Explanatory Memorandum
(Circulated by authority of the Treasurer the Hon P. J. Keating M.P.)FINANCIAL IMPACT
The estimated revenue gain from denying income tax deductions for entertainment expenses is $20m in 1985-86, $310m in 1986-87 and $330m in 1987-88.
Revenue gains of $105m are expected in 1987-88 from the measure to require substantiation of employment-related expenses and car and travel expenses, increasing to $200m after about 4 years.
The measure to tax, as companies, those public unit trusts which operate a trade or business is expected to result in revenue savings of $5m in each of the 1986-87 and 1987-88 financial years.
The potential revenue saving arising from the move to a 5 year write-off of water conservation or conveyance expenditure by primary producers is estimated at $25m in 1986-87 and $20m in 1987-88. An accurate estimate cannot be made of the revenue cost of extending the soil conservation immediate write-off to expenditure in respect of land degradation but is likely to be less than $1m in a full year.
The revenue gain from taxing the carer's pension will be less than $50,000 in each of the 1986-87 and subsequent years.
The amendments being made to counter the exploitation of the eligible termination payment provisions of the income tax law will prevent future losses of revenue. The impact on revenue of any prior exploitation cannot yet be determined.
The revenue forgone by allowing the income tax rebate in respect of certain life assurance policies issued by State government insurance offices will be offset by amounts which the respective State Governments have agreed to reimburse to the Commonwealth.
The measures to amend the income tax law as a result of changes to the Repatriation legislation will have no effect on revenue.