2012 Federal Budget Summary

Superannuation

• Increase in the concessional contribution cap for people aged 50 or over with less than $500,000 in super will be postponed until 1 July 2014 (FY2015), l.e.$25,000 cap will apply to all ages in FY2013 and FY2014
• Tax payable on concessional super contributions by people earning $300,000 pa or more will increase from 15% to 30%
• The minimum income payments for a superannuation pension/income stream won’t increase until 1 July 2013 (FY2014), and remain at 3% for under 65, at 3.75% for age 65-74 in FY2013

Individuals

• The combined result of maximum low income tax offset being reduced to $445 from current $1 ,500, and the increase of the tax-free threshold from current $6,000 to $18,200 will result in that taxpayers earning under $80,000 pa will receive modest tax cuts and people earning over $80,000 pa will payapprox. same amount of tax.
• Tax may increase on certain employment termination payments
• The tax concession for LAFHA (Living Away From Home Allowance) and benefits will be limited to employees living away from a home maintained in Australia as previously announced. The changes will apply from 1 July 2014 for arrangements entered into prior to the Budget night, 8 May 2012.
• ‘School Kids Bonus’ of $820 a year for each child at high school and $410 for every child in primary school will automatically be paid to parents who are eligible for Family Tax Benefit Part A. This will replace the Education Tax Refund from 1 January 2013
• A means test will be introduced for the net medical expenses tax offset from 1 July 2012 and high income earners will have to pay the first $5,000 out of pocket medical expenses before claiming 10% on the excess
• The mature age worker tax offset (MAWTO) will be phased out for taxpayers born on or after 1 July 1957 from 1 July 2012.
• The 50% CGT discount for non-residents will be abolished for gains accrued after the budget night, 8 May 2012.

Company and small business

• The reduction in the company tax rate isn’t going ahead.
• Companies will be allowed to carry back up to $1 m of tax losses in FY2013 to offset against tax paid in FY2012. From FY2014, tax losses can be carried back and offset against tax paid up to two years earlier.
• The write off of bad debts owning from related parties will not be deductible effective from the budget night, 8 May 2012
• From 1 July 2012, all small businesses, regardless of the structure, can claim an immediate deduction for the cost of any new business assets costing less than $6,500, and assets costing $6,500 or more will be depreciated in a single pool (15% in the first year, 30% in each subsequent year). An immediate deduction for the first $5,000 of a new or used motor vehicle is also available. (These previously announced measures have already been legislated).