Budget 2013

Key Impacts:

Individuals (from 1/7/12)

-          Lowest tax free threshold increases to 18,200; and the Low Income Tax Offset decreases to $445 – thus the new tax free threshold is effectively approx 21K

-          Medical offsets – changes for income earners above MLS threshold. Out of pocket medical expenses need to be over 5K before any rebate is payable.  Also the rebate rate drops from 20% to 10%

-          Schoolkid bonus for those on FTBA – primary school = 410 each; secondary = 820 each

 Companies

-          Rate not changed – still 30%

-          Carry back of losses – businesses who paid tax in prior year (starting 2011yr) & then make a loss in a subsequent year (2012 onwards) can claim a refund of prior year taxes

-          Bad Debt deduction – no deduction allowed for related party transactions. Effective from 8/5/12. Appears this will only apply to those write off’s on revenue account

Fringe Benefits

-          LAFHA – concessions removed for temporary residents. Can still apply if the employee already has an established home in Australia. Transition rules apply however doubt this will apply to any of our clients & as such if need be please seek more info.

 Super

-          Deferral of start date allowing people over 50 with low super balances to pay up to 50K in employer contributions to 1/7/14

-          Higher tax for contributions of individuals with income > 300K. The contributions tax for these people will be 30%. Not sure how “income” will be assessed by the Superfund?

While there are other proposals etc in the budget I did not think them necessary to our clients. Please also note that some of these proposals are yet to receive royal assent and until such a time they will not become law.