Keep up to date with the latest tax news from the Australian Taxation Office brought to you by the staff of Susan Nash and Associates. You will find plenty of useful information here designed to help you keep up to date with the latest from the ATO.
New for 2013
FBT - further reform of living-away-from-home allowances and benefits
The Government has announced it will further reform the tax concession for living-away-from-home ('LAFH') 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. In particular, this measure 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.
Non-residents - removal of the 50% CGT discount
The Government will remove eligibility for the 50% discount on capital gains accrued by non-residents on taxable Australian property such as real estate, after 7.30pm (AESD on 8 May 2012.
However, non-residents will still be entitled to the CGT discount on capital gains accrued before this time, provided they choose to obtain a market valuation of assets as at 8 May 2012.
Phasing out the Mature Age Worker tax offset
From 1 July 2012, the Government will phase out the mature age worker tax offset ('NMETO') 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 the 2011/12-year.
To help older Australians who wish to continue working, the Government will provide a Jobs Bonus of $1,000 to 10,000 employers who recruit and retain a worker aged 50 years or over for over three months.
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 taxpayers with adjusted taxable income ('ATl') 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 $2,060); and
• the rate of the tax offset will be reduced to 10% (currently 20%) for eligible out of pocket expenses incurred.
Other Budget measures previously announced but not going ahead
Low-income tax offset ('LITO') - From 1 July 2012, individuals will be entitled to receive the LITO if their taxable income is below $66,667. The maximum value of the LITO will be reduced from $1,500 to $445 and will be phased out at the rate of 1.5 cents (previously 4 cents) for every dollar of taxable income over $37,000. Together with the other changes, this will mean low-income earners will have an effective tax-free threshold of $20,542.
Replacement of the Entrepreneurs Tax Offset with better incentives for small business - The Government will replace the Entrepreneurs Tax Offset with simpler and supposedly more effective measures (e.g., simplified depreciation measures below).
Simplified depreciation measures and instant write-offs - The Government will simplify tax for small businesses by:
• allowing small businesses to instantly write off each and every business asset costing less than $6,500 that is purchased from 1 July 2012;
• replacing the two depreciation pools that currently exist, with a single depreciation pool; and
• introducing an immediate deduction for the first $5,000 of the cost of a motor vehicle purchased from 1 July 2012.
Phasing out the Dependent Spouse Tax Offset ('DSTO') - The Government will reduce "outdated workforce participation disincentives” for spouses without dependent children, by restricting the DSTO from 1 July 2012 to taxpayers with spouses born before 1 July 1952.
Increasing the Superannuation Guarantee rate from 9% to 12% - The Government will boost retirement savings, by progressively increasing the rate of the superannuation guarantee from 9% to 12%.
New for 2012
Education Tax Refund
The government has abolished the Education Tax Refund and replaced it with the Schoolkids Bonus which will be paid directly via Centrelink.
Medicare Levy Surcharge
The government has introduced a sliding scale for the surcharge from 1% to 1.5% if you do not have private insurance cover. The rebate on health insurance is also progressively reduced.
Tax Changes for 2012/2013 returns
There have been a few changes to the tax rules for this tax season. It is possible you may no longer qualify for some tax deductions or you may be eligible for a bigger tax refund.
Some of the changes to watch out for this year affect the following;
Dependent Spouse Offset
The dependent spouse offset is now only available to those whose spouse was born before 1st July 1971.
Foreign income exemptions no longer apply and any income generated by foreign employment is now taxable. You can however claim a foreign tax income offset against the total amount of foreign tax paid on that income.
More information is now required from those who apply for super co-contribution claims from the Govt. This information is required to delineate between eligible income, ineligible income and assessable income.
Concessional Superannuation Contributions
There is now a maximum contribution of $25,000 for individuals.
Superannuation Co Contributions
There is now a maximum of $1000 available for incomes up to $31,920, with the amount available phasing out for incomes up to $61,920.
Entrepreneurial Tax Offset (ETO)
This offset is for small businesses. From 1st July 2009, a family income test will apply to the eligibility criteria for the ETO and as of the 1st of July 2012 the Entrepreneurs Tax Offset will cease.
ATO Occupation Targets for 2011/2012
These occupations will be targeted by the ATO for the 2011./2012 financial year. If your occupation is listed below it is highly recommended you contact us to help ensure your tax return is lodged correctly.
- The Construction Industry
- Cash Economy
Medicare Surcharge Income Thresholds
Income thresholds have now been changed to the following:
- $84,000 - Individuals
- $1,500 - Each dependent child or student
- Without private hospital cover, there is an extra 1% charge
Capital Gains & Losses changes for 2011/2012
Capital Gains Tax Audits are now done electronically as well as manually. The ATO now has web crawling robots that search the Australian Securities Exchange, Share Registers, and State Revenue Offices both domestically and internationally.
These web crawling robots use complex algorithms to detect unreported Capital Gains when an Asset is sold. With this technology it is now impossible to hide the sales of your assets.
You will need to have the following documents to support your Capital Gains declarations when you lodge your tax return.
- Date of Asset acquisition and its cost
- Date of Assets Sale and its Selling Price
- Costs of Buying and Selling this Asset
- Costs of Holding that Asset (interest etc)
Due to the global financial crisis more taxpayers than normal will be recording losses on the sale of their capital than they would have in the past. Many will be facing Capital Losses for the first time.
In some cases it may be possible to offset a Capital Loss against a Capital Gain, but not all losses can be offset and many of those losses can only be offset against the same type of asset.
To find out exactly how we can help to manage your Capital Gains and Losses make an appointment with us to handle your next tax return today
Rental Property Changes for 2011/2012
The ATO follows up on 75% of the tax returns of new Property Investors so new investors be warned, expect to hear from the ATO especially, if it is your first ever rental claim.
Some of the expenses which can be claimed immediately include;
- Loan Interest
- Repairs to Damage incurred since Properties Purchase
- Maintenance of Existing Appliances and Services
Some of the expenses which must be depreciated over several years include;
- Repairs to Damage which existed at the time of Purchase
- Renovations and other Home Improvements
- Replacement of Appliances or Fixtures
Property Investors are quite often confused about the difference between what they can claim immediately and what needs to be depreciated.
We recommend that you contact us to help you with your rental claims to ensure they are lodged correctly, retaining our services may potentially save you a lot of money.
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