Henry Tax Review - Revisited

The Henry Tax Review, formally known as Australia’s Future Tax System Review, was commissioned by the Rudd Government in 2008 and delivered its final report in December 2009. Led by Treasury Secretary Ken Henry, it made 138 recommendations aimed at creating a simpler, more efficient and more sustainable tax system.

More than 16 years later, implementation has been limited.

Some recommendations have been adopted or partly adopted. Australia established the Australian Charities and Not-for-profits Commission, expanded pre-filled tax returns, increased the tax-free threshold, introduced a 25% company tax rate for smaller businesses, and adopted elements of Henry’s proposals on tobacco excise and company loss carry-back.

But most of the major structural reforms remain untouched. Stamp duty, payroll tax, insurance taxes and Luxury Car Tax remain. There is no broad-based land tax, uniform resource-rent tax, 25% general company tax rate or Henry-style savings tax regime.

The central Henry vision therefore remains largely unrealised. This and other issues will be discussed soon on the new Australia Inc podcast which I am invovled in. Below is a table identifying the key tax reforms in Henry and a brief note on implementation.

Key Henry Tax Review recommendations
Recommendation	What happened?
Overall tax system Concentrate revenue raising on personal income, business income, economic rents from resources and land, and private consumption. Other taxes should ultimately be removed.	Not implemented Australia continues to rely on numerous narrower taxes, including stamp duties, payroll tax, insurance duties, fuel excise and Luxury Car Tax.
Personal income tax Introduce a high tax-free threshold and a largely constant marginal tax rate for most taxpayers.	Partly implemented The tax-free threshold was substantially increased, but Australia retains multiple marginal tax brackets.
Medicare levy and offsets Incorporate the Medicare levy and major structural tax offsets into the personal income-tax scale.	Not implemented The Medicare levy and various tax offsets remain separate parts of the system.
Standard work deduction Introduce a standard deduction for work-related expenses and tax-affairs costs, while allowing taxpayers to claim higher substantiated expenses.	Partly implemented From 2026–27, a $1,000 standard deduction applies to work-related expenses. Henry's proposal was broader.
Savings and investment income Apply a uniform 40% discount to net interest income, net residential rental income, capital gains and certain investment expenses.	Not implemented Australia never adopted Henry's uniform savings-income discount.
Superannuation contributions Replace the 15% contributions tax in super funds with taxation through the personal income-tax system and a refundable offset.	Not implemented Concessional contributions generally continue to be taxed at 15% within super funds.
Superannuation earnings Reduce the tax on superannuation investment earnings from 15% to 7.5% and apply a more consistent treatment across accumulation and retirement.	Not implemented No general 7.5% superannuation earnings-tax regime was introduced.
Company tax Reduce the company income-tax rate to 25%.	Partly implemented Qualifying base-rate entities pay 25%, but the general company tax rate remains 30%.
Company loss carry-back Allow companies to carry revenue losses back against earlier taxable income, subject to franking-account constraints.	Partly implemented Temporary loss carry-back arrangements were introduced during COVID and later policy has moved closer to Henry's proposed model.
Charities regulator Establish a national commission responsible for determining charitable status and regulating the sector.	Implemented The Australian Charities and Not-for-profits Commission was established in 2012.
Resources tax Replace existing Commonwealth and state resource charges with a uniform resource-rent tax applying to economic rents from non-renewable resources.	Attempted, then reversed The narrower Minerals Resource Rent Tax was introduced and subsequently repealed. The PRRT remains, but there is no uniform Henry-style regime.
Stamp duty Abolish conveyancing stamp duties and replace them over time with more efficient broad-based taxes on land.	Limited implementation Stamp duty remains widespread. The ACT's long-term shift from conveyance duty toward general rates is the clearest reform broadly consistent with Henry.
Broad-based land tax Move toward a broad land tax ultimately applying to all land.	Not implemented State land taxes remain narrower, with major exemptions including the principal residence.
Payroll tax Ultimately replace state payroll taxes with a more efficient broad-based tax.	Not implemented Payroll tax remains an important source of state government revenue.
Alcohol tax Tax alcohol primarily according to alcohol content through a consistent volumetric system.	Not implemented Different products remain subject to different tax systems, including the value-based Wine Equalisation Tax.
Tobacco excise Increase tobacco excise, index it to wages and remove duty-free tobacco concessions.	Largely implemented Excise has risen substantially and is indexed to wages, although a limited duty-free traveller concession remains.
Insurance taxes Abolish specific taxes on insurance products, including insurance duties and fire-services levies.	Partly implemented Some states have reformed individual insurance taxes, but specific insurance taxes remain widespread.
Luxury Car Tax Abolish the Luxury Car Tax.	Not implemented The Luxury Car Tax remains in force.
Pre-filled tax returns Make pre-filled personal income-tax returns the default for most individual taxpayers.	Substantially implemented ATO myTax now automatically pre-fills extensive information received from employers, banks and other reporting bodies.