The Economic Development of Northern Australia: A Critical Review of the Taxation Benefits and Incentives Both Past and Present and the Potential Taxation Options for the Future

In 2015, the Australian government (Commonwealth of Australia) produced a White Paper on the need to realise the full potential of northern Australia and for that region to become an economic powerhouse within Australia. The White Paper explicitly states that the government is not declaring the north a Special Economic Zone where tax concessions are provided to businesses to reside and operate in the region. This paper will examine the current government’s approach to developing the north and in particular the approach to attracting economic activity and foreign investment. This paper will focus on the current tax benefits for those living and working in the north, such as zone rebates, and in particular on what more that could be done by the Australian, state and territory governments to encourage economic activity. The paper will also examine the tax concessions that existed in the past such as an exemption for income tax pursuant to the now repealed s 23(m) of the Income Tax Assessment Act 1936 (Cth) for companies resident in the Northern Territory prior to 1947, and the Darwin Trade Development Zone that was abolished in 2003. The paper will then assess the merits of offering tax benefits in the form of tax credits for businesses operating in the north and greater tax deductions. The paper will explore the merits of a Special Economic Zone for the north as well as tax benefits that could be offered by the states of Queensland and Western Australia and the Northern Territory. The paper will also provide recommendations for a range of tax benefits that could be offered by the various governments to businesses and individuals in order to assist in developing the north. If not, the north may fail to fulfill its true potential.