The 2011/2012 Federal ‘nip and tuck’ Budget
The 2011/2012 Federal Budget was a ‘nip and tuck’ Budget. Many of the changes were either because of or justified by the need to improve the workforce participation rate to counter the declining unemployment rate from the current level of 5% to 4.5% by June 2013. Others were simply to fulfil the promise of bringing the budget into surplus.
Some changes were more than cosmetic with a temporary flood and cyclone reconstruction levy set to apply in the 2011/2012 income year to those who earn over $50,000 (adding $1.725bn to Government revenues over 5 years). FBT changes will add an additional $970m over 5 years. And, a few tucks will be made to the tax system with restrictions to income splitting, the phasing out of the dependent spouse tax offset, and removing the ability for minors to access the low income tax offset on unearned income.
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New tax breaks for small business
Need a car? If you’re in small business the Government thinks you do!
Spreading some joy prior to the Federal Budget, Treasurer Wayne Swan has announced an immediate tax write-off for small business of the first $5,000 on the cost of a new car used for work purposes. However, the tax write-off is not scheduled to start until the 2012/2013 financial year, so we hope you did not need that car now. The write-off is in addition to other previously announced incentives for small business operators due to start in 2012. These include:
- an immediate write-off of all assets valued at under $5,000 (up from $1,000 presently);
- a write-off of all other assets (except buildings) in a single depreciation pool at a rate of 30%. Currently, small businesses allocate assets to two different depreciation pools, with two different depreciation rates (30 per cent and five per cent); and
- a reduction in the company tax rate to 29%.
The write-off for cars will replace the current entrepreneur’s tax offset that provides a 25% tax offset on business income where income is between $50,000 and $75,000.
Pregnant pause – the new paid parental leave scheme
The Federal Government’s paid parental leave scheme is open for business. Available to eligible parents whose babies are born or adopted from 1 January 2011, the scheme opened for registrations on 1 October.
Expectant parents can apply to access the scheme through the Family Assistance Office (FAO) up to 3 months prior to the birth of their child. During the six month phase-in period of the scheme, employers can opt into the scheme. If they don’t, the FAO will administer the parental leave payments for them. From 1 July 2011 however, responsibility for administering the scheme will predominantly fall to employers.
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Tax reform and you – what’s in, what’s out, and what’s still to come
The Government’s response to the Henry Review released at the beginning of this month was an anti-climax. The Government have released only the first phase of reforms and left the majority of the Henry Review recommendations untouched. This does not mean that we will not see any further reform; it’s just that there is no definitive timeframe for further announcements.
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Flood levy announced
The Government has just announced an increase to the Medicare Levy threshold to help pay for the flood recovery process.
Applying from the 2011/2012 income year, the flood levy of 0.5% will apply to all taxpayers with a taxable income of $50,000 or more and 1% for all those with an income above $100,000. Those below the income threshold or who are in receipt of an Australian Government Disaster Recovery Payment for a flood event that occurred during the 2010/2011 income year will be exempt from paying the flood levy. The levy is intended to apply to the 2010/2011 income year only.
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Tags: ATO | Federal Government | Flood assistance | flood levy | State Government
Posted in Brisbane News & Events, Infotelligence, News & Commentary, Uncategorized |