2013 Federal Budget Update

Posted on Jun 3, 2013 | 0 comments

UntitledThe 2013 Federal Budget only contained a few surprises as many of the measures had already been announced.

Note: These measures are proposals only and may or may not become laws. If a change of Government occurs in September 2013, it may mean that some of these proposed changes do not occur.

Summary

·       The Medicare Levy will increase by 0.5% to 2% per year (p.a.) from 1 July 2014.

·       The $5,000 Baby Bonus will be removed from 1 March 2014. Instead, families eligible for Family Tax Benefit (Part A) will receive $2,000 following the birth of their first child, and $1,000 for each subsequent child.

·       The superannuation concessional contribution cap will increase from $25,000 p.a. to $35,000 p.a. from:

-               1 July 2013 for people 60 and over, and

-               1 July 2014 for people 50 and over.

·       From 1 July 2014, all pension asset earnings in Super Funds above $100,000 will be taxed at 15%.

Reduced tax concessions for high-income earners

In the 2012 Federal Budget, the Government announced that from 1 July 2012 individuals with incomes above $300,000 p.a. will pay an additional 15% tax on their concessional super contributions. Draft legislation for this measure was recently released and was confirmed in the 2013 Budget.

Changes to self-education expense deductions

From 1 July 2014, tax deductions for self-education expenses will be capped at $2,000 p.a. for individuals. Note that at this stage, there is no cap on deductions claimed by businesses for employee training.

Personal tax rates for resident individuals

Some of the proposed changes to the marginal tax rates and income thresholds, which were due to take effect from 1 July 2015, will not occur.

The table below summaries the thresholds and taxation rates that apply to Australian tax residents for the 2013, 2014 and 2015 tax years:

 

 

 

Current Income Thresholds

Marginal Tax Rates

(excludes Medicare Levy)

$0 – $18,200

0%

$18,201 – $37,000

19%

$37,001 – $80,000

32.5%

$80,001 – $180,000

37%

$180,001 +

45%

 

Phasing out the Net Medical Expense Tax Offset

Effective 1 July 2013, this offset will be phased out.

Generally, taxpayers who don’t claim the offset in this 2013 tax year will not be able to claim the offset in the 2014 or later tax years.

Early HECS-HELP repayments removed

Up-front and voluntary early repayment discounts under the HELP program will be removed from 1 January 2014. University and other eligible students will then no longer receive a discount if they pay their fees up-front or repay their HELP debt early.

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