Date
- The Tax Expenditures Statement (TES) is published annually, as required by the Charter of Budget Honesty Act 1998.
- A tax expenditure results from a provision of the tax law that causes a deviation from the standard tax treatment that would apply to an activity or class of taxpayer; that is, from the benchmark tax treatment.
- The choice of benchmark unavoidably involves judgment and may therefore be contentious in some cases.
- This choice should not be interpreted as indicating a view on how an activity or class of taxpayer ought to be taxed.
- The level of the tax expenditure estimates the difference in tax liabilities relative to the benchmark. Consistent with most OECD countries, the standard methodology (the ‘revenue forgone’ approach) used to estimate tax expenditures is based on the existing level of activity utilising a tax provision.
- These estimates therefore do not indicate the revenue loss to the Australian Government budget of specific tax expenditures, as there may be significant changes in activity were tax expenditures to be removed.
- The potential revenue losses associated with some of the largest tax expenditures have been estimated (see Table 1.3).
- These estimates are subject to significant caveats.
- Previous editions of the TES have stated that tax expenditure estimates are not strictly additive. Tables aggregating tax expenditures have therefore been removed from the 2013 TES. This issue will be reviewed for the 2014 TES.
- Care is required when comparing tax expenditures with direct expenditures as they may, for example, measure different things.
- The 2013 TES reflects Australian Government policy, as announced, up to and including the 2013‑14 Mid-Year Economic and Fiscal Outlook.
- Estimates from previous editions of the TES should not be compared to estimates in the current edition because, for example, benchmarks may have changed.
- Currently, the benchmark for the tax treatment of savings is the comprehensive income tax benchmark. Experimental estimates for superannuation using an expenditure tax benchmark are reported at Appendix A.