GST crackdown on business to raise an extra $3.8 billion

GST crackdown on business to raise an extra $3.8 billion

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The taxman plans to raise an extra $3.8 billion in GST by extending a compliance crackdown on businesses as part of the government’s efforts to lift tax receipts and repair its bottom line.

Multinationals also face a new minimum tax rate, while gas companies will be taxed an extra $2.4 billion over five years under changes to the Petroleum Resource Rent Tax that were announced in the lead-up to the budget.

There are some new support measures for businesses, including a new tax break for small businesses, a perk to encourage investment in energy efficiency, $2 billion to promote the hydrogen sector, and funding to fight scams.

But Tuesday night’s budget shows the government expects to raise substantial extra revenue from the business world over the next four years, mainly because of upgrades to its economic outlook and high commodity price assumptions.

A GST compliance crackdown is projected to raise $3.8 billion for federal coffers.Credit: Dominic Lorrimer

Among the policy changes to raise more revenue, an extension in a GST compliance program is the biggest initiative, raising $3.8 billion over the next four years. The government said the program would involve giving the Australian Taxation Office an extra $588 million to continue with “a range of activities that promote GST compliance”.

“These activities will ensure businesses meet their tax obligations, including accurately accounting for and remitting GST, and correctly claiming GST refunds,” the budget said.

Global companies are also in the taxman’s sights, with the budget confirming Labor would introduce minimum tax rates of 15 per cent for multinationals. The measure, which honours an election commitment and is part of a global effort to counter tax-dodging, is expected to raise $370 million over five years.

Treasurer Jim Chalmers described the changes to multinational tax rules, the Petroleum Resource Rent Tax, and the extension of tax compliance programs as modest but meaningful moves to help the government deal with long-term pressures on spending.

But these revenue-raising measures were dwarfed by big upgrades in expected company tax receipts thanks to buoyant conditions in the resources sector.

Since October, the government has raised its forecasts for company tax receipts in the coming financial year by $28.9 billion, and it now expects to collect an extra $52.7 billion over the five years from 2022-23.

“The significant upward revision across the forward estimates reflects continued strength in company tax instalments and an improved outlook for company profits across the broader economy,” the budget said.

The government’s revenue-raising measures targeting business were dwarfed by big upgrades in expected company tax receipts thanks to buoyant conditions in the resources sector.Credit: Peter Braig

There were also new support measures for business, including a tax break allowing small firms to deduct the full cost of eligible assets costing up to $20,000.

The government said the instant asset write-off, which will be open to businesses with turnover under $10 million, would improve cashflows and cut compliance costs.

The government is also offering smaller businesses a 20 per cent bonus tax deduction on investments in new assets that will drive electrification and energy efficiency, such as heat pumps and electric heating or cooling systems. This tax break is open to businesses with turnover up to $50 million.

The budget also said about one million small businesses would pay lower power bills than otherwise as a result of the government’s cap on coal and gas prices in response to last year’s energy crisis.

The government also pledged $2 billion to establish a program to boost green hydrogen production, a scheme aimed at making Australia a world leader in the sector.

In the financial sector, the government provided $86.5 million in funding over four years for various programs aimed at combatting online scams and fraud.

This included funding for a National Anti-Scam Centre, money for the corporate watchdog to find and remove websites promoting investment scams, and a new system to prevent scammers from sending text messages that appear to come from corporations or government agencies.

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