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Corporates may be targeted to fill gov’s $12b revenue shortfall: Deloitte

Corporates may be targeted to fill gov’s $12b revenue shortfall: Deloitte

Previously rejected revenue-raising measures may be "given new life in this year's Budget", says analyst firm.

One of Australia’s largest accounting consulting groups warns corporates will be a key target in filling the $12 billion gap in the Prime Minister’s tax revenues by the end of the financial year.

Prime Minister Julian Gillard, in her address to the Per Capita Reform Forum yesterday, said that the “Budget bottom line” in tax revenue is $7.5bn less this financial year than last October’s forecast.

Deloitte Access Economics identified the shortfalls to be in profit-related taxes such as company tax, resource rent tax and tax on unincorporated small businesses, as well as interests, dividends and rent.

“We’d expect corporates will be targeted to [in part] plug the gap. Previously proposed revenue-raising measures [that were rejected by the business community last year] may be given new life in this year’s Budget,” Deloitte claimed.

“There could be a reduction of the thin capitalisation safe harbour from 75 per cent to 60 per cent. This would have a potentially significant impact on business by denying interest deductions available to both Australian and foreign companies.”

Deloitte nominated the resources industry as a primary target, and predicted diminishing value rate for depreciation to 150 per cent, spreading the deduction for first use exploration assets over five years or their effective life. It also saw the potential to remove the capped effective life for certain exploration-related and primary production depreciating assets.

Businesses with a turnover of more than $20 million could also see the 40 per cent non-refundable tax offset abolished due to the government’s revenue shortfall, according to Deloitte. “These would provide only a fraction of the dollar shortfall in question here,” Deloitte stated.

The advisory group pointed out there was no consensus among taxpayers on any of these measures during last year’s consultation process and said many large corporates would be disappointed with these measures. “These could adversely affect the international competitiveness of Australian-based multinationals and the resources industry,” Deloitte continued.

“It is vital Australians begin this conversation with ourselves, because our politicians aren’t. Labor is busily talking about new spending on schools and disability insurance, while the Coalition is talking about rolling back the carbon and mining taxes.”

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Tags DeloitteEconomicsDeloitte Access EconomicsPrime Minister Julian GillardPer Capita Reform ForumBudget 2013-14

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