By Brad Hancock

The 2012/2013 Budget was handed down on 8 May. The Budget was fiscally tight, designed to return the Budget to surplus. The budget contained many anticipated changes to superannuation, however the inclusion of some surprises along the way made for some interesting reading. The following is an overview of some of the major changes:

From the 2012/13 financial year, the tax-free threshold increases to $18,200. With the inclusion of the low income tax offset of $445 means you will be able to earn up to $20,542 before any income tax is payable.

Individuals & Families

• Net medical expenses tax offset has been amended to introduce a means test. Currently a 20% tax offset is available for net medical expenses in excess of $2,060. From 01 July 2012 individuals earning more than $84,000 and families earning more than $168,000 will have to incur more than $5,000 net medical expenses in order to qualify and the tax offset rate will reduce to 10%. • Mature age workers tax offset will be phased out for taxpayers born on or after 01 July 1957. • The Education Tax Refund will be replaced from 1 January 2013 by the ‘Schoolkids Bonus.’ The new Schoolkids Bonus will pay eligible families (receiving Family Tax Benefit Part A) $410 per primary student and $820 per secondary student. The bonus will be paid as a lump sum in January and July each year. • In relation to the above, the Education Tax Refund for June 2012 will be paid in full as a lump sum to eligible families in June (no receipts are required). • Standard deduction for work-related expenses announced in the 2010/2011 Budget will not proceed.

Companies

• The proposal to reduce company tax rates from 30% to 29% will not proceed. • From 30 June 2013, companies will be entitled to carry back up to $1 million in tax losses incurred in the 2012/2013 financial year to be offset against tax paid in the 2011/2012 financial year. From 30 June 2014, companies will be entitled to carry back and offset against tax paid in the previous two years. Essentially there will be a refund of tax paid in those previous years.

Small Business

• The threshold for the small business asset instant write-off will increase from 1 July 2012 from $1,000 to $6,500. • Small business will be eligible for an immediate write-off of $5,000 on new motor vehicles purchased from 1 July 2012. The balance of the motor vehicle will be depreciated with other small business assets in the pool at 15% in the first year and 30% after that. • The entrepreneurs tax offset has been removed from 1 July 2012.

Superannuation

• For the budget changes relating to superannuation please consult Kymberlee Naumann’s article entitled ‘Superannuation – Keeping the Faith’.

If you have any questions in regards to any budget changes or announcements, please feel free to contact the office and one of our staff will be able to assist.