Albanese government dumps Coalition’s self-assessment assets plan

Taxpayers will be banned from self-assessing the effective life of assets with the government axing a Coalition plan as part of a raft of measures set raise almost $10bn.

Taxpayers will be banned from self-assessing the effective life of assets with the government axing a Coalition plan as part of a raft of measures set raise almost $10bn. Picture: Annette Dew

Taxpayers will be banned from self-assessing the effective life of assets with the government axing a Coalition plan as part of a raft of measures set raise almost $10bn.

Budget papers show the Albanese government will not proceed with a measure announced by the Morrison government in 2021 to allow the self-assessment of the effective life of intangible assets.

“Reversing the decision will maintain the status quo – effective lives of intangible depreciating assets will continue to be set by statute,” budget papers read.

“This will avoid the potential integrity concerns with the previously announced measure and contribute to budget repair.”

The measure is estimated to increase receipts by $550m over the four years of the forward estimates from 2022–23.

Recent depreciation measures introduced in response to the Covid-19 pandemic – including temporarily allowing most businesses to immediately deduct the full value of new assets – delivered a $160bn hit to the budget.

However, analysis of Australian Taxation Office returns reveals that despite high deductions over the past two years, data from 2020–21 indicates “the use of these measures is significantly lower than originally predicted, particularly by large businesses”.

Jim Chalmers has also given the Australian Taxation Office more firepower, with the Treasurer allocating almost $2bn over the next four years to strengthening compliance efforts The measures are expected to increase total tax receipts by $488m in 2022–23 and $9.5bn over the forward estimates to 2025–26.

An $80.3m boost to extend the ATO’s personal income tax compliance program until 2025 will see it investigate over-claiming of deductions and incorrect income reporting. The program is estimated to increase receipts by $674.4m and increase payments by $80.3m over four years.

Funding for the ATO’s tax compliance task force will also rise by more than $200m each year over four years, with the crackdown estimated to increase receipts by $2.8bn and increase payments by $1.1bn over the forward estimates. The ATO’s shadow economy program will be extended by three years to boost the budget’s bottom line.

“The extension of the shadow economy program will enable the ATO to continue a strong and co-ordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules,” the budget papers read. The measure is estimated to increase receipts by $2.1bn and increase payments by $685.2m over the four years from 2022–23 – including a $442.3m increase in GST payments.

The government notes that the estimated aggregate value of outstanding tax disputes as of August 31 is $7.8bn.

Originally published as Albanese government dumps Coalition’s self-assessment assets plan