THE federal government has scaled down the expected revenue from its controversial mining tax and scrapped the planned 1 per cent cut in the company tax rate.
However, small businesses will benefit from new concessions announced in Treasurer Wayne Swan’s fifth budget, handed down this week.
As was widely expected, Mr Swan projected a $1.5 billion surplus in 2012-13 and bigger surpluses down the track.
The turnaround occurred despite the deficit for this financial year deteriorating to $44.4 billion, from an expected $37.1 billion.
The budget focus was very much on families, with extra tax breaks to those who qualify for the Family Tax Benefit Part A.
The budget also included a new cash payment to families of school-age children, as previously disclosed.
Revenue forecasts for the Minerals Resource Rent Tax (MRRT) have been downgraded again, to $9.1 billion in its first three years of operation, down from $10.7 billion as per last November’s mid-year review. The 30 per cent impost on coal and iron ore ‘super profits’ starts from July 1.
The MRRT will bring in just $3 billion in 2012-13, rising to $3.5 billion and $3.7 billion in the following two financial years.
Arch critic and Fortescue Metals Group chairman Andrew Forrest has claimed the new tax will bring in very little revenue because big miners will benefit from depreciation write-offs.
Mr Swan said the cut in the company tax rate was dropped because the measure “has been rejected in full by the Liberals and Nationals, and in part by the Greens”.
The Opposition rejected the tax cut because it was linked to the MRRT, while the Greens wanted it limited to small business.
“We will now adopt a different approach to spread the benefits of the (mining) boom to families and business,” the government said in its budget papers.
Small businesses will be able to write off every new business asset they buy worth up to $6,500.
The reform kicks in on July 1 and its value will be more than $1 billion in 2013-14.
Under current arrangements, if a small business bought four $6,000 items it would only be able to claim $3,600 as a deduction compared to $24,000 in the new arrangement.
Other tax break measures for small business include ‘loss carry-backs’, under which a company can apply operating losses to the previous year’s income to reduce their tax liability.
The $714 million scheme was expected to assist 110,000 businesses over its first four years, including one in six manufacturing companies.
“The introduction of the loss carry-back will allow businesses to also ‘carry back’ their losses, to offset past profits and get a refund of tax previously paid on that profit,” Small Business Minister Brendan O’Connor said.
“In doing so, this reform will mean businesses can use their tax losses now – when they need to – rather than in the future when their businesses are performing better.”
Businesses will also be able write off the first $5,000 of a motor vehicle, and assets costing $6,500 or more will be depreciated in a single pool.