No MYEFO FOMO for tax folks | KPMG | AU

No MYEFO FOMO for tax folks

No MYEFO FOMO for tax folks

Andy Hutt discusses the Mid-Year Economic and Fiscal Outlook (MYEFO) for 2017/18.

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Director, Australian Tax Centre

KPMG Australia

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The federal government has released its Mid-Year Economic and Fiscal Outlook (MYEFO) for 2017/18. At a time of year when many are gripped by the “fear of missing out” (FOMO), MYEFO contained little that would be of concern for those involved in tax.

The government projects that the underlying cash balance will return to surplus in 2020/21, and notes an increase in expected receipts up to that point, relative to the projections in the 2017/18 budget, driven by company tax and superannuation fund taxes.

The government expects its net debt to peak at around 19 percent of gross domestic product in 2018/19, reducing to around 17 percent by 2020/21.

Against the backdrop of a busy year of new tax announcements and measures, the MYEFO documents do not contain news of any additional major taxation initiatives. However the government has taken the opportunity to use MYEFO to recap on some of the measures that are under way, but not yet legislated, including:

  • Extension of the hybrid mismatch rules to include branch mismatch situations, and to address the insertion of entities based in zero-tax countries into multinational group structures.
  • Enhanced capital gains discount for investment in affordable housing, and accessibility to this investment class for Australian managed investment trusts.
  • Integrity measures concerning employer superannuation contributions, including strengthened penalties for company directors and the establishment of an Australian Taxation Office (ATO) taskforce to address non-compliance with superannuation contribution obligations.
  • Repeal of capital gains tax CGT main residence exemption, for taxpayers who are foreign residents at the time of the CGT event.

With major tax reform looking almost certain to be enacted in the United States (US) within days, it will be interesting to see what dynamic unfolds when parliament resumes in February.

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