Tax Expenditures
Statement

2006

 Commonwealth of Australia 2006
ISBN 0 642 74378 9
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:
Commonwealth Copyright Administration
Attorney‑General’s Department
Robert Garran Offices
National Circuit
CANBERRA  ACT  2600
Or posted at:
http://www.ag.gov.au/cca.

A copy of this document and other Treasury information appears on the Treasury Website.  The Treasury Website address is:  http://www.treasury.gov.au.

Printed by CanPrint Communications Pty Ltd
 
Contents

Chapter 1: 	Introduction	1
1.1	What is a tax expenditure?	1
1.2	Why report tax expenditures?	2
1.3	Coverage of this statement	4
1.4	Structure of this statement	5
Chapter 2: 	Trends in tax expenditure estimates	7
2.1	Interpretation of trends and aggregates	7
2.2	Trends in tax expenditures	8
2.3	Large tax expenditures	9
2.4	Trends in tax expenditures by function	10
2.5	Comparison with direct expenditure	12
Chapter 3: 	Measuring tax expenditures	15
3.1	Approaches to measuring tax expenditures	15
3.2	Interpretation of tax expenditure estimates	16
3.3	Accrual estimates	17
3.4	Technical notes	18
Chapter 4: 	Benchmarks	19
4.1	Defining benchmarks	19
4.2	Income tax benchmark	20
4.3	Commodity tax benchmark	28
Chapter 5: 	New, modified and deleted tax expenditures	33
5.1	New tax expenditures	33
5.2	Modified tax expenditures	34
5.3	Deleted tax expenditures	39
Chapter 6: 	Tax expenditures	41
6.1	Introduction	41
6.2	Income tax benchmark	47
Appendix A: 	Modelling tax expenditures	163
A.1	Aggregate modelling	163
A.2	Distributional modelling	163
A.3	Microsimulation	164
Appendix B: 	Concessional taxation of funded superannuation	165
B.1	Scope	165
B.2	Interpretation	166
B.3	Estimates	167
Glossary		173
Index		175

List of tables
Table 2.1: 	Total measured tax expenditures	8
Table 2.2: 	Measured tax expenditures by benchmark	9
Table 2.3: 	Large measured tax expenditures in 2006‑07	10
Table 2.4: 	Aggregate tax expenditures by function	12
Table 2.5: 	Aggregate tax expenditures and direct expenditures by function in 2005‑06	13
Table 5.1: 	New tax expenditures	33
Table 5.2: 	Modified tax expenditures	35
Table 5.3: 	Deleted tax expenditures	39
Table B1: 	Concessional taxation of funded superannuation	172