A mixed box of handmade bonbons, soft centres and empty chocolate wrappers Federal Treasurer Scott Morrison has released a suite of measures designed to drive economic and job growth, target tax avoidance by large multinationals and increase access to superannuation benefits for some Australians whilst limiting access for others. Although the early leaking of Federal Budget measures has become an annual custom, Budget 2016/17 is best described as the Forrest Gump Budget – “just like a box of chocolates, you never know what you are going to get.” And when the box was unwrapped, the Federal Government definitely did not disappoint. From a tax perspective, the announcements concerning the changes to lifetime caps to non-concessional superannuation contributions, pension transfer balance caps, the change in the small business entity thresholds and the extent of the company tax rate cuts were certainly not anticipated by the pundits. Australian resident companies, especially those in the $2m - $10m turnover range, have been able to pick all the “soft centred” chocolates, with these companies getting access to tax concessions relating to outright deductions for low cost assets, and simplified measures for depreciation, trading stock, GST and FBT. The proposed reduction in the company tax rate to 27.5% from 1 July 2017 for companies with less than $10m turnover and eventually 25% in the 2027 financial year for all companies, will have an impact on dividend yields and tax payments for shareholders in both private and public companies. Large multinational organisations have certainly been given the “carob chocolates” in this Budget. As we have seen in recent years, they are an easy revenue target politically for Federal Governments, with different initiatives targeting multinationals to pay their “fair share” of Australian tax. The Organisation for Economic Co-operation and Development (OECD) has been working on a global action plan to limit tax avoidance of multinational groups, known as the Base Erosion and Profit Shifting (BEPS) action plan. Along with other developed economies, Australia has made a significant contribution towards development of the BEPS action plan. With this Budget, Australia now joins the United Kingdom as being one of the only countries that have taken action outside of the BEPS action plan, by proposing domestic legislation to counter the tax leakage created by “new world” business models. The commercial reality of the proposed Diverted Profits Tax is that these entities will inevitably pass on any additional costs to their Australian customers. Read that as your monthly Netflix subscription going up in the near future! The Federal Government realises that the mining investment boom is over and is trying to stimulate the economy and jobs growth through investment in infrastructure and reducing tax on businesses, in turn encouraging businesses to reinvest in the economy. Business and individual tax cuts come at a cost and it seems that cigarette smokers and some superannuants have been left with the empty chocolate wrappers in this Budget. With a Federal election on the horizon, the 2016/17 Budget was not expected to deliver major change, but has delivered more than many thought we would see. One wonders whether the Federal Government has hidden the best chocolates, the handmade bonbons, from view and will unveil them during the election campaign.