of A$80,000.
A day earlier the government introduced a bill to reduce tax incentives for corporate investment in research and development (170 ITM, 9/1/16)
To contact the reporter responsible for this story: Murray Griffin in Melbourne at firstname.lastname@example.org
To contact the editor on this story: Rita McWilliams at email@example.com
The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 and an explanatory memorandum are at http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr5684%22.
Treasury Laws Amendment (Income Tax Relief) Bill 2016 and an explanatory memorandum are at http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr5683%22.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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