Last night saw the Federal Treasurer hand down this year’s Federal Budget. There will be lots of dicussion throughout the media as to who are the winners and losers and what it all means but what are the key points?
- The standard work-related expenses deduction which was announced 2 years ago will not proceed. It was intended that certain taxpayers who have simple tax affairs be allowed to “claim” $500 in work-related deductions for the 2012/13 year increasing to $1,000 for the 2013/14 year.
- The planned 50% discount on interest income which was announced in the 2010/11 budget which would have seen 50% of the first $1,000 of interest income earned each year made non-taxable has been scrapped
- The Medical Expenses Tax Offset which allows taxpayers to claim an offset if they have large medical expenses in a financial year will be tightened to prevent it being claimed by taxpayers who’s income is above the Medicare Care Levy Surcharge Threshold from 1 July 2012. The threshold is currently $84,000 for singles and $168,000 for families. Also, the amount of out of pocket expenditure before becoming eligible for the offset will increase from $2,000 to $5,000
- Mature Age Worker Tax Offset to be phased out. Currently taxpayers over 55 years of age or older may be entitled to an offset of up to $500 as an incentive to stay in the workforce for longer.
- Education Tax Offset scrapped effectively immediately and replaced with a new payment from Centrelink. It is planned that payments for the 2011/12 year shall be paid by Centrelink in June 2012.
- Previously announced company tax cuts will not proceed. This is not a bad thing as it would have created a net set of problems for small business and individual taxpayers alike. The cuts were poorly thought otu and would not have helped many of businesses they were intended to assist.
- Company Tax Loss Carry Back Measures. This will effectively allow companies to claw back income tax paid in up to the 2 previous years if the company makes a loss in the current year. This measure will be limited to taxes actually paid apply from 1 July 2012.
- Non-resident taxpayers to pay more. Currently non-residents pay tax at the rate of 29% of income up to $80,000 per year (with some exceptions such as franked dividends and interest income). From 1 July 2012 this will be increased to 32.5% and then to 33% from1 July 2015
- CGT Discount for Non-Residents Abolished. The 50% general discount available to taxpayers in relation to capital gains where the asset was held for greater than 12 months has been abolished for non-residents effective 7.30pm 8 May 2012.
- Deferral of Higher Superannuation Contributions Cap. It was planned to allow taxpayers aged 50 and over to contribute up to $50,000 into superannuation and tax advantage of the 15% tax rate on contributions from 1 July 2012. This will now not happen until 1 July 2014
