2012-13 Federal Budget

JohnnySu

2012/13 Budget

Measures previously announced that are not going ahead

Standard deduction not proceeding
The Government will not proceed with the 2010/11 Budget measure to introduce a standard deduction for work related expenses and the cost of managing tax affairs, which was due to commence on 1 July 2013.

Company tax cut not proceeding
The Government will not proceed with the measure to lower the company tax rate, from the 2013/14 income year, nor implement an early start to the company tax rate cut for small businesses from the 2012/13 income year.


50% tax discount for interest income not proceeding
The Government will not proceed with the 2010/11 Budget measure to introduce a 50% discount for interest income, which was due to commence on 1 July 2013, as a result of concerns with the complexity involved in calculating the discount and its overall effectiveness.
Changes effective 1 July 2012 (i.e., from 2012/13 income year)

Changes to the Net Medical Expenses Tax Offset
The Government will introduce a means test for the net medical expenses tax offset (‘NMETO’) from 1 July 2012. For people with adjusted taxable income (‘ATI’) above the Medicare levy surcharge thresholds (i.e., $84,000 for singles and $168,000 for couples or families in 2012/13):

the threshold above which a taxpayer may claim the NMETO will be increased to $5,000 (currently $2,000); and

the rate of the tax offset will be reduced to 10% (currently 20%) for eligible out of pocket expenses incurred.



Phasing out the Mature Age Worker Tax Offset

The Government will phase out the mature age worker tax offset (‘MAWTO’) from 1 July 2012 for

taxpayers born on or after 1 July 1957. Access to the MAWTO will be maintained for taxpayers who are aged 55 years or older in 2011/12.



Non-residents – changes to tax rates

The Government will adjust the personal income tax rates and thresholds that apply to non-residents’ Australian income, as follows:

From 1 July 2012, the first two marginal tax rate thresholds will be merged into a single threshold, with all taxable income below $80,000 taxed at 32.5% (currently, taxable income from $0 to $37,000 is taxed at 29%, and taxable income from $37,001 to $80,000 is taxed at 30%); and

From 1 July 2015, the same marginal rate will rise from 32.5% to 33%.



Non-residents – removal of the CGT discount from 8 May 2012

The Government will remove the 50% CGT discount for non-residents on capital gains accrued after 7.30 pm (AEST) on 8 May 2012. The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.



Consolidating the dependency offsets into one tax offset

The Government will consolidate eight dependency tax offsets into a single, streamlined and non-refundable offset that is only available to taxpayers who maintain a dependant who is genuinely unable to work due to carer obligation or disability from 1 July 2012.



The offsets to be consolidated are the invalid spouse, carer spouse, housekeeper, housekeeper (with child), child housekeeper, child housekeeper (with child), invalid relative and parent/parent in law tax offsets. The new consolidated offset will be based on the highest rate of the existing offsets it replaces.



Taxpayers who are currently eligible to claim more than one offset amount in respect of multiple

dependants who are genuinely unable to work will still be able to do so.



Superannuation – deferral of higher concessional contributions

cap for people aged 50+

The Government will defer the start date of the measure to increase, by $25,000, the concessional contributions cap for individuals over 50 with superannuation balances below $500,000, to 1 July 2014. The two-year deferral means that, for 2012/13 and 2013/14, the concessional contributions cap will be $25,000 per year for all individuals.



In 2014/15, the general cap is likely to increase to $30,000 through indexation, and the higher cap would then commence at $55,000.



Superannuation – reduction of higher tax concession for

contributions of high income earners

The Government will reduce the tax concession which people with income over $300,000 receive on their concessional contributions. From 1 July 2012, individuals with income greater than $300,000 (who pay tax at a top marginal rate of 45%, excluding Medicare levy) will have the tax concession on their contributions reduced from 30%(i.e., 45% marginal tax rate less 15% tax generally payable by the super fund) to 15%. The reduced tax concession will not apply to concessional contributions which exceed the concessional contributions cap and are therefore subject to ‘excess contributions tax’ (as these contributions are effectively taxed at the top marginal tax rate and therefore do not receive a tax concession).

Editor: This looks like it will be a nightmare to administer (anyone fondly remember the superannuation contributions surcharge?), so apparently, Treasury will consult with the superannuation industry and other relevant stakeholders on further design and implementation details.



Better targeting of the ETP tax offset – crackdown on golden

handshakes

The Government will apply a ‘whole of income’ cap to tax concessions provided to certain employment termination payments (‘ETPs’), which include ‘golden handshakes’. The ETP tax offset can currently be used to reduce tax payable on payments included in remuneration packages such as ‘golden handshakes’ (up to the relevant ETP cap amount – e.g., $165,000 for

2011/12).

From 1 July 2012, only that part of an affected ETP (e.g., a ‘golden handshake’) that takes a person’s total annual taxable income (including the ETP) to no more than $180,000 will receive the ETP tax offset. Amounts above this ‘whole of income’ cap will be taxed at marginal rates. The ‘whole of income’ cap will apply in addition to the existing ETP cap. That is, the ‘whole of income’ cap will complement the existing ETP cap (i.e., $175,000 for 2012/13).

Existing arrangements will be retained for certain ETPs relating to genuine redundancy (including to those aged 65 and over), invalidity, compensation due to an employment related dispute and death.



Company Loss Carry-back

The Government will provide tax relief for companies (and entities taxed like companies) by allowing them to carry-back tax revenue losses so they receive a refund against tax previously paid, as follows: • A one year loss carry-back will apply in 2012/13, where tax losses incurred in that year can be carried back and offset against tax paid in 2011/12; and For 2013/14 and later years, tax losses can be carried back and offset against tax paid up to two years earlier.

Companies will be able to carry back up to $1 million of revenue losses each year (providing a cash benefit of up to $300,000 a year). The measure will be subject to integrity rules, and limited to a company’s franking account balance.



FBT – further reform of living away from home allowances and

benefits

The Government will further reform the tax concession for living away from home allowances and

benefits by better targeting it at people who are legitimately maintaining a second home in addition to their actual home for an initial period. They will:

limit access to the tax concession to employees who maintain a home for their own use in Australia, that they are living away from for work; and

provide the tax concession for a maximum period of 12 months in respect of an individual employee for any particular work location.

These further reforms will stop employers from being able to give the tax concession to employees who aren’t maintaining a second home, or are maintaining two homes indefinitely.

This measure will not affect:

the tax concession for ‘fly in fly out’ arrangements, as these employees will not be subject to the 12 month time limit; or

the tax treatment of travel and meal allowances, which are provided to employees who have to travel away from their usual place of work for short periods (generally up to 21 days).

For arrangements entered into after 7.30pm (AEST) on 8 May 2012, the reforms will apply from 1 July 2012. For arrangements entered into prior to that time, the reforms will apply from 1 July 2014.

corexin

even my English is ok, I don't want to read the long English article ;(