Federal tax receipts down: A budget omen?

The ATO’s latest published taxation statistics show revenues from personal taxation, company taxation and capital gains tax are all down.

With the Government keen to, among other things, claw in revenue to help it produce the Treasurer’s promised budget surplus, the statistics perhaps point to areas where revenue gains might be sought. Next Tuesday’s budget will tell the story.

The stats feature data compiled from tax returns from the 2009-10 income year and other financial information provided in activity statements and other FBT, GST and excise forms for the 2010-11 financial year.

Highlights from the statistics for the 2009-10 year include:

• Individuals had a cumulative taxable income of $577.5 billion, an increase of 4.2% over 2008-09 and a cumulative net tax payable of $120 billion.
• Total deductions claimed by individuals decreased by 6.1% from 2008-09 to $29.7 billion, which included $17.1 billion in work-related expenses. No doubt the Government would be happy to see this trend continue. Top work-related expenses were car expenses (cents per km), compulsory uniform expenses, and protective clothing.
• For the 2008-09 and 2009-10 income years, it looks like rental properties essentially ran at a loss. Rental deductions were greater than total rental income, resulting in overall negative net rental income of around $10.3 billion. Of individuals declaring net rental income, 80.2% claimed rental interest deductions. In 2009-10, deductions for interest comprised around 65.5% of gross rental income.
• For the 2009-10 income year, 63.4% of individuals with net rental income reported a taxable loss from their rental property. Perhaps negative gearing is alive and well, but it’s virtually impossible to see the budget attacking this strategy.
• For the 2009-10 year, the total Medicare levy and Medicare levy surcharge affected almost 8.5 million taxpayers and collections increased by 4.2% to $7.9 billion. It will be interesting to see what impact the means testing of the private health insurance rebate has on this after July 1, 2012.
• Just over 777,000 companies lodged tax returns, a 1.9% decrease from 2008-09. Total company expenses were $2.027 billion, a 5.4% decrease from 2008-09. Companies were liable for $50.4 billion in net tax, a 10.6% decrease from 2008-09. All of these figures seem to confirm it’s tough times for many businesses.
• Net capital gains were reported by 541,898 individuals, 15,174 companies and 61,191 super funds totalling $20.3 billion, a 13.6% decrease from 2008-09. Approximately 60% of capital gains came from share transactions.

The number of companies claiming CGT small business concessions fell by almost 12% from 2008-09.

CGT payable on the net capital gains of taxable individuals, companies and funds was estimated to be $5.1 billion, a 15.1% decrease from 2008-09.

• Super funds were one exception and the figures show funds had net tax liabilities in 2009-10 of $7.2 billion, a 26.7% increase from 2008-09. Over 377,000 funds lodged returns, an increase of 4.8% from 2008-09.
• Partnerships saw a 3.7% decrease in reported total net income in 2009-10. The largest proportion of partnerships were in the agriculture, forestry and fishing industry.
• There was an increase of 6.4% in the number of trusts lodging tax returns. Total net income or loss reported by trusts was $123.8 billion, a 19.5% increase from 2008-09. Trusts with income in the rental, hiring and real estate services industry represented the largest proportion (at 17.2%) of all industry identified trusts.

The stats also showed that the average time taken to complete a business income tax return was 5.8 hours. The average time taken to complete a BAS was 2 hours. It took an average of 11.3 hours to compete an FBT return and the average cost of managing tax affairs claimed by an individual was $356. The cost of managing tax affairs increased by 11.3% from 2008-09 to 2009-10.

For the 2010-11 year:

• The number of self-managed super funds grew by 7.7% while the total value of assets held by those funds grew by an estimated 11.9%. This will not surprise anyone.
• The stats suggest that employees may be getting more fringe benefits in their remuneration packages. FBT payable was $443.2 million for Australian Government departments, a 13.4% increase from 2009-10. FBT payable was $3.2 billion for other employers, an increase of 6.7% from 2009-10.
• Total net GST liabilities (including Customs collections) were $46 billion, an increase of 2.4% from 2009-10. Luxury car tax liabilities were $479 million (a 0.7% decrease). This tax has often been criticised by the car industry and others, and the threshold at which it cuts in has nowhere near kept pace with the increase in car prices over the years.

Nonetheless, it is a near impossibility to expect there will be any changes to this in the Budget — $479 million is $479 million after all!

Net GST refunds increased by 9.4% in 2010-11, with the category “refunds of $10,000,000 or more” increasing by 14.4% or 3.5 billion from 2009-10.

• Total grants paid under the fuel tax credits scheme were $5.1 billion, a 2.3% increase over 2009-10. It is widely predicted that the Budget will reduce this credit – $5.1 billion must look a tempting target to the Government.

Taxation statistics provide scope for all sorts of interpretations, but this year they take on a little more importance and interest in light of the looming Federal Budget.

Terry Hayes is the senior tax writer at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.

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