TAX practitioners offered caustic responses to the Budget announcements claiming to have found little more than one substantial tax change – the decision to bring forward by a year the full input tax credits for the purchase of motor vehicles worth some $600 million a year.
“It is a Clayton’s budget in terms of tax measures,” said Craig Robson, a tax partner at Ernst & Young.
Mr Robson said that among the rare news for tax boffins was a move to make the tax treatment of listed investment companies comparable to MIS-based funds.
“Essentially, in most cases they have been announced (previously) … then we have other legislation in place or draft legislation which is waiting for carriage through Parliament,” Mr Robson said.
“From a purely tax perspective there is really zero surprises here, the days are largely gone for the Budget to be a vehicle for any new substantive tax measures.”
Deloitte Touche Tohmatsu tax partner Dale Judd was equally underwhelmed by Mr Costello’s tax initiatives.
“It is pretty much a non-event for business, they haven’t been adventurous,” Mr Judd said.
One change he noted was the tax treatment of lending from overseas.
“A key change is the introduction of a de minimus exemption from the new thin capitalisation rules for taxpayers with total debt deductions below an annual amount of $250,000.”
But this was a minor initiative.
“The 2001/02 Federal Budget has missed yet another opportunity to encourage multinational companies to stay in Australia.
”Australia is almost unique in taxing capital gains from the sale of shares by foreign investors. It would not have been difficult to address these problems in the Budget.”
“We could have exempted foreign investors from capital gains tax on the sale of their shares in Australian companies. We could also have allowed the streaming of franking credits to Australian shareholders and foreign dividend account credits to foreign shareholders.”
