Budget 2013/14: Is it ‘Stronger, Smarter & Fairer’?May 16, 2013
Our guest columnist, Kirstin Stewart, Director of Business Services for HLB Mann Judd, gives her view on how the Federal Budget will effect you over the next 12 months.
Treasurer Wayne Swan announced the Labor Government’s Federal Budget for 2013/14 last night. But is this budget ‘stronger, smarter and fairer’ like it claims to be? As always, it will depend on what camp you’re in. The budget estimates a cash deficit of billion for the 2013/14 year, and estimated to ‘return to balance’ in 2015/16. Whilst one side of the budget focuses on where the nation’s funds will be spent – the winners being DisabilityCare Australia (formerly known as the National Disability Insurance Scheme), infrastructure and education; on the other side is the question of how these proposals will be funded? The answer is change to superannuation, business and personal taxation. In an election year, there is some doubt that the proposals put forth in the budget will take effect if the Liberal Party win the election in September.
So how will this affect you from a taxation perspective?
- Entities classified as ‘large’ will be required to make PAYG Instalments monthly. Currently only large companies are required to pay these instalments monthly. These measures affect timing of payments only. The phase in will be as follows:
- 1 January 2014 – Companies with $1billion turnover or more
- 1 January 2015 – Companies with $100million turnover or more
- 1 January 2016 – Companies with $20million turnover or more, and all other entities with turnover of $1billion or more
- 1 January 2017 – all other entities with turnover of $20million or more.
- Changes to the Thin Capitalisation regime from 1 July 2014
- Changes to tax consolidated entities from 1 July 2014
- Changes to CGT for foreign residents from 14 May 2013
- Changes to prevent dividend washing – a practice where shareholders can receive two lots of imputation credits for the same share holding
- Funding provided to the ATO to increase compliance activities to review business restructures to shift profits (transfer pricing).
- R & D tax concessions eligibility only to companies with turnover of less than $20billion.
- Superannuation guarantee to increase from 9% to 9.25% from 1 July 2013, and the phase in of the increase of superannuation guarantee to 12% from 1 July 2019.
- From 1 July 2012 if your income is above $300,000, contributions tax will increase from 15% to 30%.
- The superannuation concessional contributions cap will increase from $25,000 per year to $35,000 per year from 1 July 2013 if you are aged 60 and over; and 1 July 2014 if you are aged 50 and over. For under 50s, cap remains at $25,000 until 1 July 2014, when it increases to $30,000.
- From 1 July 2013 excess contributions made into the super fund can be withdrawn and taxed at the individual’s marginal rate, with an interest component.
- Pension asset earnings above $100,000 will be taxed at 15% from 1 July 2014.
- Previously announced changes to reduce individual tax rates from 1 July 2015 will not be going ahead.
- From 1 July 2014, the Medicare Levy will increase from 1.5% to 2% of taxable income. These additional funds will be used specifically to fund DisabilityCare Australia.
- From 1 March 2014, the Baby Bonus will be scrapped. Currently, if you earn up to $150,000 and are not claiming Paid Parental Leave, you are eligible for $5,000 Baby Bonus for your first child, and $3,000 for any subsequent children. From 1 March 2014, this will change to reduce the maximum earnings eligibility down to $112,000, and a payment of $2,000 for your first child, and $1,000 for each subsequent child, and will be paid with your Family Tax A entitlement.
- Self-education expenses deduction will be capped at $2,000 per year from 1 July 2014.
- The discount for early or up-front payment of HELP (HECS) debts will be removed.
- There will be a phase out of the offset for 20% of the excess of medical expenses over $2,000.
For further information please contact Kirstin Stewart.This entry was posted in Uncategorized. Bookmark the permalink. ← Branding – Is It Much Ado About Nothing? Walker Wayland/BDA Business and Franchising Golf Day Sponsor’s Breakfast →