Government scraps Labor tax initiatives

The Federal Government announced this week that they will not proceed with a number of tax initiatives announced by the previous Labor Government. These are measures that were not legislated prior to the election. These measures include:

• The proposed $2,000 cap on claiming deductions for self education expenses. This is a welcome announcement. As we highlighted in a recent newsletter one of the biggest problems with this measure was that it proposed extending the definition of self-education beyond merely courses conducted at universities and other educational institutions. The effect would have been to limit self-paid training of almost any kind, including conferences and related travel.

• The proposed change to the way in which motor vehicle fringe benefits are calculated. This proposal had caused considerable consternation for both the car industry and salary packaging specialists, as it had the potential to make motor vehicles less attractive as a salary packaging tool - which could mean less cars being sold.

• The proposed tax on superannuation pensions where the income of the super fund exceeds $100,000. The Coalition had been largely silent on this measure prior to the election. Superannuation income is traditionally tax free for members that are receiving a pension, however Labor had proposed to tax any excess income over $100,000 at 15%.