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Welcome to our news update section where important information is added or updated on a semi-regular basis, with the latest finance and taxation news that affects you and your business. Disclaimer: The following information is intended to be a guide only and is not intended to be advice. You should not act solely on the information contained on this website because many aspects of the information have been generalised and the tax laws apply differently to different people in different circumstances. Further, as tax and related laws change frequently, there may have been changes to the law since the information was published on the website. Specific advice should always be obtained from our office before taking action. All Accounting & Taxation Services, its partners and staff expressly disclaim any and all liability to any person for the consequences of anything done or omitted to be done by any such person relying on information contained in part or in whole on this website.
2010 BUDGET Summary of Key Announcements - Individuals will only need to include 50% of interest income of up to $1,000 from certain investments in their tax return.
- Taxpayers will have the option to claim a standard deduction of $500 in 2012/13, increasing to $1,000 in 2013/14.
- The maximum co-contribution matching rate and payment amount will remain at 100% and $1,000 respectively.
.Henry Review Proposals Confirmed - The superannuation guarantee (SG) rate will increase gradually from 9% to 12% from 1 July 2013
- The SG contribution age limit will increase from 70 to 75 from 1 July 2013
- A Government super contribution of up to $500 pa will be made for people earning up to $37,000 pa from 1 July 2012 to effectively refund contributions tax
- The company tax rate will gradually reduce to 28% by 1 July 2014 (two years earlier for eligible small businesses)
- Very generous depreciation rules will apply to small businesses from 1 July 2012, and
- A 40% Resource Super Profit Tax will be introduced from 1 July 2012.
.First Home Saver Account A minor amendment has been made to the First Home Saver Account (FHSA), allowing individuals to purchase a home within the initial 4 years. .Low Income Tax Offset Enhancement Confirmed The increase in the maximum low income tax offset to $1,500 per year from 1 July 2010 has been confirmed. As a result, the amount of tax-tree income low-income earners can receive each year will increase to $16,000. .Outstanding Centrelink Claim Threshold Increase Effective from: 1 July 2010 The net medical expenses tax offset of 20% will apply to net medical expenses above a threshold of $2,000 in 2010/11, instead of the current level of $1,500. The threshold will also be indexed to the Consumer Price Index, starting 1 July 2011. .Child Care Rebate Cap Reduced Effective from: 1 July 2010 The annual Child Care Rebate will be capped at $7,500 per child (reduced from the current cap of $7,778), and indexation will be paused for four years from 1 July 2010. Out of pocket expenses will continue to be rebated at 50% of the annual cap. .Disability Support Pension Announcements Assessments will be improved for disadvantaged job seekers and Disability Support Pension (DSP) claimants who are currently required to undergo a Job Capacity Assessment to ensure appropriate employment and income support are provided. .Youth Allowance Enhancements Funding has been confirmed to implement reforms to student income support announced in the 2009 Budget. These include changes to the criteria for independence and personal income test and will provide greater access to the Youth Allowance for people form lower income backgrounds. .Outstanding Centrelink Debts The current process will be improved for garnishing the returns of ex-Centrelink customers who has an outstanding debt and now arrangement in place to repay the amount. This will be done by enabling the ATO to automatically intercept tax refunds on behalf of Centrelink. Henry Review Superannuation contribution will grow from 9%to 12% by 2020 which will be phased in over seven years starting in 2013 - Company tax to be cut to 28 per cent in 2013/14
- Workers who earn under $37,000 will get up $500 a year from the Government, effectively cancelling out any tax these workers pay on their super contributions.
- A much-higher personal tax-free threshold of $25,000. This is how much you have to earn before you start paying tax.
It is strongly suggested that other reforms will be included in the next round of information released by the government. These are - A tax reduction on interest earned
- A default tax-return system without the ability to claim deductions
ATO Refunds The ATO has experienced significant delays on hundreds of thousands of tax returns. This is due to new ’system upgrades’ that have been undertaken over the Christmas period. As a result, if you have submitted your tax return after late November 2009, you may experience delays in receiving your refund. For more information on this, please go to: Further information Small Business & General Business Tax Break - Additional Upfront Tax Deduction for Asset Purchases The Australian Government has now legislated the Small Business and General Business Tax Break. Businesses will now be entitled to an additional upfront tax deduction for qualifying asset purchases if they pass certain requirements. This is on top of the usual capital allowance depreciation (or pooling) amounts claimed. Requirements for Small Businesses (annual turnover of less than $2 million) Other Business Entities (annual turnover over $2 million) (differences underlined) if purchased between 13/12/08 and 30/06/09 and first uses the asset, or installs it ready for use, or brings the asset to its modified or improved state on or before 30 June 2010, The additional deduction is 30% of the cost of the eligible asset/s. if purchased between 13/12/08 and 30/06/09 and first uses the asset, or installs it ready for use, or brings the asset to its modified or improved state between 1 July 2010 and 31 December 2010, The additional deduction is 10% of the cost of the eligible asset/s. if purchased between 1 July 2009 and 31 December 2009 and first uses the asset, or installs it ready for use, or brings the asset to its modified or improved state on or before 31/12/10, The additional deduction is 10% of the cost of the eligible asset/s.
As this new concession is quite complex please review the most current ATO information available and contact our office to discuss its applicability to your situation. Further information Education Tax Refund The Education Tax Refund (ETR) is a new government initiative to help with the education costs for children in primary and scondary school. The ETR started on 1 July 2008. If eligible you may be able to receive up to $375 for each primary school student and up to $750 for each secondary school student. This is usually claimed through your tax return. How does it Work? If you have spent money on eligible items purchased for primary or secondary school children you could receive 50% of the money back to you (conditions apply). The limit is a maximum refund of $375 on a spend of $750 or more on a primary school child, and $750 on a spend of $1,500 or more on a secondary child. You are eligible if: What are Eligible Education Expenses? Examples of eligible expenses include the cost and maintenance of computers, computer software purchased, school textbooks and stationary. Examples of costs you cannot claim are school fees, school uniforms, excursion and tutoring costs. Further information If you intend to claim this ETR in your 2009 income tax return please ensure you keep all receipts and provide them (or their details) to our office when completing your tax return.
NOTE: The ETR can only be claimed in the tax return of the person who is receiving the Family Tax Benefit Part A. This may mean a person who otherwise does not need to lodge a return must do so (or complete the necessary form) in order to claim this ETR. Medicare Levy Surcharge Changes The thresholds for the Medicare Levy Surcharge (MLS) have changed for the 2009 and future tax years. You will be charged a surcharge if you are; It should be noted that FROM 1 JULY 2009 your Income For Surcharge Purposes will change. These changes will add back any investment losses you have incurred and will add on reportable superannuation contributions (typically salary sacrifice amounts made to super above the compulsory 9% employer contribution) for calculating if you breach the threshold. These changes are a result of the new changes to income tests. This may mean you may breach the thresholds from the 2010 financial year onwards if you don't have the required level of private health insurance. 2009-10 Budget Proposals for Super - Salary Sacrifice Arrangements Impacted It has been proposed that from the 2010 financial year onwards the annual superannuation deduction limits would be halved from 2009 levels and then indexed annually. If passed/legislated this would mean; These caps include all compulsory 9% employer contributions as well as any before tax salary sacrifice amounts made by employees and is the limit of tax deductible contributions for self employed persons. These changes may seriously reduce the amount of tax deductible contributions that can be made leading up to your retirement. If you are an employee who is salary sacrificing (before tax) into superannuation you should review your situation to ensure that your total concessional contributions do not breach these amounts, on an annual basis, IF these rules become law. Further information on these proposed changes, including the proposed changes to the Government Co-Contribution can be viewed here. Superannuation Income Streams - 50% Reduction in Minimum Payments As a result of the downturn in financial markets, the Government has announced a 50 per cent reduction in the minimum drawdown requirement for account based pensions for the 2008-09 financial year. This will apply to account-based Allocated Pensions including Transition to Retirement and Term Allocated Pensions. This change may allow you to keep more of your wealth fully invested in the tax advantaged superannuation environment and may reduce or postpone the need to sell assets at these lower prices. To take advantage of these changes and reduce your pension drawdowns you will need to contact your pension provider. **JUNE UPDATE** In the Goverment's 2009-10 budget it has been proposed that the existing pension draw down relief (established for the 2008-09 year detailed above) be extended for the 2009-10 financial year. For Further information or assistance please contact our office.
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