01/6/2012

The major revenue measures announced in the 2012 budget include:

  • company tax rate cut to 29 per cent will not proceed
  • loss carry-back arrangement for companies – the budget confirmed the Treasurer's announcement on Sunday 6 May that the government would allow businesses to carry-back losses. From 1 July 2012, companies will be able to carry back up to $1 million worth of losses to get a refund of tax paid in the previous year. From 1 July 2013, companies will be able to carry back up to $1 million worth of losses against tax paid up to two years earlier
  • living-away-from-home-allowance (LAFHA) – the government will reform the LAFHA to limit access to the tax concession to employees who maintain a home for their own use in Australia and provide the tax concession for a maximum period of 12 months in respect of an individual employee for any particular work location. The proposed changes will apply from 1 July 2012 for arrangements entered into after 8 May 2012, and from 1 July 2014 for arrangements entered into prior to that time. However, the changes do not affect:
  • tax concessions for "fly-in-fly-out" arrangements
  • tax treatment of travel and meal allowances which are provided to employees who have to travel away from their usual place of work for short periods
  • Project Wickenby – the government will provide $76.8 million over three years to the ATO and other agencies for Project Wickenby-related activities commencing from 1 July 2012
  • more funds for the ATO – the government will also provide $106 million over four years to the ATO to improve the management of outstanding tax debts and super guarantee charge
  • extension of the ATO GST compliance program – the government will provide $193.3 million to the ATO in 2014–15 and 2015–16 to continue to promote voluntary GST compliance
  • capital gains tax (CGT) discount for non-residents – the government will remove the 50 per cent CGT discount for non-residents on capital gains accrued after 8 May 2012
  • bad debts related party financing deductions – the government will deny a tax deduction for bad debts write off where the debtor is a related party not in the same tax consolidated group from 8 May 2012
  • limited recourse debt – the government will clarify limited recourse debt arrangements to ensure that tax deductions are not available for capital expenditure on assets that have been financed by limited recourse debt, to the extent the taxpayer is not effectively at risk for the expenditure and does not make an economic loss
  • standard tax deduction for work related expenses and the cost of managing tax affairs will not proceed
  • 50 per cent discount for interest income will not proceed
  • education tax offset to be replaced with the Schoolkids bonus. It will apply from 1 January 2013, and each year families will receive an automatic payment of $410 for each primary school child and $820 for each high school child. The Schoolkids bonus is only available to families receiving the Family Tax Benefit Part A plus young people in school receiving Youth Allowance and some other income support and veterans' payments. It will not be a taxable payment
  • limit on employment termination payment (ETP) offset for "golden handshakes" – the government will limit the availability of the ETP tax offset from 1 July 2012 to no more than $180,000
  • consolidation of the dependents offset – the various dependent tax offsets will be consolidated into a single, non-refundable offset from 1 July 2012. The new offset will only be available to taxpayers who maintain a dependent who is genuinely unable to work
  • mature age worker offset – the government will phase out the mature age worker offset from 1 July 2012 for taxpayers born on or after 1 July 1957
  • medical expenses offset will be means tested from 1 July 2012 for taxpayers with adjusted taxable income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples or families in 2012–13)
  • further exemptions from the flood and cyclone levy – the budget confirmed the Treasurer's announcement on 6 May 2012 that people who suffered flood damage in 2012 will also be made exempt from the flood and cyclone levy that applies for the 2011–12 financial year only
  • Medicare levy thresholds – from the 2011–12 income year, the Medicare levy low-income thresholds will be increased for singles to $19,404 (up from $18,839 for 2010–11) and to $32,743 for those who are members of a family (up from $31,789 for 2010–11). The additional amount of threshold for each dependent child or student will also be increased to $3007 (up from $2919)
  • fringe benefits tax airline transport benefits – the method of determining the taxable value of airline transport fringe benefits will be changed from stand-by value to market value to apply to benefits provided after 7.30 pm AEST on 8 May 2012
  • superannuation contributions tax – from 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their concessional contributions reduced from 30 per cent to 15 per cent (excluding the Medicare levy)
  • concessional contributions cap for over-fifties – the proposed higher concessional contributions cap for individuals aged 50 and over with super balances of below $500,000 will be deferred from 1 July 2012 to 1 July 2014
  • Increase in MIT withholding rate – the managed investment trust final withholding tax rate will increase from 7.5 per cent to 15 per cent from 1 July 2013
 

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