Question:
Government mini-budget
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
The Razor Gang is out – tax changes proposed. The 2011/12 Mid-Year Economic and Fiscal Outlook (MYEFO) has been issued by the Government. In effect, this is a mini-budget.
The anticipated deficit for 2011/12 of $22b. has blown out to $37b. Yet the Government states that it is still in track to achieve its promised surplus for 2012/13, albeit reduced from $3.5b to $1.5b.
How can the Government turn a $37b deficit into a $1.5b surplus? The MYEFO provides for the following:
+ Tax receipts are expected to grow by $34b in 2012/13.
+ $6.6b of expenditure on infrastructure, carbon tax offsets, industry support and natural disaster relief planned for 2012/13 will be brought forward to 2011/12.
+ Taxes and charges will be increased and public sector reduced to save $6.8b
Proposed Tax Changes
Living away from home allowance (LAFHA)
Temporary residents will be unable to claim this benefit unless they maintain a residence for their own use in Australia in which they are living away from home for work purposes.
Claimants will be required to substantiate their actual expenditure on accommodation and food beyond a statutory amount.
These changes apply from 1 July 2012.
Work Related Expenses
The Government previously announced that it would allow claims for a standard amount to cover work related expenses. The start date for this change has been deferred until 1 July 2013.
Tax on Interest Income
The Government previously announced that it would allow a 50% tax discount for interest income. The start date for this measure will be deferred until 1 July 2013.I
nterest Withholding Tax
In a proposal to improve Australia’s international competitiveness, the Government previously announced a phase down in interest withholding tax for financial institutions. The start date for this measure will be deferred until 2014/15.
Managed Investment Trusts
The start date for the new tax system relating to Managed Investment Trusts will be deferred until July 2013.
Dependent Spouse Tax Offsets
These benefits will be restricted to those with spouses born before July 1952.
Superannuation Contributions
Indexation of the superannuation contribution cap of $25,000 will be deferred until 2014/15 and there will be industry consultation in relation to the higher contributions cap for those members aged 50 and over.
Superannuation Co-Contribution
The Government matching contribution will be reduced by 50% up to a maximum co-contribution of $500. This will be available only to people with incomes up to $31,920 in 2012/13, with a phasing down arrangement for incomes up to $46,920.
Superannuation Pensions
Minimum drawdowns of 75% of the required amount will be extended to 2012/13.
Baby Bonus
The baby bonus of $5,400 will be reduced to $5,000 from 1 September 2012. Indexation of the amount will be frozen for three years from 1 July 2012.
Visa Charges
The cost of non-resident visas will increase. This will cause higher costs for employers seeking overseas employees.
Data Matching
The Tax Office will aim to increase revenue collections by contractors involved in the cash economy. It will do this by undertaking examination of businesses not meeting benchmarks set by the ATO.
