This year's MYEFO had the added expectation that comes with
a New Government. As expected Federal Treasurer Joe Hockey placed a
strong emphasis on the issues inherited from the previous Labor
Government. The MYEFO paints a grim picture of the fiscal position
of the Federal Government and the Australian economy. It forecasts
a $47 billion deficit in 2013-14, $123 billion worth of cumulative
deficits over the forward estimates, declining terms of trade and
unemployment rising to 6 1/4%.
Prior to MYEFO the Government had already:
introduced legislation to repeal the Minerals and Resources
Rent Tax and Carbon Tax.
declared that of the 92 announced but unlegislated tax changes,
34 would proceed, 7 would proceed with amendment and 51 would not
Key measures that are not being proceeded with include the:
cap on deduction for self education expenses
removal of statutory formula for Fringe Benefits Tax (FBT)
tax on superannuation pensions earning over $100,000
R&D tax incentive - quarterly credits
Bad debts - ensuring consistent treatment in related party
financing arrangements (symmetric treatment of bad debts).
Foreign accruals regime
"better targetting" of not-for-profit tax
Key measures that are being introduced include the:
Changes to the thin capitalisation provisions
CGT treatment of earn-out arrangements
reverse charge GST mechanism for the sale of a going concern or
of farm land
income tax treatment of instalment warrants
GST and cross-border transactions – "connected with
Loss recoupment rules – multiple classes of shares
It will be interesting to see if any of this legislation is
actually able to be passed prior to the changes to the composition
of the senate on 1 July 2014. They have already been able to lift
the debt ceiling with the support of the Greens to $300m. However,
they have struggled to get other legislation through. Treasurer
Hockey said that there was $5 billion of savings before parliament
that was previously part of Labor policy that Labor refused to
The Abbott Government has come to power on the back of a mantra
of better financial management, reliability and integrity.
Backflips on the Gonski Education reforms and the handling of
Holden's departure from Australia have already put pressure on
the Government in its first 100 days to demonstrate these
There are still questions hanging over some of the
Coalition's big ticket promises of paid parental leave and the
National Disability Insurance Scheme. There was little guidance on
the future of these reforms but no cut backs have been announced as
You may also ask with the departure of Ford and Holden what is
in the MYEFO for the manufacturing industry. There has been little
clarity provided on initiatives to assist the manufacturing sector.
However the Treasurer did advise that there were some provisions
included to support workers. The Government believes that its main
assistance to the manufacturing industry is the repeal of the
carbon tax and the subsequent reduction in power costs to increase
competitiveness of the manufacturing industry.
One election policy not costed is the 12,000 reduction in public
sector headcount over 2 years. Hockey said as "the previous
Government had cut over 14,000 public service jobs without an
announcement, our proposal will be reviewed in light of the
findings of the National Commission of audit."
Overall the MYEFO did not deliver any new significant macro
developments. However, as a number of significant issues are still
in limbo, 2014 will be a very interesting year in politics.
There has been a range of recent legal developments that affect privacy, child abuse claims and workers compensation.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).