High Earners To Lose Tax Breaks
High-earning individuals better brace themselves, because tax breaks for high-earners will be targeted in the 2012 Budget. The measures will specifically target executives who claim tax-free accommodation allowance.
The slash in tax breaks is expected to bring in about $1 billion in savings. It is also the government’s way of protecting low- and middle-income individuals.
Under the current system, high-income executives can receive thousands of dollars tax-free. The Australian Taxation Office cited an example, where one executive claimed as much as $273,000 in tax-free accommodation allowance in his tax return. The unnamed executive was said to be earning as much as $957,000.
Cassandra Goldie, spokeswoman for the Australian Council of Social Services, said that this tax loophole has been abused and exploited as high-earners are able to reduce their tax liabilities.
Tim Lyons of Australian Council of Trade Unions shared the same sentiment, saying that tax agents and accountants have exploited these tax breaks.
Aside from the slashes in tax breaks, the government is also expected to defer spending of Defence and also put a tight leash on Medicare’s safety net rebates.
Treasurer Wayne Swan expressed confidence that the Government will be able to deliver a surplus on the Budget, forecasting a savings of $1.5 billion.
Swan was also quick to respond to the Coalition’s criticisms. He said the Coalition is overreacting, just like what it did in previous cuts on the budgets.
The Treasurer said although the criticisms were reasonable, the Coalition ended up supporting these measures after they realized the benefits. He also urged everyone in the government to take a mature approach when it comes to the Budget.