It would appear small businesses and workers aged over 50 are the voting blocs targeted for the most generous relief from the Government's immediate response to the Henry Review announced today (2 May 2010)

Although the Rudd Government rejected outright 27 of the 138 recommendations made, including a land tax on the family home and the reintroduction of indexation for fuel excise, a number of reform measures were announced today.

However, all the initial measures announced will be dependent on the Government's 40 per cent Resource Super Profits tax on mining royalties due to start from 1 July 2012. The Federal Government will also provide a refund credit for State Govt mining royalties. This ensures the states will be able to keep their existing royalties, but the Commonwealth will refund these payments to the companies.

The specific measures announced today include the following:

Company taxation

The company tax rate will be reduced to 28% by 2014/15. This reduction will take place in two stages as follows:

• 29% from 2013-14
• 28% from 2014-15

This diverges from the Henry Review recommendation of a reduction in the company tax to 25%.

Superannuation

• from 2013/14, the rate of superannuation guarantee contributions (SGC) will increase to 9.25 per cent from a long-standing 9.0 per cent and will increase incrementally to 12 per cent by 2019/20. The incremental increase will also be 0.25 per cent for 2014-15 but will be 0.5 per cent for each of the years 2015-16 to 2019-20.
• the SGC increase will come entirely from the employer.
• low income earners with income of up to $37,000 will receive a new superannuation subsidy of up to $500 from 1 July 2012. This will be calculated by applying a matching rate of 15% on concessional contributions made. Therefore, concessional contributions above $3,333 made by low income workers will receive no additional rebate amount.
• the entitlement age for SGC will be lifted for workers, with the cut-out age limit increasing from 70 to 75 years of age from 2013/14. This will align the SGC cut-out age with voluntary and self-employed contributions.
• the cap for concessional contributions will double to $50,000 (indexed annually) for eligible workers aged 50 and older. The low balance cap applies from 1 July 2012 and effectively replaces the transitional cap for workers aged 50 and older which is due to expire on 30 June 2012. However, as the higher cap is referred to as a 'catch up' it is expected workers will not be eligible for it once their overall superannuation balance exceeds the $500,000 limit.

Small businesses (those with turnover of less than $12 million)

From 1 July 2012:

• the company tax rate for eligible small businesses will be reduced by 2% to 28%.
• small businesses will be able to write off assets costing up to $5,000 immediately. Again, this diverges somewhat from the Henry Review recommendation that a write-off be allowed for assets costing up to $10,000.
• All other assets (except buildings) can be written off at 30% in a single pool. This is intended to allow small businesses to ‚Äúsignificantly reduce their need to track assets for depreciation purposes'' as they will no longer be required to maintain two asset pools, one short-term and one-long term.

Further announcements to simplify tax returns and to encourage savings are expected before the calling of the federal election in the second half of the year.