THE 2012-13 AUSTRALIAN BUDGET LACKS INITIATIVES TO CAPTIVATE
AND PROMOTE GLOBAL BUSINESSES AND TO PURSUE IMPORTANT TAX POLICY
DEVELOPMENT AND IMPLEMENTATION.
INTRODUCTION
While the Budget provides significant announcements, including
the increase in the Managed Investment Trust (MIT) final
withholding tax rate from 7.5% to 15% effective 1 July 2012, it is
as much characterised by what is not in the Budget. Importantly,
there are no changes to the thin capitalisation rules, including
reducing the safe harbour maximum debt limit below 75% on a debt to
total assets basis, no threat to the arm's length debt test, no
tinkering with the new Research & Development (R&D) tax
incentive, and no retraction of tax benefits for particularly the
mining/resources sector, including the immediate deduction for
expenditure on exploration or prospecting for minerals or the
reduction in Fuel Tax Credit entitlements. Certain of these
possible reform initiatives were being evaluated by
