Standard work-related expenses deduction will not proceed
The government has announced that it will not proceed with the standard deduction for work-related expenses which was announced in the 2010/11 Budget.
Source: Budget Paper No 2, p 36; Treasurer's press release "2012-13 Budget Builds on Growing Record of Tax Reform", 8 May 2012.
50% discount for interest income
The government has announced that the 50% tax discount for interest income announced in the 2010/11 Budget will not proceed.
Source: Budget Paper No 2, p 35; Treasurer's press release "2012-13 Budget Builds on Growing Record of Tax Reform", 8 May 2012.
Medical expenses tax offset tightened
A means test will be introduced for the net medical expenses tax offset (NMETO).
For people with adjusted taxable income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples or families in 2012/13), the threshold above which a taxpayer may claim NMETO will be increased to $5,000 (indexed annually thereafter) and the rate of reimbursement will be reduced to 10% for eligible out of pocket expenses incurred.
Date of effect
This measure will apply from 1 July 2012.
Source: Budget Paper No 2, p 34; Treasurer's press release "2012-13 Budget builds on growing record of tax reform", 8 May 2012.
Dependency tax offsets consolidated
The eight dependency tax offsets will be consolidated into a single, streamlined and non-refundable offset that is only available to taxpayers who maintain a dependant who is genuinely unable to work due to carer obligation or disability.
The offsets to be consolidated are the invalid spouse, carer spouse, housekeeper, housekeeper (with child), child-housekeeper, child-housekeeper (with child), invalid relative and parent/parent-in-law tax offsets.
The new consolidated offset will be based on the highest rate of the existing offsets it replaces, resulting in an increased entitlement for many of those eligible for this measure. Taxpayers who are currently eligible to claim more than one offset amount in respect of multiple dependants who are genuinely unable to work will still be able to do so.
Date of effect
This measure will apply from 1 July 2012.
Source: Budget Paper No 2, p 35; Treasurer's press release "2012-13 Budget builds on growing record of tax reform", 8 May 2012.
Mature age worker tax offset to be phased out
The mature age worker tax offset (MAWTO) will be phased out for taxpayers born on or after 1 July 1957.
This will not affect any person who currently receives MAWTO.
Access to the MAWTO will be maintained for taxpayers who are aged 55 years or older in 2011/12.
Date of effect
This measure will apply from 1 July 2012.
Source: Budget Paper No 2, p 37; Treasurer's press release "2012-13 Budget builds on growing record of tax reform", 8 May 2012.
Medicare low income thresholds
The Medicare levy low income thresholds will be increased to $19,404 for individuals and $32,743 for families for the 2011/12 income year. The additional amount of threshold for each dependent child or student will also increase to $3,007.
The government will also increase the Medicare levy threshold for single pensioners below Age Pension age to $30,451 for the 2011/12 income year. This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy when they do not have an income tax liability.
From 1 July 2012, the low-income threshold for this group will be fixed at the level applicable to seniors entitled to the Senior Australians Tax Offset.
Source: Budget Paper No 2, p 37; Treasurer's press release "Keeping low-income earners exempt from Medicare levy", 8 May 2012.
Exemptions from flood and cyclone levies
Exemptions for the temporary flood and cyclone reconstruction levy (the temporary flood levy) will be extended to include individuals who were eligible for an Australian Government Disaster Recovery Payment (AGDRP) in 2010/11 even if they did not apply for and receive the payment, as required under the existing exemptions.
Exemptions from the temporary flood levy will also be extended to include those people who have been affected by a natural disaster in 2011/12. The classes of individuals to whom the extension apply are those who, in 2011/12:
- are eligible for an AGDRP for a disaster event
- are directly affected by a Natural Disaster Relief and Recovery Arrangements (NDRRA) declared disaster and would have met the AGDRP criteria, or
- are a New Zealand non-protected special category visa holder who received an ex gratia payment from the Australian Government in relation to a disaster that occurred.
The government introduced the temporary flood levy for 2011/12 only to contribute towards rebuilding costs following the natural disasters that affected Australia in 2010/11.
Source: Budget Paper No 2, p 45.
School kids Bonus to replace education expenses tax offset
The education expenses tax offset will be replaced with a new Schoolkids Bonus of $410 pa for each primary school student and $820 pa for each secondary school student. The bonus will be paid to eligible families in two equal instalments in January and July each year. As a transitional arrangement for 2011/12, the education expenses tax offset will be paid out in full to eligible families in June 2012.
Date of effect
The payments will replace the education expenses tax offset from 1 January 2013.
Source: Budget Paper No 2, p 146; Treasurer's press release "2012-13 Budget Builds on Growing Record of Tax Reform", 8 May 2012; Prime Minister and Deputy Prime Minister joint press release "Spreading the Benefits of the Boom", 8 May 2012.
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