Late last month, 22/10/12, the Treasurer delivered his Mid-Year Economic and Fiscal Outlook 2012/13 (MYEFO), revising the 2012/13 budget down to a $1.1b surplus. This includes a write down of $4b in receipts and a variety of savings measures. The MYEFO was relatively uneventful and did not include hikes to tobacco or alcohol excise or any substantial reform to superannuation which had been rumoured in the lead up to the release.
New taxation measures include:
- Changes to the SMSF Levy – If you have a Self Managed Superannuation Fund (SMSF), the annual levy payable to the ATO will increase from $191 to $259 from the 2013/14 financial year. It will also be brought forward so that is it payable in the year of income instead of after year end on lodgement of the SMSF tax return meaning you may pay 2 levies in a 12 month period.
- ATO compliance activities – An additional $390m for tax compliance activities including focussing on lodgements for businesses with two or more years of outstanding tax returns, following up long-term outstanding debts and addressing tax avoidance schemes.
- Increase in penalties – The base penalty unit used to determine penalties for items such as late lodgements of BAS, tax returns and PAYG payment summaries will increase from $110 to $170 per unit effective one month after the amending legislation receives royal assent. For example, if your 2012 PAYG payment summary report (due on 30/09/12) is lodged on 30/01/13, your late lodgement penalty will now be $850 instead of $550 for small withholders and $1,700 instead of $1,100 for medium withholders. A medium payer is anyone with annual PAYG withholding exceeding $25,000.
- Private health insurance rebates – The government rebate will be calculated using commercial premiums at 1 April 2013 with increases capped at CPI. Currently the rebate is generally 30% of the cost of the policy (subject to a means test). Additionally, the rebate will no longer be paid on the lifetime health cover loading effective from 1 July 2012. i.e. the loading paid if you take out insurance after your 31st birthday.
Other measures include:
- Reduction in the baby bonus – From $5,000 to $3,000 for the second child and subsequent children commencing 1 July 2013 and saving $461m over 3 years.
- Cuts to university and trade training programs – A total of $575m over 4 years.
- Cuts to payments to employers of part-time and casual apprentices – A total of $277m over 4 years.
- Increased visa charges – Charges for a number of visas incluing temporary workers, skilled graduates, partners and working holiday makers to be increased. This is expected to raise $520m over 4 years.
- Specific grants – Cuts/reduced increases in grants mean that $765m less will be paid to State Governments over 4 years.
- Bank deposits – Unclaimed deposits to be handed to the Government after 3 years instead of 7 years resulting in a $300m windfall for the 2013/14 financial year.
- Court fees – Fees charged by the Family Court, the Federal Court, the Federal Magistrates Court and the High Court to be increased.
- Transfer of lost super accounts to the ATO – A reduction in the time frame from 5 years to 12 months for superfunds to transfer lost member account balances to the ATO. This measure is expected to return lost super to members in a more timely manner. It also helps the Government balance the budget, delivering an expected $555m in additional revenue for the 2012/13 financial year.
The most pertinent item above for many small businesses will be the increase in late lodgement penalties and increased ATO activity in relation to the lodgement and payment of taxes. Let us know if you require assistance in this area as the penalties for digging your head in the sand are becoming quite heavy.