The new financial year is almost here and we would like to let you know about some upcoming changes in government and Tax Office practices.

BUSINESSES – SUPERANNUATION ISSUES

• Deduction for super contributions: To ensure that your business gets a deduction for your employer superannuation contributions for your employees, payments must go into their super fund’s bank accounts before 30 June 2014.

• Superannuation contributions rise: Don’t forget – as of 1 July 2014, compulsory employer superannuation contributions will rise from 9.25% to 9.5%.

• Electronic payments only for super contributions: As part of the new SuperStream standard being introduced progressively from 1 July 2014, employers with 20 or more employees will need to start paying superannuation contributions for employees by electronic transfer only, rather than by other means such as cheque.  All other employers will be required to do the same from 1 July 2015.

• Electronic contribution messages: Also as part of the new SuperStream standard, employers will need to send electronic messages containing contribution data to the receiving superannuation funds from 1 July 2014.  Please have a read through the new requirements at www.ato.gov.au/superstream.

BUSINESSES – OTHER ISSUES

• Electronic tax refunds: Most tax returns with an estimated refund must now be lodged with bank account details so that refunds can be received electronically.  This includes income tax returns for companies, partnerships, trusts, superannuation funds and individuals.

• Deduction for fixed assets: Until 31 December 2013, small businesses could claim an immediate deduction from all assets purchased with a cost price of less than $6,500.  The federal government has announced that they intend to revert to the previous rules, whereby you would only be able to claim an immediate writeoff for assets with a cost of less than $1,000.  However, the legislation has not yet passed through parliament and is still subject to some debate.  The longer the uncertainty remains, the more problematic this will be for the government.  While we cannot guarantee a deduction will be available for assets up to $6,500 acquired after 1 January 2014, if you have been considering purchasing assets for your business it may be worth making purchases before 30 June 2014, where there is still a possibility that the higher threshold will still be in place.

• Repeal of company loss carry-back: The government announced that it intends to repeal the loss carry-back tax offset for the 2013-14 income year and later income years.  If the repeal of the offset is enacted as announced, companies will no longer be entitled to claim the offset in the 2013-14 year.
• Stocktake: If this is applicable to your business, don’t forget to do a stocktake at 30 June 2014!

INDIVIDUALS

• Income tax rates: The income tax rates for the 2013-14 year will remain the same as at present.

• Medicare levy: The Medicare levy will increase from 1 July 2014, from 1.5% to 2% of taxable income.

• Private health insurance rebate changes: Your annual private health insurance statement will look different from this year onwards.  The rebate percentage will be adjusted annually on 1 April, so your statement will include extra rows of information for the periods that the different rebate percentage was applied. This change will be applied automatically to your private health insurance and you don’t need to do anything.

• Net medical expenses tax offset: The net medical expenses tax offset is being phased out from 1 July 2013.  To be eligible for the offset this year, you must have received the offset in your 2012-13 tax assessment.  The final year that the offset can be claimed is in 2014-15.  If you received this offset in the 2012-13 year, please make sure that you include all your medical and pharmaceutical receipts when sending in your 2013-14 tax papers, as well as your Medicare number

• Tax receipt: From 1 July 2014, the Australian government will issue most taxpayers with a tax receipt as part of the annual income tax return process.  This tax receipt will give you a breakdown on how your tax has contributed towards government expenditure.

• Electronic tax refunds: As with the 2012-13 year, tax returns with anticipated tax refunds must include Australian financial account details so that refunds can be processed electronically.

• First home saver accounts: The government is abolishing the First Home Saver Accounts scheme.  New accounts will not receive any concessions or government contributions.  Existing accounts will receive government contributions until 30 June 2014.  From 1 July 2015, the scheme will be abolished and all accounts will be treated like any other bank account.

• Concessional superannuation contributions cap: From 1 July 2014, the concessional superannuation contributions cap will be lifted to $30,000 for people aged up to 49 years and $35,000 for people aged 50 years or older as at 30 June 2014.  (Note, if you turn 50 after 30 June 2014, the lower cap applies to your contributions.)

ADDITIONAL ISSUES

In addition to all these issues, there are a number of measures that have been proposed by the government in the 2014-15 budget of which we would like to make you aware.  The budget has not yet been ratified by parliament and so please be aware that all of these measures may be changed before the budget is ratified.  Further information can be found at www.budget.gov.au.

• Temporary budget repair levy: The government has proposed a levy of 2% to an individual’s taxable income over $180,000 per year for three years.  This would include non-residents.

• Option to withdraw excess non-concessional contributions from super: The government has proposed that individuals will have the option to withdraw contributions made from 1 July 2013 that exceed their non-concessional contributions gap.  This means that any inadvertent excess contributions can be withdrawn and taxed at your marginal tax rate, rather than the top marginal rate.

• Family Tax Benefit changes: The government has proposed a number of measures regarding Family Tax Benefit parts A and B.  These include the freezing of indexation on payments, removing the per-child add-on amount to calculate a family’s income-free area for FTB(A), reduction of primary earner income limit to $100,000 for FTB(B) and limiting FTB(B) to families with children under 6 years old.

• Company tax rate: The government has proposed that the company tax rate be reduced to 28.5% from 1 July 2015.

• Medicare levy threshold: The government has proposed increasing the Medicare levy threshold for families only, to $34,367 for couples with no children plus $3,156 per dependent child.

• Subsidy for employers hiring Australians 50 years and over: The government has proposed a wage subsidy called “Restart” to encourage employers to hire Australians 50 years and over.  Employers would receive subsidies of up to $10,000 over two years.

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