What’s Next On the Agenda For The Government?

Now that the Labor party is officially in government, people will be interested to see what policies and changes are now likely to occur. A helpful starting point is Labor’s election promises which provide a valuable indication of possible areas the newly appointed government will target over the next few years. This includes:

  • Limiting debt-related deductions (i.e. interest payments) by multinationals at 30% of profits to end the creation of artificial debts and repayment arrangements within related entities. Further deductions over 30% may be considered if firms can substantiate those under the arm’s length or the worldwide gearing ratio test. 
  • Limiting the ability of large multinationals to abuse Australia’s tax treaties while holding intellectual property in tax havens from 1 July 2023. This means that if a firm makes payments for the use of the intellectual property to a jurisdiction where they do not pay “sufficient tax”, a tax deduction in Australia will be denied for those payments. 
  • Increasing transparency by requiring large multinational firms to publicly release high-level data on how much tax they pay in their jurisdictions, along with the number of employees working there. 
  • Implementing a public registry of beneficial ownership to show who ultimately owns, controls, or receives profits from a company or legal vehicle. This will stop individuals from hiding behind complex corporate structures that avoid accountability and obscure their tax liabilities. 
  • They are having mandatory reporting to shareholders as a “material tax risk” where the company is doing business in a jurisdiction with a tax rate below the global minimum (15%). 
  • They are requiring government tenderers to contracts worth more than $200,000 to disclose their country of tax domicile. 

During the election campaign, Labor also promised to reduce the cost of childcare by lifting the maximum child care subsidy rate to 90% for those with a first child in care. 

Total Family IncomeCurrent child care subsidy %Labor election promise child care subsidy %
$0 to $70,01585%90%
More than $70,015 to below $175,015Between 85% and 50%Between 90% and 71%
$175,015 to below $254,30550%Between 71% and 56%
$254,305 to below $344,305Between 50% and 20%Between 56% and 37%
$344,305 to below $354,30520%37%
$354,305 to $500,0000%Between 37% and 7%

In addition, Labor will be seeking to retain the higher child care subsidy rates for second and additional children in care. For those with school-aged children, the promise of the increased child care subsidy will be extended to outside school hours care. 

Over the longer term, it is also likely that Labor will be engaging with the Australian Competition and Consumer Commission (ACCC) to design a price regulation mechanism for child care and with the Productivity Commission to conduct a comprehensive review of the sector to implement a universal 90% subsidy for all families. 

Want to find out more?

During the election campaign, Labor also made announcements which would affect individuals and businesses, both big and small. These include more security for gig economy workers, making wage theft illegal, and training more apprentices. Contact us today on enquiries@rm.net.au if you want to learn more about potential changes that may affect you. 

**The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

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