The yearly “tax expenditure statement” has been released (http://www.treasury.gov.au/PublicationsAndMedia/Publications/2016/TES-2015). What is a tax expenditure? Its a negative tax. Effectively it is a tax concession so that certain income is taxed less than the “norm”.
For example, super is taxed at 15% generally, which is less than most marginal tax rates.
So what are the big tax expenditures?
Capital gains tax main residence exemption cost $54 billion in revenue each year.
Concessional taxation of superannuation contributions and superannuation entity earnings cost $30 billion in revenue each year.
GST discounts and exemptions cost $21 billion in revenue each year.
Capital gains tax discount for individuals and trusts costs $6 billion in revenue each year.
Concessional taxation of non-superannuation termination benefits costs $2 billion each year.
My favourite three are growing with the car fringe benefit statutory method aproaching $1 billion, Division 43 capital deductions costing $1 billion and the R&D tax incentive $850 million each year.
But remember we need to find $40 billion in savings to balance the budget. We are not going to find this by playing with tax concessions alone…