This is a very quick overview of the proposed changes as outlined in the recent budget. The proposed changes will need to be confirmed by the passing of any relevant legislation and thus all details may change.
Interest on Bank Accounts
The Treasurer outlined a 50% tax discount on the first $1,000 of interest earned. This gives potential savings of $75 for those on a marginal rate of 15% and $225 for those on the top marginal rate of 45%. This change is expected to come into force from 1 July 2011 and is to apply to interest bearing deposits with authorised deposit taking institutions which includes bank accounts, term deposits, bonds, annuities and debentures.
First Home Saver Account Changes
Previously if you held a First Home Saver Account (FHSA) and purchased a new home before the end of the qualifying period of 4 years then the account proceeds would have been compulsorily transferred to your superannuation account. The nominated changes will now see the funds go into your eligible mortgage at the end of the four year qualifying period.
Superannuation
Superannuation Co-contribution
The matching by the Government of personal super contributions was to increase from 1 July 2012 to $1,250 and again at 1 July 2014 to $1,500. Now it will remain at $1,000. Furthermore the thresholds on which the co-contributions are based will be frozen for the next two years. The current threshold under which you could receive the maximum co-contribution is $31,920 with the fade out threshold $61,920.
New Concessions for Superannuation Guarantee Contributions
The Government has indicated that in will effectively remove the contributions tax on normal employer superannuation contributions for workers on incomes up to $37,000 from 1 July 2012. The contributions tax on the current 9% super contribution for someone on an income of $37,000 is approximately $500.
12 per cent Superannuation Guarantee
The Government has indicated that it will legislate to increase the superannuation guarantee, from the current 9% to 12%, incrementally by 0.5% pa from 1 July 2013 until 2019/20.
Increase in eligibility for compulsory Superannuation Contributions to age 75
From 1 July 2013 the maximum threshold for compulsory superannuation contributions will be lifted to 75 years.
Superannuation Concessional Cap
The concessional cap on superannuation contributions for individuals over 49 years of age and with less than $500,000 in super will be lifted to $50,000 pa from 1 July 2012.
Tax
Simple Treatment of Work Related Expenses
From the 2012-13 financial year tax payers will provide have a choice of a $500 standard deduction to replace deductions for their work related expenses and cost of managing tax affairs. This is slated to increase to $1,000 in 2013-14.
For those with more complex needs they will be able to continue to claim expenses by the current methods.
Low Income Earner Tax Offset (LITO)
The Low Income Earner Tax Offset will be increased to $1,500 with a $30,000 fade out threshold. This means that a individual earning less than $16,000 or a recipient of a superannuation pension of $48,158 should pay no tax.
Senior Australian Tax Offset (SATO)
The maximum a senior Australian can earn before paying tax or the Medicare levy will now be $30,685 for singles and $26,680 for members of a couple.
Child Care Rebate
The annual Child Care Rebate is to be dropped from the current $7,778 to $7,500 with indexation suspended for the next 4 years.
For more details visit the Government Budget website