If you found the 2013 Budget less than riveting, you may have missed some of the changes, some applicable to this 2012/13 year.  We have given a summary below of these key matters.  If you have a particular query, call us and we would be happy to send you a copy of our associate's, Hayes Knights Accountants, Report, or one of the other 14 we received.

Swan (in his Swan Song?) has pushed reform but without unnecessarily upsetting voters before the election.  Many of the big reforms impact on large and foreign entities and non-residents.  Very few cuts directly impact on the broader population.

Business

         Foreign Residents Capital Gains Targeted

                  From 1/7/16, a 10% non-final withholding tax will apply on the disposal of Australian property and equities.

         Access to R&D unchanged

                  a 45% refundable tax offset, when business turnover is under $20m.

Tax Measures

         ATO and Trusts

                  ATO to target exploitation of trusts that conceal income, mischaracterize transactions, artificially reduce trust income, or underpay tax.

         Data matching

                  More money to match transactions, including government payments, sales of property and equities, sales through merchant cards, partnership and trust distributions and dividends and interest, and transfers to and from Australia.

         GST instalments

                  Extension of the GST instalment system to allow quarterly access or refunds for businesses that are in a net refund position.

Superannuation

No new changes, the Budget confirms the changes announced in April.

         Excess Contributions tax

                  From 1/7/13, individuals can withdraw excess contributions and these will be taxed at the individuals marginal tax rate (presently, taxed in the Fund at 46%).

         Higher Concessional Contributions cap

                  From 1/7/13, if over 60, an allowable contribution of $35,000, and from 1/7/14 for those over 50.  The cap is now applied based on age, not as previously for those with super balances under $500,000.

         Taxing earnings on super assets paying income streams.

                  From 1 July 14, only the first $100,000 of earnings per member will be tax exempt, and income above that will be taxed at 15%.  Special arrangements apply for capital gains on assets purchased before 1/7/14.

         Account based pensions lose preference for Centrelink

                  From 1 January 2015, new super pensions will be subject to the standard pension deeming rules, which could increase the levels of income under the Centrelink Income Test (currently, preferential concessional treatment).

Individuals

         Medical expenses tax offset (METO)

                  From 1 July 2013, abolished unless METO claimed in 2012/13 (previously 20% of medical costs paid in a year).  Continues for those relating to disability aids, attendant care or aged care expenses.

         Medicare levy increase

                  From 1 July 2014, the Levy increases from 1.5% to 2%.

         Work related self education costs capped

                  From 1 July 2014, annual cap of $2,000 on self education, whether paid by the individual or an employer.  Costs include conferences and workshops, tuition fees, texts, travel and accommodation, where these expenses are incurred in the production of a taxpayer's current income.

         Income tax cuts deferred

                  From 1 July 2015, the tax-free threshold will increase to $19,400 (now $18,000)

         Key Economic Highlights

                  The assumptions by Treasury may not be reliable (again).  The Australian on 18/5/13, looked at Treasury's record for the last 10 years and concluded most were 'significantly wrong'.  The assumptions include:

      -     Australian dollar to remain high (other forecasters expect to fall to early 90's).

      -     Wage growth to remain around 3.5%

      -     Dwelling investment to grow at 5.0% (Shrapnel's expect new building to increase in SEQ by 30% next year, to meet current demand and shortfalls)

      -     Interest rates low this year (but likely to increase over the next 3 to 4 years as the $ falls, government competes for debt funds).