Here at Gotsis Rubic & Barbariol Chartered Accountants we have summarised below some of the major tax measures proposed in the 2010/11 Federal Budget. As always, please bear in mind that the Budget announcements are proposals only and require the passage of legislation before becoming effective. In addition, most of the proposals in the Budget will be largely dependant on the re-election of the Labour Government and many of the proposals are not due to be implemented for some years.
Individuals and Family Tax Measures
Proposed measures commencing 1 July 2010
* The low income tax offset will increase from $1,350 to $1,500. This will mean a tax-free threshold of $16,000 for salaries up to $30,000.
* The 20% medical expenses tax offset threshold will increase from $1,500 to $2,000 and will be indexed annually.
* The annual Child Care Rebate will be capped to $7,500 per child and indexation of the cap paused for 4 years.
Proposed measures commencing 1 July 2011
* Individuals will pay tax on only half of total interest generated from savings, on up to $1,000 of interest income.
Proposed measures commencing 1 July 2012
* Individuals will have the option of claiming a standard deduction of $500 for work related expenses and the cost of managing their tax affairs, rather than itemizing individual deductions. The amount of the deduction will increase to $1,000 from the 2013-14 year. This may be of benefit to taxpayers who have only salary income and limited deductions, but may not assist taxpayers who have other income (for example, income from rental properties or businesses) or large amounts of deductions.
Companies & Businesses
Proposed measures commencing 1 July 2012
* Instant asset write off is available for small business assets under $5,000.
* For small businesses, the company tax rate will be reduced to 28% and be implemented from 1 July 2012 with a stepped reduction for other companies.
GST
Proposed measures commencing 1 July 2012
* Small businesses accounting for GST on a cash basis will be able to claim input tax credits up front in relation to hire purchase arrangements. This change will assist those businesses that have been forced into high cost chattel mortgages following the introduction of GST.
Superannuation
Proposed measures commencing 1 July 2010
* The Government Co-contribution Scheme will be reduced permanently to 100% of eligible contributions, with the maximum co-contribution that is payable on an individual’s eligible personal non-concessional superannuation contributions capped at $1,000. For the 2010-11 and 2011-12 years, the co-contribution begins to phase out once the taxpayer’s income reaches $31,920 and cut out once the taxpayer’s income reaches $61,920.
Proposed measures commencing 1 July 2012
* Concessional contribution cap of $50,000 for individuals aged 50 and over with superannuation balances less than $500,000 to be continued beyond 30 June 2012.
* Government contribution of up to $500 for low income workers with income up to $37,000.
Proposed measures commencing 1 July 2013
* Superannuation guarantee age limit to be increased from 70 years to 75 years.
* Increase in superannuation guarantee rate from 9% to 12% in seven increments (to 2019-20 year).
DIMITRI GOTSIS
