The end of the financial year is fast approaching and it’s time to start planning to prepare for your 2012 Income Tax Return. Now is a good time to start thinking about your tax affairs. Some things you could look at are:
The standard deduction of $500 that was set to begin on 1 July 2012 is no longer going to be introduced. So, you must continue to keep your receipts so you can claim all your relevant work-related expenses which exceed $300 in total in the 2011-12 and future income years.
From 1 July 2011, as part of the 2012-13 Budget announcements, the following changes apply to the Medicare Levy low income thresholds:
From 1 July 2012, access to the private health insurance rebate becomes means tested by reference to how much income an individual earns. Not all taxpayers will be entitled to the 30% rebate. Some higher income-earning taxpayers will be entitled to a lesser rebate amount and individuals and families whose income is higher than the top threshold amount will no longer be entitled to any rebate at all.
The three tier income thresholds also apply to calculate who has to pay the Medicare levy surcharge and how much they have to pay.
The table summarises how much rebate an individual can claim if they have private health insurance and how much Medicare levy surcharge an individual has to pay if they don’t have sufficient private hospital cover from a private health insurer.
$84,001 – $97,000
$97,001 – $130,000
$168,001 – $194,000
$194,001 – $260,000
% of insurance premium = rebate*
Medicare levy surcharge %
*If you are an older taxpayer, the rebate amounts are higher.
The way you claim your rebate (either directly from your private health insurer, through your tax return or from Medicare) should not change. If you are a higher income earner, the cost to you personally of your private health insurance is likely to be more because of this change.
If you are concerned about how these changes might affect you in the coming income year, speak to your tax agent about the possible impact of these changes.
From 1 July 2012, the following tax rebates are going to change:
The previous edition of TaxWise referred to recently announced changes to the living-away-from-home allowance (LAFHA). The proposed changes are to:
These changes are due to apply from 1 July 2012.
An “instant write-off” amount of $6,500 (increased from $1,000) will apply to small businesses who acquire “low cost” assets from 1 July 2012. In addition, an instant write-off for the first $5,000 of the cost of a motor vehicle purchased by a small business will also be available (unless the vehicle can be written off immediately).
Other changes simplifying depreciation for small businesses include the creation of a “general small business pool” (which will be made up of depreciating assets in the “general small business pool” and the “long life small business pool”). Assets will be depreciated at a rate of 15% in the first year and at 30% in each subsequent year.
If you are currently considering some new asset purchases, your tax agent is the best person to help you decide when you should make those purchases.
The entrepreneurs’ tax offset ceases to be available on 30 June 2012. The new small business asset instant write-offs and depreciation pool in effect replace this tax offset.
If you are planning on claiming the entrepreneurs’ tax offset this year, talk to your tax agent soon!
In March 2012, certain changes to the superannuation provisions were introduced into parliament, including the following:
The following announcements were made in the 2012-13 Budget in relation to superannuation changes:
Amounts above $180,000 (known as the “whole-of-income cap”), will be taxed at marginal rates. This cap will complement the existing ETP cap (which will be $175,000 in 2012-13, indexed) which ensures that the tax offset only applies to amounts up to the ETP cap.
All developers of residential premises should take note that the GST provisions have been amended to ensure that sales of residential premises that have been constructed under certain arrangements known as “development lease arrangements” will be subject to GST (i.e. they will be treated as sales of new residential premises). Even if there has previously been a “wholesale supply” of the newly built premises to the developer, this will still be the case. This is something that developers who are building residential properties under these types of arrangements should be aware of.
There are also some changes under the GST law confirming the GST treatment of new residential premises in the case where they have been subdivided or strata-titled.
You should be aware that these changes will apply from 27 January 2011. If you are a builder who has constructed new residential premises since 27 January 2011, you should see your tax agent to see if these amendments affect the GST treatment you have applied to your project. You might need to consider amending your previously lodged Activity Statements if these amendments impact your business.
See your tax agent if you are concerned how these new GST provisions might affect the GST treatment of a residential development you have undertaken. You might need to amend your Activity Statements as well!
If you are in the building and construction industry and you have an Australian Business Number (ABN), you may need to report certain payments you make to contractors for certain building and construction services.
You need to report certain details in relation to the contractor to whom you make payments, including their ABN, name, address and amount you paid them (including GST). Generally, these amounts need to be reported to the ATO by 21 July, which is very soon after the financial year end.
As these rules apply from 1 July 2012, it might be a good time now to look at the kinds of records you keep in relation to payments you make to contractors and see if you need to change anything to help you comply with these new rules. Your tax agent can assist you with the types of records you might need to start keeping to help you meet this obligation. It might turn out that you don’t need to change any of your record-keeping details and you will be able to meet this obligation.
You should take the opportunity now to consider the impact of this reporting obligation and make any necessary changes now so you are ready for 21 July 2013! See your tax agent if you need help with this.
Taxwise® News is distributed quarterly by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.