Changes to your Private Health Insurance Rebate and Medicare Levy Surcharge
You may have seen or heard recent media coverage about the Australian Government's plans to means test the Private Health Insurance Rebate (PHIR).
Currently, all private health insurance recipients benefit from either receiving a tax rebate each year, or having their premiums directly reduced by the rebate. The PHIR is currently 30% of premiums if you are under 65 years of age increasing up to a maximum of 40% of premiums if you are 70 years of age.
The means testing of the PHIR will begin reducing the PHIR for singles earning over $80,000 and families earning over $160,000.
It is expected the effective date of these changes will be 1 July 2012.
The table below provides more detail on the proposed changes:
|
|
Unchanged
|
Tier 1
|
Tier 2
|
Tier 3
|
|
Singles
|
$80,000 or less
|
$80,001-93,000
|
$93,001-124,000
|
$124,001 or more
|
|
Families
|
$160,000 or less
|
$160,001-186,000
|
$186,001-248,000
|
$248,001 or more
|
|
REBATE
|
|
Under 65
|
30%
|
20%
|
10%
|
0%
|
|
65-69
|
35%
|
25%
|
15%
|
0%
|
|
Over 70
|
40%
|
30%
|
20%
|
0%
|
|
SURCHARGE
|
|
All ages
|
0.0%
|
1.0%
|
1.25%
|
1.5%
|
In addition to the rebate changes, the Australian Government is also proposing to increase the Medicare Levy Surcharge for the same tiers, as summarised also in the table above.
The increase in the Medicare Levy surcharge may have added tax implications and will come into effect if an Australian taxpayer does not hold private health insurance. This will be in addition to the standard 1.5% Medicare Levy you currently pay.
These changes still need to pass through the Australian Federal Senate to become law.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Federal Budget 2011
Low Income Tax Offset restriction for minors
From 1 July 2011 the low income tax offset will not be available to minors to reduce income tax due on their non-work income. Non-work income for this purpose includes income from dividends, interest, rent and royalties whether received directly or via trust distributions. Minors will continue to be entitled to use the low income tax offset to reduce income tax due on their work income. The removal of the low income tax offset in relation to non-work income effectively pegs back the tax free non-work income threshold a minor can earn to $416.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Low income earners to remain exempt from Medicare Levy
From the 2011 income year, the Medicare Levy low income threshold will increase to $31,789 for couples (up from $31,196), and to $18,839 for singles (up from $18,488).
For families, the additional amount of threshold for each dependent child or student rises to $2,919 (up from $2,865).
From 1 July 2010 the Medicare levy low income threshold for pensioners below Age pension age will increase to $30,439 (up from $27,697). The result of this increase is that below Age pension age pensioners will not pay Medicare levy when they do not have an income tax liability.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Anstis decision overruled
With effect from 1 July 2011 the law will be amended so as to prevent deductions being claimed against all government assistance payments. This measure is in response to the High Court decision in FCT v Anstis [2010]
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Dependent Spouse Tax Offset
Summary:
- The dependant spouse tax offset (DSTO) is currently available to taxpayers who meet the following criteria:
- they are Australian tax residents;
- they maintain a dependant spouse or de-facto spouse (who must also be an Australian tax resident);
- the taxpayer has an Adjusted Taxable Income (ATI) below the relevant threshold ($150,000 for 2009/10) and their dependant spouse has an ATI of less than the threshold ($9,254 for 2009/10); and
- neither the taxpayer nor their dependant spouse are eligible for Family Tax Benefit Part B.
From 1 July 2011 the DSTO will generally no longer be available to taxpayers whose dependant spouse was born after 1 July 1971 (i.e. those who are under age 40);
A number of exceptions apply, including:
- Taxpayers who are eligible for the zone, overseas forces or overseas civilian tax offsets; and
- Dependant spouses who are carers, invalids or permanently unable to work.
Taxpayers who maintain a dependant spouse (or de-facto spouse) are currently eligible for a dependant spouse tax offset (DSTO) of up to $2,243 (2009/10 year) if:
- They are Australian tax residents;
- Their dependant spouse is also an Australian tax resident;
- They have an Adjusted Taxable Income (ATI) of less than $150,000 (2009/10 year):
- Their dependant spouse has an ATI of less than $9,254 (2009/10 year); and
- Neither the taxpayer nor their dependant spouse is eligible for Family Tax Benefit Part B.
The Government has announced that the DSTO will be phased out in order to encourage nonworking spouses to enter paid employment.
From 1 July 2011 the DSTO will no longer be available for taxpayers whose dependant spouse was born after 1 July 1971 (i.e. who is less than 40 years old as at 1 July 2011). This recognises that dependant spouses over age 40 may find it more difficult to re-enter the workforce, so they will remain eligible.
There will be no impact on dependant spouses with children - they will remain eligible for Family Tax Benefit (FTB) Part B rather than the DSTO.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Higher Education Contribution Scheme (HECS) - reduction in discount
From 1 January 2012, the following discounts apply to payments made under the HECS:
- The discount available to students electing to pay their student contribution up-front will be reduced from 20 percent to 10 percent; and
- The bonus on voluntary payments made to the ATO of $500 or more will be reduced from 10 percent to 5 percent.
Students electing to make contributions up-front will continue to receive a 10 percent discount.
Under the Higher Education Loan Program (HELP), payments of $500 or more will attract a 5 percent bonus such as to reduce an outstanding HELP debt by $525.
Option to request refund from superannuation fund of excess concessional superannuation contributions
If an individual has had concessional (i.e. deductible) superannuation contributions made on their behalf to a superannuation fund (whether by
themselves or from an employer), an annual cap applies to the amount of such contributions that can be made before excess concessional contributions tax (at 31.5%) becomes payable.
- The 31.5% is in addition to the 15% tax that is paid on the concessional contributions in the fund itself.
- The current annual cap is $25,000, unless the taxpayer is aged over 50 at the end of the year, when the cap is $50,000.
- A new option will be provided to avoid excess concessional contributions tax, for an excess of up to $10,000, on a once-only basis.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Higher superannuation contributions cap for over 50s
2010-2011 Budget announced that from 1 July 1012 eligible individuals 50 and over have a concessional contribution cap of $50,000 if their super account balance is under $500,000
2011-2012 Budget announces that this higher cap will remain $25,000 over the general concessional cap.
This will ensure no erosion of indexation
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Employer super payments on payslips
From 1 July 2012 employers will need to advise on payslips the superannuation actually paid for an employee.
Super funds will advise both the employer and the employee where regular payments have ceased.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Small Business Measures
Accelerated depreciation for motor vehicles for SBE’s
On the 8 May 2011 in a joint announcement the Treasurer Wayne Swan together with the Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten, and Nick Sherry the Minister for Small Business announced an instant tax write-off of the first $5,000 of any motor vehicle purchased from 2012-13.
The announcement advised that the remainder of the purchase value of the vehicle can be transferred into the general small business depreciation pool, which is depreciated at 15 per cent in the first year and 30 per cent in later years.
The new small business instant write-off for the first $5,000 of any motor vehicle will replace the Entrepreneurs Tax Offset (ETO).
Unlike the ETO the new tax reforms will be available to all small businesses, including sole traders and businesses operating through trusts, partnerships and companies.
Small business depreciating assets
Depreciable assets acquired in 2013 onwards and valued at under $5,000 will be eligible for immediate write-off.
Vehicle write off
Small business taxpayers will be eligible for an immediate write-off of the first $5,000 on the purchase of any motor vehicle acquired from the 2013 income year.
PAYG Instalments to be reduced
Tax instalments paid by small business taxpayers under the PAYG system to be reduced by using the gross domestic product GDP) method for one year.
PAYG instalments in 2012 will be set at 4% above a small businesses taxable income for the previous year, half the statutory rate that would otherwise have applied. This measure will only apply for one year and the statutory rate will return to normal for 2013 onwards.
Whilst not specifically announced in the Budget papers, other instalments where the Commissioner uses the GDP rate (such as, GST instalments) may also be impacted.
Corporate tax rate of 29%
Incorporated small business entities to have a reduced corporate tax rate of 29% from 2013.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Temporary Flood Reconstruction Levy
Content
The Government announced that it will introduce a flood levy for the 2011-12 income year to assist affected communities recover from the recent floods and rebuild essential infrastructure. This is contained in Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill and Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill and is currently being debated in the House of Representatives.
Detailed Description
If enacted in its current form, a summary of how the levy will be imposed is as follows:
Amount of the flood levy
A levy of 0.5% will be applied on that part of an individual’s income between $50,001 and $100,000 and a levy of 1.0% will be applied on that part of the taxpayer’s taxable income above $100,000. No levy is payable where the person has income of $50,000 or less. For example, for someone who has an income of $80,000 this means the cost of the levy to them will be $2.88 per week.
Exemption from the flood levy
Where the person has received an Australian Government Disaster Recovery Payment in relation to a flood event in the 2010-11 year they will be exempt from the levy.
Payment of the flood levy
Taxpayers will not have to do anything extra to pay the levy. People will make their levy payments through the tax taken out of their regular pay in the same way that people pay the Medicare levy. This will help prevent taxpayers from receiving a tax bill at the end of the financial year.
Pay As You Go (PAYG) Instalment taxpayers will have the levy charged in their PAYG instalments. People who received an Australian Government Disaster Recovery Payment can seek a variation to their instalment payment so that they don’t have to pay the levy. The Tax Office is also investigating the possibility of automating PAYG Instalment amounts so that people who don’t have to pay the levy are
not charged an amount in their PAYG instalments.
Impact on businesses
Businesses will need to apply a new withholding schedule to their employees to withhold levy payments. Businesses will not be required to pay the levy. The levy will be applied to individual taxpayers.
Operative Date
The flood levy will apply to individual’s taxable income for the 2011-12 financial year.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Tightening the non-commercial loan rules
In the 2009–10 Federal Budget, the government announced new measures to improve the integrity of the tax system by tightening the rules relating to taxing benefits that a private company provides to its shareholders or their associates.
The measure reduces the scope for private companies to allow company assets – such as real estate, cars and boats – to be used for free, or at less than their arm's length value. This inconsistent treatment was removed by deeming a 'payment' made to a shareholder through the free use of a company asset to be a dividend and taxable accordingly.
The non-commercial loan rules have been changed to make sure that corporate limited partnerships cannot be used to circumvent Division 7A. Other technical amendments to Division 7A have been made.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Tax Office Sets Compliance Focus Areas for 2010/11
The ATO has released its compliance program for 2010/11. The program sets out risk areas facing the tax and superannuation systems identified by the ATO and the compliance activities that it plans to undertake to address them. Despite acknowledging that most taxpayers demonstrate high levels of voluntary compliance, the ATO’s latest compliance program flags needed attention on numerous target areas including individual taxpayers claiming incorrect or fraudulent refunds and small businesses omitting or incorrectly reporting property sales in business activity statements.
The program also reiterated the ATO’s continuing and increasing use of data-matching projects to verify information provided by individual taxpayers in their tax returns and by other parties. In particular, the ATO flagged interest in cross-referencing information relating to income received from employment, welfare, interest and dividends. This year, the ATO expects to data-match over 500 million transaction records reported to it by third parties.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Starting a Business in Australia
If you are considering starting a business in Australia or investing in a business in Australia, you will need to consider a number of factors including:
- Feasibility Study
- Licence & Permits
- Business Planning
- Finance/Funding
- Business Structure
- Location & Premises
- Registration of Business Name
- Income Tax, State Tax & Duty
- Insurance
- Employees
- Business Documentation
- Budgeting & Finance Control
- Marketing, Advertising
- Credit & Debt Collection
- Technology & Communications
- Legal Aspects
- Franchising
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
ATO to increase audit activity of foreign transactions
Due to the increase in Australian businesses venturing into foreign markets and Australian investors investing abroad in foreign property and shares the ATO has increased its audit activity of foreign transactions.
There are many taxation implications of investing and doing business overseas. Some of the more common implications include:
1. Australian residents are taxed on worldwide income.
2. Where income earned overseas has already been taxed in a foreign jurisdiction, the Australian foreign income tax offset is available to address any double-up.
3. Where SMEs have dealings with an overseas-related entity, those dealings must be on a commercial basis to ensure arm’s length principals are adopted and appropriate tax is paid
4. Exports of goods and services from Australia will generally be GST free, but GST can apply in certain instances.
5. Where goods are being imported, the Australian Customs Service collects GST generally before Customs releases the goods. The amount payable is calculated as 10% of the value of the imported product. However, if you are an importer and are registered for GST, you may be able to defer payment by participating in the deferred GST scheme.
6. There are also rules around what foreign exchange rate needs to apply to all foreign income, deductions and tax paid when converted into Australian dollars for inclusion on your Australian tax return.
Given the ATO's compliance focus on international transactions, including the high-profile Project Wickenby, now is a good time to make sure your international dealings are compliant with Australian Taxtaion Law.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Government to ease school costs with new tax refund for uniforms
On 13 July, the Prime Minister Julia Gillard, issued a media release announcing the Government will expand the Education Tax Refund scheme so that school uniforms can be included in claims, giving families up to $779 per child each year to help with the costs of sending kids to school.
To be eligible, school uniforms would need to be approved by the school but not necessarily mandatory for the child to wear.
The new eligible items would be available for expenses incurred during the 2011-12 financial year and the tax refund would be paid in the 2012-13 financial year.
Parents or guardians entitled to Family Tax Benefit Part A for one or more children in school are eligible for the refund. Parents are also eligible if their child receives another payment, such as Youth Allowance, Disability Support Pension or ABSTUDY Living Allowance, but would otherwise be eligible for Family Tax Benefit Part A.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
ATO Briefing - Tax Time 2010
The ATO have advised that this week the bulk processing of 2010 returns has commenced.
Tax agents and individuals who have lodged their 2010 returns can expect to see some EFT payments commencing, Friday 16 July. This is for 2010 returns which are processed in a routine manner. Following the initial arrivals on Friday, there should be regular arrivals in the following days.
From Wednesday 21 July the ATO expects that cheques will start to be received in the mail by clients or their tax agents.
If you have lodged a 2010 (or earlier year) return which requires a compulsory repayment of HELP or SFSS then these will take longer to process. A system change for this issue will be made over the weekend of 17 and 18 July. The ATO will confirm that this change has applied and the processing of these returns has recommenced (planned for 20 July).
At this stage there have been three issues which have emerged affecting a relatively small number of 2010 income tax returns.
· Regarding the tax averaging calculation for primary producers and personal superannuation contributions. The calculation is incorrect and the ATO are notifying affected taxpayers;
· Regarding personal superannuation deductions for the self-employed the ATO has procedures to ensure they receive their correct entitlement; and
· Regarding spouse contributions tax offset, the solution is in progress, with a systems fix to e-tax due to occur this weekend.
2010 Federal Budget – Superannuation Announcements
The Federal Government has proposed changes to super legislation that will make a real difference to your retirement income when you stop working. The changes are the Government's response to the Henry Review, a major review of Australia’s Federal and State tax arrangements.
If the changes are passed by Parliament, the new measures will contribute thousands of extra dollars to your super savings. The extra savings are necessary to help improve the standard of living expected in retirement for Australians, particularly as we are expected to live long lives well after we stop working.
The proposed changes designed to help you save more for your retirement, are:
Increased SG contributions
The Superannuation Guarantee (SG) is the amount your employer must pay for you in superannuation contributions – currently 9% of your salary. This will gradually increase to 12% by 2020. The current 9% is estimated to provide you with just over half of your working income. The increase to 12% will close the gap and provide more Australians with a secure and comfortable retirement.
Your employer pays SG until you are 75
Australians are living longer, and staying in the workforce for longer, so from 1 July 2013 your employer would be required to continue to pay SG payments until you are 75 if you are still working. Currently the SG requirement cuts out when you reach 70 – even if you are still working. This is great news for those people that continue working after they turn 70.
Government Co-contribution to continue
There is a Government Co-contribution scheme already in place in which the Government pays up to $1,000 extra into your super if you make voluntary contributions from your after-tax salary. If you earn under $31,920 the current scheme matches your contribution dollar for dollar up to $1,000. If you earn above $31,920 the co-contribution amount payable gradually reduces until your salary reaches $61,920, when it becomes zero. This scheme will be retained, including salary thresholds.
An extra 15% on top of your SG if you earn less than $37,000
As well as the Government co-contribution to help those people that earn average wages, people earning under $37,000 per year will receive a special contribution of a further 15% of their SG payments into their super account from the Government. The payment will be up to a maximum of $500 per year. So if you were earning $30,000 and currently receiving $2,700 paid as SG annually, the Government will contribute an additional $405 (which is 15 per cent of $2,700) to your account. This would come into effect on 1 July 2012, for SG contributions made the following year(s).
$50,000 before-tax contribution limit for over 50’s with less than $500,000 in super
For the past few years a ‘transitional’ arrangement was in place that allowed people over 50 to add up to $50,000 per year as concessionally taxed contributions – that is as SG or salary sacrifice. This will stay in place permanently. This is great news for those nearing retirement and in a position to be adding more to their super, with less than half a million dollars in their super accounts.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Cooper Review
The final report of the Cooper superannuation review has been released by the Government and has some potential significant consequences for self-managed super funds. Whilst not yet law trustees should be prepared in case the recommendations are supported by the Government.
Four major aspects that we find are relevant to most of our client SMSF’s are:
1) SMSF’s acquiring business real property from members.
2) In House assets
3) Borrowing through the use of instalment warrants
4) Exotic investments (cars, artwork etc)
Listed below are a summary of what the Cooper review had to say about each of the above listed topics:
1. Don't worry if your business premises are held in your SMSF.
Fortunately, the Cooper review makes no recommendations about business real estate held in SMSFs – even if rented to the members' own businesses. This should be seen as a key win for many SME owners.
Significantly, business real estate is expressly excluded in law from being classified as a so-called in-house asset of a SMSF, which the Cooper review wants to prohibit funds from owning.
2. Think about how to refocus your SMSF's investment portfolio if it holds related-party investments.
The Cooper review has strongly recommended to the Government that self-managed funds be barred from holding even a small percentage of what are known as in-house assets. In-house assets include loans, investments or leases involving related parties of the fund.
Currently, a self-managed fund cannot hold more than 5% of its assets (based on value) in in-house assets. The Cooper review recommends that the SMSFs be prohibited from acquiring new in-house assets, and funds with existing in-house assets be given five years to either get rid of them or become what is known as a small APRA fund with a professional, APRA-approved trustee.
3. Be cautious about gearing levels in your SMSF.
The Cooper review states that "leverage should not be a core focus for SMSFs".
The Superannuation Industry (Supervision) Act was amended in September 2007 to unequivocally allow self-managed funds to borrow to buy investments – using such means as instalment warrants – provided strict conditions are met.
While the Cooper review notes that the level of borrowing by funds under this amendment began modesty, it appears to have gathered pace.
Given the fund gearing recommendation of the Cooper review, it is not difficult to envisage the Government tightening of the borrowing provision sometime in the future. Whilst no changes are currently proposed to the borrowing arrangements trustees should always be prepared.
4. Think about how your fund's diversification may have to change if it owns paintings, antiques or classic cars.
The Cooper review recommends that the Government prohibit self-managed funds from owning collectables and personal-use assets. The review suggests that funds already with these investments be given five years to get rid of them or to convert to a small APRA fund.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Trusts – Bamford High Court Decision
Special consideration must be given to making trusts distributions for the year ended 30 June 2010 due recent developments.
On 30 March 2010 the High Court handed down its decision that:
The expression “income of the trust estate” in s.97(1) is to be ascertained by the trustee in accordance with the trust deed, trust principles, and appropriate accounting principles; and
The proportionate approach and not the quantum view, in the correct approach to apply when determining a beneficiary’s “share” of the trust’s tax law income to be included in the beneficiary’s assessable income.
We recommend anybody who uses a trust to thoroughly review their trust deeds paying special attention to the trust distribution clauses, recharacterisation clauses and equalisation clauses.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
ATO attacks trust distributions to companies
Special attention must be given to making a trust distribution to a company beneficiary due to the recently released tax ruling 2010/3 issued on 2 June 2010.
For many years the Australian Taxation Office has accepted that non-payment of a trust distribution to a company beneficiary which gives rise to an unpaid present entitlement is not a loan for the purposes of Division 7A. However this view has recently changed with the release of TR 2010/3.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
New ASIC fees from 1 July 2010
March quarter CPI figures, released on 28 April 2010 have resulted in an increase to fees chargeable under the Corporations (Fees) Act 2001 and Corporations (Review Fees) Act 2003.
The Federal Government amended Regulations to enable these fees to be indexed on an annual basis.
The fees will be indexed each financial year from 1 July 2010 based on any increase in the Consumer Price Index (CPI) for the March quarter immediately before the start of the next financial year.
Examples of some fee changes are:
Annual review for a proprietary company increases from $212 to $218
Application for registration as an Australian company increases from $400 to $412
Company voluntary deregistration fee increases from $33 to $34
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
2009-10 Commonwealth Budget Announcements
Extension of Small Business and General Business Tax Break The Government will expand the Small Business and General Business Tax Break announced in the February 2009 Updated Economic and Fiscal Outlook to provide additional assistance to small businesses. A bonus deduction of 50% will be available to small businesses that acquire an eligible asset between 13 December 2008 and 31 December 2009 and install it ready for use by 31 December 2010. The previously announced 30% and 10% bonuses will continue to apply to all other businesses.
Small businesses only need to invest a minimum of $1,000 per asset in order to qualify for the Tax Break. Under enhancements to the Tax Break announced in March 2009, they can also amalgamate their expenditure on batches and sets of assets in order to meet this threshold.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Targeting overseas employment income exemption
The Government will better target the income tax exemption for foreign employment income, with effect from 1 July 2009. The exemption will apply to income earned as an aid worker, a charitable worker, under certain types of government employment or on projects that are in the national interest.
Currently, certain foreign employment income earned by Australians working overseas for a continuous period of 91 days or more is exempt from income tax. The original intent of this measure was to relieve double taxation, however, in practice little foreign tax may actually be paid on the foreign income concerned.
Instead, subject to the aforementioned exemptions, foreign employment income will generally become taxable and taxpayers will be entitled to a foreign income tax offset for foreign tax paid on the foreign employment income. This will relieve double taxation for those individuals.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Targeting the concessions for Employee Share Schemes
The Government has announced measures that will remove the inconsistency which currently exists between the two types of employee share schemes: qualifying shares schemes and non-qualifying share schemes. The measures will maintain the incentives for low and middle-income earners to access such schemes.
Currently an employee under a qualifying share scheme can elect to be assessed on discounts provided on shares or rights in the income year the shares or rights are acquired. If no election is made, the discount (which includes gains on shares or rights) is taxed at a later time (such as when restrictions on the shares or rights are lifted). If an employee elects to be taxed upfront they receive a tax exemption of up to $1,000 on the discount.
In comparison, if the shares or options are issued under a non-qualifying scheme, the employee is taxed on the discount when he or she acquires the shares or options. This means they do not enjoy the tax benefits associated with qualifying employee share schemes.
Under the new arrangements, all discounts on shares and options provided under an employee share scheme - either qualifying or non-qualifying -will be assessed in the income year in which they are acquired. That is, employees acquiring shares or options under qualifying employee share schemes will no longer be able to elect to defer taxation on their discount to a later time. This will ensure that all forms of remuneration are taxable in the year the remuneration is received.
The Government will also limit access to the $1,000 upfront concession. The $1,000 upfront tax exemption will be limited to those employees with a taxable income of less than $180,000 after adjustment for fringe benefits, salary sacrifice and negative gearing losses.
The measure will take effect with respect to shares and rights acquired after 7:30pm (AEST) on 12 May 2009.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Reducing the concessional contributions caps
The Government will reduce the concessional contributions cap to $25,000 per annum (indexed), with effect from the 2009-10 financial year. The transitional concessional contributions cap (applicable to individuals aged 50 and over for the 2009-10, 2010-11 and 2011-12 financial years) will be reduced to $50,000 per annum.
"Grandfathering" arrangements will apply to certain members with defined benefit interests as at 12 May 2009 whose notional taxed contributions would otherwise exceed the reduced cap. Similar arrangements were applied when the concessional contributions cap was first introduced.
The annual cap on non concessional contributions is $150,000 per annum for the 2008-09 financial year and will remain at that level in 2009-10. In the future, the cap will be calculated as six times the level of the (indexed) concessional contributions cap.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Temporary reductions in the co-contribution
The Government will temporarily reduce the level of the superannuation co-contribution. The Government will reduce the superannuation co-contribution matching rate from 150% to 100% for contributions made in the 2009-10, 2010-11 and 2011-12income years, and to 125% for contributions made in the 2012-13 and 2013-14 income years.
The maximum co-contributions payable will also be reduced accordingly to $1,000 for contributions made in the 2009-10, 2010-11 and 2011-12 income years, and to $1,250 for contributions made in the 2012-13 and 2013-14 income years.
The co-contribution matching rate and maximum payable will return to 150% and $1,500 for contributions made in the 2014-15 and later income years.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Increase in the Medicare levy low-income thresholds
The Government will increase the Medicare levy low income thresholds to $17,794 for individuals and $30,025 for individuals in families, with effect from 1 July 2008. This measure has an ongoing cost to revenue which is estimated to be $205.0 million over the forward estimates period.
The additional amount of threshold for each dependent child or student will also increase to $2,757. The increase in these thresholds takes into account movements in the Consumer Price Index and ensures that low income families and individuals are not liable to pay the Medicare levy.
The Government will also increase the Medicare levy threshold for pensioners below Age Pension age to $25,299, with effect from 1 July 2008. This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy when they do not have an income tax liability.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Government Stimulus Package
As part of the Federal Government’s revised $42 billion economic stimulus package, the following one-off cash bonus payments have / will be made:
- A Tax bonus of up to $900 subject to certain taxable income thresholds for the 2007/08 year and paid to individuals through the tax system.
- A Single-Income Family bonus of $900 for sole parent and two-parent families (irrespective of the number of children) who rely on one main income earner and are entitled to Family Tax Benefit Part B.
- A Back to school bonus of $950 per child to assist low-and middle-income families eligible for Family Tax Benefit A with school-age children (age 4 to 18).
- A Farmer's Hardship bonus of $950 paid to farmers and others receiving exceptional circumstances related income support.
- A Training and Learning bonus of $950 to assist students, those returning to study or training, and some income support recipients.
Tax Time !
Want a refund for sending the kids to school?
This year make taxes work for you - claim the new Education Tax Refund on offer by the Australian Tax Office.
What is the Education Tax Refund?
The Education Tax Refund is a new tax initiative being offered by the government to assist families who incur education costs as a result of sending children to school. This refund can give back up to 50% of the education costs you have incurred for each child up to a certain limit (refer below for limits).
How it works
You can claim the Education Tax Refund from July 1 (tax season!) this year. There are certain rules surrounding this so please talk to us if you intend to make this claim on your tax return this year.
If you have full care of a child, you can claim 50% of eligible expenses up to:
$750 for each child in primary school (a refund of up to $375)
$1,500 for each child in secondary school (a refund of up to $750)
If your expenses exceed your refund limit for the year, any excess can go towards next year’s refund.
Please ensure you keep all your receipts or are able to obtain a docket for the items eligible for a claim.
What expenses are eligible for the Education Tax Refund?
- You can claim the cost of buying, establishing, repairing and maintaining any of the following items:
- Laptops and home computers, printers, USB flash drives
- Home internet connections
- Computer software for educational use
- School textbooks and other paper-based school learning materials
Items that you cannot make tax refund claims for include:
- School fees
- School uniforms
- Excursions
- Tutors
- Musical instruments or sporting equipment
- Computer games or consoles
- Library book fees
- School photos
- Tuck shop expenses
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Beware - Tax Refund Scam
The Tax Office has issued two separate but related media releases warning taxpayers of two e-mail scams purporting to offer a tax refund.
The scams operate by requesting a taxpayer’s credit card and personal details.
Generally, the subject heading of the emails are titled:
• Get refunds on your Visa or Master Card;
• Notification — Please Read; or
• Australian Taxation Office — Please Read This.
The Tax Office does not send e-mails requesting personal information including credit card details.
Individuals who receive emails of this nature should immediately delete them.
For a confidential discussion direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information.
Insurance Industry
- Acquisition Opportunities Sought
Our client is a well respected name in the insurance brokerage industry. Having recently completed a significant combination their organization contains a number of well qualified personnel who together with administrative infrastructure is well versed to expand with an acquisition. They are looking for private companies which:
Operate in the commercial insurance brokerage sector;
Own 100% of their intellectual property;
Have a history of profitability and the ability for growth in the future;
For a confidential discussion interested parties should direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information on an opportunity in this field.
Construction Industry
- Acquisition Opportunities Sought
Our client is a Pty Ltd company in the Construction industry. They are looking for private companies with an enterprise value between $1M to $5M which:
Operate in the Precast Concrete Products sector;
Own 100% of their intellectual property;
The product sits high on the value chain;
Have a history of profitability and the ability for growth in the future; and
Have a high quality management team in place who can operate the business following the completion of the transaction.
For a confidential discussion interested parties should direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information on an opportunity in this field.
Information & Communication Technology Industry
- Acquisition Opportunities Sought
Our client is a Pty Ltd company in the Information & Communication Technology industry. They are looking for private companies with an enterprise value between $3M to $5M which:
Operate in the I&CT sector;
Own 100% of their intellectual property;
The product sits high on the value chain;
Have a history of profitability and the ability for growth in the future; and
Have a high quality management team in place who can operate the business following the completion of the transaction.
For a confidential discussion interested parties should direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information on an opportunity in this field.
Expansion Mandate
- Insurance Brokerage Authorised Representative Opportunities
Our client is a well respected name in the insurance brokerage industry. They seek to recruit Authorised Representives to join the team. This NIBA & Steadfast affiliated organization contains a number of well qualified personnel using leading edge infrastructure to provide the answers for the future under FSRA. Other advantages provided are:
A supportive culture
Enables you to comply with the new legislative requirements;
Provision of technology (Systems, surveys, etc);
Provision of administration support services;
You have the freedom to write business with whichever underwiters you like
For a confidential discussion interested parties should direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information on an opportunity in this field.
Acquisition, Disposal, Expansion, Consolidation Mandate - Opportunities Sought
Does your business seek to acquire or dispose of a business interest or investment? Contact SR Chartered Accountants and Business Advisors to discuss how we can facilite the optimal transaction outcome for you.
For a confidential discussion interested parties should direct all enquiries to Nikki Schwarz on +61 3 9853 1587, or via email at nikki@sraccountants.com.au for more information on an opportunity in this field.
Tax Lodgement deadline has passed
If you haven't lodged your tax return yet the news isn't all bad but you have missed the ATO's deadline for lodgement of 08 / 09 tax returns. If you've missed the deadline please email us RIGHT NOW on enquiry@sraccountants.com.au so that we can explain what you need to do. If you've completed your tax return with us this year we'd love to hear what you thought of the service and we'd really like to know what you think we can do to improve again next year. We really do appreciate your feedback and we do everything we can to incorporate the changes our clients suggest.
Tax is all done, time to prepare for next year
Yes it is never ending. Every year we reach the end of the financial year and start thinking about doing our tax and usually by the time we've sorted it all out its time to start thinking about the next year. At NRJ Partners we specialize in helping you prepare for the next year's tax issues. If you ever look at your payment summary and wonder, where did it all go, or why do I pay so much tax, we can help.
Please email us at enquiry@sraccountants.com.au or call us on +61 3 9853 1587 to find out more.