This Tax Expenditures Statement (TES) provides details on the financial benefits that individuals and businesses derive from taxation concessions of various kinds. These concessions are usually delivered by tax exemptions, tax deductions, tax rebates or reduced tax rates. They lower the tax burden by either reducing or delaying the collection of taxation revenue.
The benefits provided by the tax concessions could equally be delivered in the form of direct expenditures, ie outlays. The Government can use taxation concessions to allocate resources to different activities in much the same way that it can use direct expenditure programmes. For this reason, and noting their direct impact on the underlying budget deficit, these concessions are generally called ‘tax expenditures’.
To allow for a more transparent and complete assessment of public funding, information is presented in this statement about the magnitude of public assistance that is provided via concessional taxation treatment, and the sectors to which the assistance is provided. These figures provide information on the cost of tax expenditures and hence on the level of tax assistance provided to various groups. Details are also provided on the trends in tax expenditures, a comparison with direct outlays assistance, and the level of tax expenditure by taxpayer affected. Additional detail on methodological issues, including a detailed discussion of the retirement income tax and other employment termination tax concessions is presented in the Appendices.