Each tax time brings changes and this year is no different. It’s important to be aware of the changes, what they mean to you, how they will affect your net income for the year and to look at ways to ensure you minimise the tax you need to pay.
This year’s changes will affect most of us in some way.
Private health Insurance rebate changes: from 1 April all rebate percentages will be adjusted annually taking into account the average increase in premiums and the consumer price index. You need to provide your private health insurance statement to your accountant.
Net medical expense tax offset is being phased out: to be eligible individuals need to have received the offset in their 2012-13 income tax assessment to be eligible to claim for this year. 2013/2014 is the final year the offset can be claimed. As is often the way there are exceptions to the rule as it doesn’t apply to disability aids, attendant care and aged care which can be claimed until June 2019.
The concessional contribution cap for superannuation increases to $30,000 from 1 July 2014 and $35,000 if you are over 49 as at 30 June 2014. The non concessional cap goes to $180,000 and the bring forward cap is $540,000.
New CGT discounts: if you have a Capital Gains Tax event after 8 May 2012, and have had any periods of foreign or temporary residence since that date, your eligibility and discount rate may be affected.
This year the ATO is not targeting certain occupations but will be focusing its attention on work related expenses across all occupations. Under the spotlight will be overnight travel, transportation of large tools and equipment and the work use of electronic devices such as laptops, computers and mobile phones.
And of course the Debt Repair Levy is an additional 2% tax on incomes above $180,000 for the next 4 years, placing Australia’s top income tax rate at 49% (including medicare levy which is now 2% rather than the previous 1.5%) and amongst the highest in the world. This is an attempt by the government to reduce the budget deficit by $3.2b
Another sting for high income earners is Division 293 Tax, which applies to individuals when relevant income plus their concessional super contributions exceeds $300,000. The tax is an extra 15% on their concessional superannuation contribution and can be either paid by the individual or the super fund. Thus the contribution is taxed at 30% as opposed to 49%. Still a worthwhile tax saving.
We’re running 2 seminars on Thursday 24th July which will expand on the impact of the recent budget on personal, business and retirement finances. Contact us if you would like to attend.