July Supplement 2013
The
'
Tax Advisers'
Voice
July 2013
Year End Supplement
The NTAA
2012/13
Year End
Supplement
Voice
Page 1
Voice
2012/13 Supplement
Index
Income-producing Building Write-off Rates ............................................................
19
Capital Gains Tax – Improvement Thresholds, Indexation Factors ......................... 16-17
Cars – Per Kilometre Claims for Car Deductions/Depreciation Cost Limit ..............
16
Client Details – 2013 Individual Income Tax Return Checklist ................................ 23-28
Depreciation – Prime Cost and Diminishing Value Rates (150% and 200%) .......... 20-21
................................................................................
22
Genuine Redundancy Payments – Tax-free Amounts .............................................
4
Higher Education Loan Programme (HELP) Repayment Thresholds – 2012/13 .....
7
Medicare Levy – 2012/13 .......................................................................................
5-6
Medicare Levy Surcharge – 2012/13 ......................................................................
6-7
Tax Offsets 2012/13 – Dependant and Housekeeper Tax Offsets ........................
12
– Low Income Tax Offset .....................................................
13
– Mature Age Worker Tax Offset .........................................
14
– Net Medical Expenses Tax Offset .....................................
13
– Private Health Insurance Tax Offset .................................
14
– Senior and Pensioner Tax Offset ......................................
15
– Zone Tax Offset ................................................................ 15-16
Rates of Tax 2012/13 – Companies .....................................................................
8
– Resident Individuals ........................................................
3
– Resident Minors – Unearned (Division 6AA) Income .......
3
– Non-resident Individuals ..................................................
3
– Non-resident Minors – Unearned (Division 6AA) Income .
3
– S.99 Assessment – Resident Deceased Estate ...............
4
...
4
– Superannuation Funds ....................................................
9
Superannuation Thresholds – 2012/13 ................................................................... 10-11
Superannuation Guarantee Rate............................................................................
11
Tax-free Threshold – Pro-Rated Tax-Free Threshold for Non-residents ..................
4
Trading Stock – Valuation of Natural Increase/Goods Taken for Private Use ..........
18
DISCLAIMER
This publication has been prepared for the members of the National Tax & Accountants' Association Ltd. Many of the comments
contained in Voice are general in nature and anyone intending to apply the information to practical circumstances should independently
verify their interpretation and the information's applicability to their particular circumstances.
Page 2
July Supplement 2013
July Supplement 2013
Rates of Tax – 2012/13
Resident Individuals
The following rates apply to individuals who are residents of Australia for tax purposes for the entire income
year.
Taxable Income1
$
0 – 18,200
18,201 – 37,000
37,001 – 80,000
80,001 – 180,000
180,001+
Tax Payable2
Nil
19% of excess over $18,200
$3,572 + 32.5% of excess over $37,000
$17,547 + 37% of excess over $80,000
$54,547 + 45% of excess over $180,000
1
The tax-free threshold may effectively be higher for taxpayers eligible for the low-income tax offset, the Senior and Pensioner
Tax Offset and/or certain other tax offsets.
2
The above rates do not include the Medicare Levy of 1.5%. From 1 July 2014, the government will increase the Medicare
Levy by 0.5% from 1.5% to 2% to provide funding for the national disability insurance scheme.
Resident Minors – Unearned (Division 6AA) Income
The following rates apply to the income of certain minors (e.g., persons under 18 years of age on the last
day of the income year who are not classed as being in a full-time occupation) that is not excepted income
(e.g., employment income):
Division 6AA Income
$
0 – 416
417 – 1,307
1,308+
1
2
Tax Payable1, 2
Nil
66% of excess over $416
45% of the entire amount
Medicare Levy may also be payable.
Resident minors are not entitled to the low-income tax offset in respect of 'unearned income.'
Non-resident Individuals
The following rates apply to individuals who are not residents of Australia for tax purposes for the entire
income year:
Taxable Income
$
0 – 80,000
80,001 – 180,000
180,001+
1
Tax Payable1
32.5% of the entire amount
$26,000 + 37% of excess over $80,000
$63,000 + 45% of excess over $180,000
Medicare Levy is not payable by non-residents.
Non-resident Minors – Unearned (Division 6AA) Income
The following rates apply to the income of certain non-resident minors (e.g., persons under 18 years of
age on the last day of the income year who are not classed as being in a full-time occupation) that is not
excepted income (e.g., employment income).
Division 6AA Income
$
0 – 416
417 – 663
664+
1
Tax Payable1
32.5% of the entire amount
$135.20 + 66% of excess over $416
45% of the entire amount
The Medicare Levy is not payable by non-residents.
Voice
Page 3
Voice
Pro-Rated Tax-Free Threshold – Non-residents
The tax-free threshold that applies to residents ($18,200 per annum in 2012/13) is pro-rated in an
income year in which a taxpayer either ceased to be, or became, a resident for tax purposes. For the
2012/13 income year the pro-rated threshold will be calculated using the following formula:
$13,464 + ($4,736 x number of months taxpayer was resident for the year ÷ 12)
Genuine Redundancy Payments
The tax-free amount of a genuine redundancy payment in 2012/13 is $8,806 plus $4,404 for each
completed year of service.
S.99 Assessment – Resident Deceased Estate
The following rates apply where a trustee is assessed under S.99 ITAA 1936 in respect of a resident
deceased estate. Where the date of death is less than 3 years before the end of the income year, the
trustee is assessed as a resident individual.
Taxable Income
Rate1
$
%
Less than 3 years since death
0 – 18,200
18,201 – 37,000
37,001 – 80,000
80,001 – 180,000
180,001+
3 years or more since death
0 – 416
417 – 594
595 – 37,000
37,001 – 80,000
80,001 – 180,000
180,001+
1
Nil
50% of excess over $416
$89 + 19% of excess over $594
$7,006 + 32.5% of excess over $37,000
$20,981 + 37% of excess over $80,000
$57,981 + 45% of excess over $180,000
Medicare Levy does not apply to S.99 assessments of deceased estate trustees.
Taxable Income
$
1+
1
Nil
19% of excess over $18,200
$3,572 + 32.5% of excess over $37,000
$17,547 + 37% of excess over $80,000
$54,547 + 45% of excess over $180,000
Rate1
%
45% of the entire amount
Medicare Levy is not included but does apply (except in relation to deceased estates).
Page 4
July Supplement 2013
July Supplement 2013
Medicare Levy – 2012/13
General Rate
Rate1
%
1.5% of taxable income
Taxpayer
Individual (resident)
1
From 1 July 2014, the Medicare Levy will increase to 2%.
Low-income Thresholds – Individuals
The 2012/13 Medicare Levy low-income thresholds for individuals are as follows:
Threshold Phase-in Limit2 1.5% at or
Amount1
Single Taxpayer
Above3
$
$
$
Not eligible for Senior and Pensioner Tax Offset
20,542
20,543 – 24,167
24,168
Eligible for Senior and Pensioner Tax Offset4
1
2
3
4
32,279
32,280 – 37,975
37,976
No Medicare Levy is payable on taxable income levels at or below the Threshold Amount.
Where taxable income falls within the Phase-in Limit, Medicare Levy is payable at 10% of the excess over the Threshold
Amount.
The Medicare Levy of 1.5% applies to the entire amount of taxable income.
From 1 July 2012, the Senior Australians Tax Offset and the Pensioners Tax Offset combined into a new offset known as
the Senior and Pensioner Tax Offset.
Family Thresholds – 2012/13
A taxpayer may be eligible to pay no (or reduced) Medicare Levy if their family income is within the
thresholds set out below, and the taxpayer;
has a spouse (married or de facto) on the last day of the income year;
has not remarried after their spouse died during the income year; or
is eligible for the notionally retained sole parent rebate, the housekeeper or the child-housekeeper
The 2012/13 Medicare Levy thresholds for families are as follows:
No. of Dependent
Children/Students
$
Family Income
1
Threshold
$
$
1.5%
at or above3
$
Reduced Levy2
Taxpayer Not eligible for Senior and Pensioner Tax Offset4
Voice
0
33,693
33,694 – 39,638
39,639
1
36,787
36,788 – 43,278
43,279
2
39,881
39,882 – 46,918
46,919
3
42,975
42,976 – 50,558
50,559
4
46,069
46,070 – 54,198
54,199
5
49,163
49,164 – 57,838
57,839
6
52,257
52,258 – 61,478
61,479
Page 5
Voice
No. of Dependent
Children/Students
$
Family Income
1
Threshold
$
Extra child
3,094
Taxpayer Eligible for Senior and Pensioner Tax Offset
Reduced Levy2
$
1.5%
at or above3
$
3,640
4
0
46,000
46,001 – 54,117
54,118
1
49,094
49,095 – 57,757
57,758
2
52,188
52,189 – 61,397
61,398
3
55,282
55,283 – 65,037
65,038
4
58,376
58,377 – 68,677
68,678
5
61,470
61,471 – 72,317
72,318
6
64,564
64,565 – 75,957
75,958
Extra child
3,094
3,640
1
Family Income is the combined income of a taxpayer and their spouse. If the taxpayer does not have a spouse, Family
Income is the taxpayer’s taxable income only. No Medicare Levy is payable on taxable income levels at or below the
Family Income Threshold.
2
The Medicare Levy shades in at 10% for every dollar where Family Income exceeds the Family Income Threshold.
dependants. Instead, a formula is applied to reduce the levy payable by families to 10% of the amount by which Family
Income exceeds the Family Income Threshold. The reduction is calculated as: A – (0.085 x (B – C)) where A is 1.5% of
the relevant Family Income Threshold, B is the Family Income and C is the Family Income Threshold. Where the levy is
also payable by the spouse, the reduction is shared according to the proportion that the taxable income of each bears to
the total Family Income.
3
4
The levy payable by the relevant taxpayer is 1.5% of their entire taxable income.
From 1 July 2012, the Senior Australians Tax Offset and the Pensioner Tax Offset were combined to form a new offset
known as the Senior and Pensioner Tax Offset.
Medicare Levy Surcharge – 2012/13
The Medicare levy surcharge (‘MLS’) may apply in respect of a resident taxpayer where the taxpayer,
their spouse and/or dependent children (if any) do not have the appropriate level of private patient
hospital cover (subject to certain exceptions for ‘prescribed persons’) and the applicable ‘income test’
threshold is exceeded.
From 1 July 2012, the rate at which the MLS is applied is determined under a tiered income system
whereby a taxpayer’s level of ‘income for surcharge purposes’ (on a spouse inclusive basis, where
Income tier thresholds
The following table sets out the income thresholds and MLS rates that apply in respect of:
at least one ‘dependent child’ (children) for the whole income year.
The MLS only applies in respect of periods in which private patient hospital cover was not held for the
taxpayer, their spouse and dependants (if relevant).
Page 6
July Supplement 2013
July Supplement 2013
Singles1
Base Tier
$
Tier 1
$
Tier 2
$
Tier 3
$
84,000 or less
84,001 – 97,000
97,001 – 130,000
130,001+
Families and Couples
1,2
0 dependants
168,000 or less
168,001 – 194,000
194,001 – 260,000
260,001+
1 dependant
168,000 or less
168,001 – 194,000
194,001 – 260,000
260,001+
2 dependants
169,500 or less
169,501 – 195,500
195,501 – 261,500
261,501+
3 dependants
171,000 or less
171,001 – 197,000
197,001 – 263,000
263,001+
4 dependants
172,500 or less
172,501 – 198,500
198,501 – 264,500
264,501+
5 dependants
174,000 or less
174,001 – 200,000
200,001 – 266,000
266,001+
1,500
1,500
1,500
1,500
1.0%
1.25%
1.5%
Each extra child
Medicare levy surcharge rate
Rate
3
0.0%
1
For a couple, their combined income for surcharge purposes is generally applied against the family surcharge threshold
2
for surcharge purposes of one of the couple does not exceed the Medicare levy low income threshold of $20,542, that
member is not liable for the MLS.
A taxpayer’s child is a ‘dependant’ child for these purposes where the child is a resident, aged less than 21 years (or
between 21 years and less than 25 years and receiving full-time education at a school, college or university) and the
taxpayer contributed to the maintenance of the child.
Note that, where a taxpayer’s circumstances change during the income year, for example, if the
taxpayer marries, or ceases to be married, during the income year, the MLS is calculated separately
for each of these periods (based broadly on the rules set out above).
HELP Repayment Thresholds – 2012/13
The Higher Education Loan Programme (HELP) offers Commonwealth loans to eligible students to
assist them with paying their higher education fees and to study overseas. A HELP debt is repaid
through the taxation system on a taxpayer's 'repayment income'.
Repayment income is the sum of the taxpayer's:
– taxable income;
– total net investment loss;
–
–
exempt foreign employment income; and
reportable superannuation contributions.
HELP Repayment Thresholds (including accumulated HECS debt)
Rate of Repayment
HELP Repayment Income
%
$
Nil
4
4.5
5
5.5
6
6.5
7
7.5
8
0 – $49,095
$49,096 – $54,688
$54,689 – $60,279
$60,280 – $63,448
$63,449 – $68,202
$68,203 – $73,864
$73,865 – $77,751
$77,752 – $85,564
$85,565 – $91,177
$91,178+
2013/14 Federal Budget update for HECS-HELP on 14 May 2013 (as part of its 2013/14 Budget) the
government announced that it proposes to abolish, as of 1 January 2014:
the 10% discount for up-front payments
the 5% discount for voluntary payments of at least $500.
Voice
Page 7
Voice
Company Rates of Tax – 2012/13
General Company Tax Rate
Rate
%
Description of Taxpayer
Private companies (except life insurance companies RSAs + PDFs)
30
Public companies (except life insurance companies RSAs + PDFs)
30
Corporate Unit Trusts
30
Corporate Limited Partnerships
30
Public Trading Trusts
30
Strata Title Bodies Corporate
30
Taxable Income
$
0 – 416
417 – 915
916+
Page 8
Rate
%
Nil
55% of excess over $416
30% of the entire amount
July Supplement 2013
July Supplement 2013
Superannuation Funds – 2012/13
Type of Receipt
Complying Superannuation Fund
Earnings (other than non-arm's length income)
Income received including realised capital gains
Discount capital gains (asset held for 12 months or more)
Employer Contributions1
Portion covered by S.295-180 choice
SGC shortfall component
All other employer contributions (no S.295-180 choice)
Employee and Self-employed Contributions
Portion covered by S.290-170 notice (of intention to claim a deduction)1
All other employee and self-employed contributions (no S.290-170 notice)
Contributions – other person (excluding trustee of exempt life assurance fund or of
complying superannuation fund, ADF or PST)
Portion covered by S.295-180 election
Eligible spouse contributions
Contributions for minor (not by an employer)
Government Co-contributions
First Home Saver Account
All other contributions (no S.295-180 election)
Roll-overs – 2012/13
Originating from taxable source (e.g., another complying fund)
– tax-free component
– taxable component (taxed element)2
– taxable component (untaxed element)
Non-arm's Length Component
Unreasonable private company dividends
Excessive non-arm’s length income
Rate of Tax
%
15
10
0
15
15
15
0
0
0
0
0
0
15
0
0
15
45
45
45
45
Transfer from Foreign Superannuation Funds
15
Transfer from Superannuation Holding Accounts (SHA) special account
All
Change of Status
Foreign fund to complying fund
– market value of assets less member contributions
Non-complying Superannuation Fund
Earnings
Income received including realised capital gains
Discount capital gains (asset held for 12 months or more)
Contributions (Australian fund)
Employee and self employed
Employer (excluding trustee of exempt life assurance fund, complying superannuation
fund, complying ADF or PST)
1
15
15
45
22.5
0
45
As part of the 2012/13 Federal Budget, the Government announced that concessional contributions made by, or on behalf, of
an individual earning over $300,000 would be subject to 30% (as opposed to the current 15%) tax rate. On 24 June, Tax and
Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013, which gives
effect to this measure, was passed by both Houses of Parliament and in now awaiting Royal Asset. This measure will apply
retrospectively from 1 July 2012 (i.e., from the 2013 income year).
if that rollover amount exceeds the untaxed plan cap amount, the excess is taxed to the member at the top marginal rate
(plus Medicare levy where applicable), with the tax withheld by the fund that makes the rollover payment.
Voice
Page 9
Voice
Superannuation Thresholds – 2012/13
Concessional Contributions Caps
Concessional contributions include employer contributions (including contributions made under a salary
Taxpayer's Age
Amount of Cap
<50 years of age
$25,000
50 to 74
$25,000
1, 2
1
Taxpayers aged 65 or over must pass the 'work test' for the fund to be able to accept the contribution.
2
As announced in the 2012/13 Federal Budget, a temporary higher cap of $35,000 will apply from 1 July 2013 for those
aged 60 and over, and from 1 July 2014 for those aged 50 and over.
Non-concessional Contributions Caps
Since 1 July 2007, a cap applies on non-concessional contributions. Non-concessional contributions
include personal contributions for which taxpayers do not claim an income tax deduction. A person is
liable to pay excess contributions tax if their non-concessional contributions exceed the cap.
1
Income Year
Amount of Cap
2012/13
$150,000 or $450,0001 over 3 years
There is a ‘bring-forward’ option under which taxpayers can contribute greater than $150,000 in an income year as long
as the total contributions for that year and the next 2 years do not exceed $450,000. This option only applies to taxpayers
who are under 65 at any time in the year that they want to 'bring-forward' their contributions.
Government Co-contribution Table for Low Income Employees
The superannuation co-contribution was initially introduced by the Government from 1 July 2003 as
an incentive to encourage low income earners to save for their own retirement.
If an individual's income is eligible for the co-contribution and they make personal superannuation
contributions, the Government will match their contribution with a 'co-contribution'.
Income Year
2012/13
2
Total Income1, 2
$
0 – 31,920
Calculation of Basic Co-contribution
$
$500
31,921 – 46,919
$500 – [3.333% x (Total Income – $31,920)]
46,920+
Nil
superannuation contributions.
Tax and Superannuation Laws Amendment (2013 Measure No. 2) Bill 2013 giving effect to the reduction of the maximum
co-contribution from $1,000 (which applied for 2011/12) to $500 was passed by both Houses of Parliament on 24 June
2013 and is awaiting Royal Assent.
Page 10
July Supplement 2013
July Supplement 2013
Superannuation Spouse Contribution Tax Offset
The tax offset applies to non-concessional contributions made by a taxpayer to a Complying
Superannuation Fund or Retirement Savings Account in respect of their low-income earning, or nonworking, spouse (married or de facto). The amount of the offset is as follows:
2
Spouse's Assessable
Income (SAI)1
$
0 – 10,800
Maximum Rebatable
Contributions (MRC)
$
$3,000
$540
10,801 – 13,799
$3,000 – [AI – $10,800]
MRC x 18%
13,800+
Nil
Nil
Maximum Offset 2
$
The offset is calculated as 18% of the actual contributions, if this results in a lower amount.
Superannuation Guarantee Rate
Employers who provide less than a prescribed level of superannuation support (the 'charge percentage')
for their employees are liable to pay a superannuation guarantee charge based on the shortfall plus
an interest component and an administration charge.
Income Year
Charge Percentage (%)
2013/14
9.25
2012/13
9
Since 1 July 2007, the application of the low rate threshold for superannuation lump sum payments
has been capped. The low rate cap amount is reduced by any amount previously applied to the low
rate threshold.
Voice
Income Year
Cap Amount
2012/13
$175,000
Page 11
Voice
Tax Offsets – 2012/13
Dependant and Housekeeper Tax Offsets
A taxpayer is entitled to a dependant or housekeeper tax offset if they are a resident for tax purposes
and their dependant is also generally a resident. The maximum amount of Dependant Tax Offsets are
reduced by $1 for every $4 by which the dependant’s 'adjusted taxable income' (ATI) exceeds $282.
The government announced in the 2012 Federal Budget that the invalid spouse, carer spouse,
housekeeper, housekeeper (with child), child housekeeper, child housekeeper (with child), invalid relative,
and parent/parent-in-law tax offsets will be replaced by a single non-refundable offset of $2,423 from 1
July 2012. However, at the time of writing, this is not yet law, and the existing legislation still provides
for the separate rebates as set out in the table below for the 2012/13 income year.
2012/13
Max
Offset
$
Max
ATI1
$
Spouse/De facto (no dependent child/student)2,3
2,423
9,974
Spouse/De facto (with dependent child/student)2,4
2,815
N/A
Child-housekeeper (no dependent child/student)2
1,975
8,182
Child-housekeeper (with dependent child/student)2,4
2,366
9,746
376
1,785
282
1,409
376
1,785
2,423
9,974
889
3,838
Parent or Parent-in-law
1,776
7,386
Sole Parent
1,607
N/A
No dependent child/student2
1,975
N/A
With dependent child/student2,4
2,366
N/A
Description
Dependant Tax Offsets:
First child under 21 (not being a student)5
Each other child under 21 (not being a student)
Student5
Invalid spouse/carer spouse6
Invalid Relative
7
5
Housekeeper Tax Offsets:
1
2
3
4
5
6
The dependant spouse tax offset can only be claimed by individuals whose ATI is $150,000 or less and for other dependant
tax offsets, the offset can generally only be claimed where the combined ATI of the taxpayer and their spouse is $150,000
or less. A taxpayer's ATI broadly includes their:
– taxable income;
– target foreign income;
– reportable superannuation contributions;
– total net investment losses;
Less Deductible child maintenance expenditure (child support paid).
The dependant spouse/de facto, child-housekeeper (no dependent child/student), child-housekeeper (with dependent child/
student) and housekeeper tax offsets cannot generally be claimed in respect of a period where there is also an entitlement
However, where FTB Part B is not available at the full care
rate (e.g., where the taxpayer's former spouse has shared care of the child), a partial tax offset may be available.
The dependant spouse/de facto tax offset cannot be claimed in 2011/12 in respect of a spouse/de facto born on or after
1 July 1971. From 1 July 2012, spouses born after 1 July 1952 are not eligible for the rebate.
The spouse/de facto, child-housekeeper and housekeeper (with dependent child/student) higher tax offsets have been
withdrawn and are only notionally retained for calculating the Zone and Overseas Forces tax offsets.
The child under 21 and student offsets have been abolished. However, they have been retained on a notional basis for
the purpose of determining whether a taxpayer is entitled to other tax offsets and the higher level of spouse/de facto and
child-housekeeper tax offsets.
A person who maintains a dependent spouse who is an invalid, permanently unable to work or providing care may be
entitled to claim an 'invalid spouse' or 'carer spouse' tax offset, regardless of the age of the dependent spouse.
Zone and Overseas Forces tax offsets and for determining entitlement to the Medicare Levy Family income threshold.
Page 12
July Supplement 2013
July Supplement 2013
Net Medical Expenses Tax Offset
Description
Medical expenses
1
Offset1
20% of every $1 over $2,120
The threshold is indexed annually in line with CPI.
Under amendments currently before Parliament, the medical expenses tax offset will be means tested
commencing 1 July 2012 (i.e., the 2013 income year). If passed, the offset will be claimed as follows:
Adjustable taxable income
for rebates1,2
Status
$84,000 or less
Single
Greater than $84,000
$168,000 or less
Family3,4
Greater than $168,000
Medical expenses
Rate of Offset
$2,120 or less
Greater than $2,120
$5,000 or less
Greater than $5,000
$2,120 or less
Greater than $2,120
$5,000 or less
Greater than $5,000
0
20
0
10
0
20
0
10
1
'Adjusted taxable income for rebates’ is a new term and is calculated as the taxpayer's taxable income + adjusted fringe
2
A taxpayer will be eligible for the family threshold if they are married on the last day of the year or have a dependant on
any day of the year.
4
Where the taxpayer is married is it the combined total of their's and their spouse's ‘adjusted taxable income for rebates’
that is compared to the threshold.
2013/14 Federal Budget Update to the Medical Expenses Tax Offset
Apart from the proposed changes referred to above, the government announced on 14 May 2013 (as
part of the 2013/14 Budget) that the medical expenses tax offset is to be abolished subject to transitional
arrangements whereby claims can only be made as follows:
– for the 2014 income year: by taxpayers who made a claim in the 2013 income year;
– for the 2015 income year: by taxpayers who made a claim in the 2014 income year; and
– for expenses related to disability aids, attendant care or aged care: up until and including the 2018
income year.
Low Income Tax Offset
Resident individuals (including trustees assessed under S.98 ITAA 1936 in respect of presently entitled
1
.
For the 2012/13 income year, the maximum offset of $445 (previously $1,500) is reduced by 1.5 cents
for every dollar of taxable income over $37,000.
1
Taxable Income
$
Tax Offset
0 – 37,000
$445
37,001 – 66,666
$445 – [(Taxable Income – $37,000) x 1.5%]
66,667
Nil
Minors with 'unearned income' are generally unable to apply the low-income tax offset.
Voice
Page 13
Voice
Private Health Insurance Tax Offset
From 1 July 2012 (the 2013 income tax year), the government has introduced three new PHI ‘income
tiers’ that will means test access to the rebate. These changes complement the new tiered increase in
the rate of Medicare levy surcharge for individuals and families without appropriate private hospital cover.
In addition to applying the income test, the PHI rebate entitlement also depends on the age of the
oldest person covered by the policy, as set out in the following table:
Base Tier
$
Singles
84,000 or less
Singles1
Families/Couples1,2
0 dependants
168,000 or less
1 dependant
168,000 or less
2 dependants
169,500 or less
3 dependants
171,000 or less
4 dependants
172,500 or less
5 dependants
174,000 or less
Each extra child
1,500
Private health insurance rebate
30%
Aged under 653
35%
Aged 65 – 693
40%
Aged 70 or over3
1
2
Tier 1
$
Tier 2
$
Tier 3
$
84,001 – 97,000
97,001 – 130,000
130,001 or more
168,001 – 194,000
168,001 – 194,000
169,501 – 195,500
171,001 – 197,000
172,501 – 198,500
174,001 – 200,000
1,500
194,001 – 260,000
194,001 – 260,000
195,501 – 261,500
197,001 – 263,000
198,501 – 264,500
200,001 – 266,000
1,500
260,001+
260,001+
261,501+
263,001+
264,501+
266,001+
1,500
20%
25%
30%
10%
15%
20%
0%
0%
0%
A person will generally be assessed under the (higher) couples/family tier thresholds if the person:
–
is married on the last day of the income year (including a de-facto couple); or
–
at any time during the year, contributes in a substantial way to the maintenance of at least one dependant child (generally,
this means a child under 18) who is broadly either the person's 'child' or that person's 'sibling' who is dependant on
them for economic support.
Each adult covered by a PHI policy is income tested to determine their entitlement to a PHI rebate, regardless of who pays
for the insurance policy. Each adult will be income tested according to their circumstances based on their share of the
cost of the insurance policy. If one adult is covered by the policy, their share of the PHI policy is 100%. If more than one
adult is covered, the premiums paid are divided into equal shares between the adults covered by the policy, regardless of
who paid the premium (however, one member of a couple can choose to claim the PHI rebate on behalf of their partner
in certain circumstances).
Note: If any of the adults insured under the policy are spouses, it is their combined income for surcharge purposes that is
compared to the family threshold.
Dependent children are not income tested (as they are not eligible for the offset) and their income does not count towards
the income test.
3
This is a reference to the age of the oldest person covered by the policy.
Mature Age Worker Tax Offset
The non-refundable Mature Age Workers Tax Offset was introduced to encourage taxpayers to remain
in the workforce. Resident taxpayers must be aged 55 or more at the end of the income year and
have received net income from working1.
Net Income from Working
$
Up to $9,999
$10,000 to $53,000
$53,001 to $62,999
$63,000+
1
Tax Offset
5% of net income from working
$500
$500 – [5% of the excess over $53,000]
Nil
The Mature Age Workers Tax Offset has been phased-out from 1 July 2012 for taxpayers born on or after 1 July 1957 (i.e.,
the offset is retained for persons who were aged 55 years or older in the 2012 income year).
Page 14
July Supplement 2013
July Supplement 2013
Senior and Pensioner Tax Offset
The Senior and Pensioner Tax Offset (SAPTO) applies from the 2013 income year and is basically a merger
of the former Senior Australians Tax Offset and Pensioner Tax Offset (which no longer apply from the 2013
income year). It is broadly available to a taxpayer who:
Veterans'
Entitlements Act 1986, has reached pension age under that Act and is not in gaol; or
Social Security Act
1991 and is not in gaol; and
was previously eligible for the former Pensioner Tax Offset.
the amount prescribed by the Regulations (refer to the table below).
The 2012/13 maximum offset and threshold amounts for SAPTO are as follows:
Family Situation1
Single, separated or widowed
Each member of a couple (married or de facto)
3
Each member of a couple (married or de facto) separated due
to illness or because one was in a nursing home3
1
Maximum
Offset
$
Shade-out
Threshold2
$
Cut-out
Threshold2
$
2,230
32,279
50,119
1,602
28,974
41,790
2,040
31,279
47,599
For a taxpayer who is a member of a couple, eligibility is established by halving the combined 'rebate' income of the
Cut-out Threshold (meaning the combined rebate income of the taxpayer and their spouse is equal to or greater than
the Cut-out Threshold, then the amount of each person’s SAPTO depends on their own rebate income and their eligibility
for any unused portion of their spouse’s SAPTO.
An individual's 'rebate' income for a year of income is the sum of the individual's:
(a)
taxable income for the year;
(b)
reportable superannuation contributions for the year
(c)
total net investment loss for the year; and
2
3
The maximum offset reduces by 12.5 cents for every dollar of rebate income over the Shade-out Threshold and reduces
to nil for rebate income levels at or above the Cut-out Threshold.
The transfer of any unused portion of a spouse’s SAPTO may occur if both the taxpayer and their spouse are eligible for
SAPTO, the spouse’s tax offset entitlement exceeds their tax payable, and tax payable by the taxpayer exceeds their tax
offset entitlement.
Zone Tax Offset
Taxpayers who live in remote areas of Australia may be entitled to a Zone Tax Offset depending on the amount
of time spent in the relevant zones. Generally speaking, taxpayers qualify as residents of a zone where
they reside in the zone (not necessarily continuously) for 183 days or more. Remote areas do not include
Zone List', which can be searched at the Tax Professionals section of the ATO website at www.ato.gov.au
and search for Australian zone list.
The zone rebate levels are set out below:
Description1
Maximum Offset2
$
Special Area in Zone A
$1,173 + 50% of the relevant rebate amount3
Special Area in Zone B
$1,173 + 50% of the relevant rebate amount3
Zone A
$338 + 50% of the relevant rebate amount3
Zone B
$57 + 20% of the relevant rebate amount3
Voice
Page 15
Voice
2
3
who is a resident
of Zone A during the year of income but has not resided or actually been in the special area of either zone (these areas
are particularly isolated) during any part of the year. The Zone B offset applies to a taxpayer who is a resident of Zone
B during the year of income but has not resided or actually been in Zone A, or the special area of either zone during any
part of the year. Where a taxpayer does not fall into any of the previous categories but resided in a zone area for some
of the year, the Commissioner can determine a reasonable amount of tax offset to allow in the circumstances.
In addition to the offset amount noted in the table, for the 2012 and 2013 income years, the taxpayer is also entitled to the
full amount of the 'notional' dependant spouse tax offset to which the taxpayer would be entitled assuming the relevant
age restrictions for that rebate do not apply (and provided also that the taxpayer is not otherwise already eligible to claim
the offset).
Further note that, there are currently proposed amendments before the parliament which ensure that those entitled to the
zone offset (and the overseas forces tax offset) from the 2013 income year will continue to be entitled to claim the existing
dependant tax offsets and for the housekeeper tax offset, rather than the proposed dependant (invalid and carer) tax offset
in certain circumstances.
The 'relevant rebate amount' is the total of certain rebates or notional rebates to which the taxpayer is entitled or deemed
to be entitled.
Per Kilometre Claims for Car Deductions
The 2012/13 cents per kilometre (km) rates for car deductions (up to a maximum of 5,000 business
kms per car), based on engine capacity are as follows1:
Engine Capacity (cc)
1
Rate per Km
Ordinary Car
Rotary Engine Car
0 – 1,600
1,601 – 2,600
2,601+
0 – 800
801 – 1,300
1,301+
2012/13
$
0.63
0.74
0.75
The rates for 2012/13 are unchanged from 2011/12.
Car Depreciation Cost Limit1
held.
Income Year
2012/13
1
Cost Limit
$
57,466
A hearse is not subject to the depreciation car limit.
CGT Improvement Thresholds
Certain improvements to pre-CGT assets will be deemed to be separate post-CGT assets where the
indexed cost base of the improvement exceeds both the improvement threshold for the year and 5%
of the consideration for the sale of the asset.
Page 16
Income Year
Improvement Threshold
$
2012/13
134,200
2011/12
130,418
2010/11
126,619
2009/10
124,258
2008/09
119,594
2007/08
116,337
2006/07
112,512
July Supplement 2013
July Supplement 2013
CGT Indexation Factors
Indexation (based on movements in the Consumer Price Index or CPI) is only relevant in working out
the cost base of an asset acquired on or before 11.45am 21 September 1999. Changes to the tax law
mean that indexation is frozen to the September 1999 quarter.
However, the CPI number is reported as it is also relevant for, among other things, calculating the
Index reference base 2011/12
The ABS changed the index reference base in September 2012 from 1989/90 to 2011/12. As a result
all CPI rates have been reset and the previous rates no longer apply.
For example, under the new numbering system, the June 2012 quarter CPI number is reset to 100.4
(previously 180.4). There has therefore been a change in the CPI number from the June to September
2012 quarter of 1.4.
Year
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Voice
Quarter Ending
31 March
102.4
99.9
98.3
95.2
92.5
90.3
86.6
84.5
82.1
80.2
78.6
76.1
73.9
69.7
67.8
67.0
67.1
66.2
63.8
61.5
60.6
59.9
58.9
56.2
51.7
48.4
45.3
41.4
37.9
Quarter Ending
30 June
Not available
100.4
99.2
95.8
92.9
91.6
87.7
85.9
82.6
80.6
78.6
76.6
74.5
70.2
68.1
67.4
66.9
66.7
64.7
61.9
60.8
59.7
59.0
57.1
53.0
49.3
46.0
42.1
38.8
Quarter Ending
30 September
Not available
101.8
99.8
96.5
93.8
92.7
88.3
86.7
83.4
80.9
79.1
77.1
74.7
72.9
68.7
67.5
66.6
66.9
65.5
62.3
61.1
59.8
59.3
57.5
54.2
50.2
46.8
43.2
39.7
Quarter Ending
31 December
Not available
102
99.8
96.9
94.3
92.4
89.1
86.6
83.8
81.5
79.5
77.6
75.4
73.1
69.1
67.8
66.8
67.0
66.0
62.8
61.2
60.1
59.9
59.0
55.2
51.2
47.6
44.4
40.5
Page 17
Voice
Valuation of Natural Increase – Prescribed Cost Rates – 2012/13
1
Description
Rate per Head
$
Description
Rate per Head
$
Cattle
20.00
Horses1
20.00
Deer
20.00
Pigs
12.00
Emus
8.00
Poultry
0.35
Goats
4.00
Sheep
4.00
Where a service fee is incurred for insemination and a horse is acquired as a result, its cost is the greater of the cost (i.e.,
actual or as prescribed by the regulations) and the amount of the service fee attributable to the acquisition.
Goods Taken from Stock for Private Use
2012/131
Type of Business
Adult/Child2
16 years+
$
Child2
4-16 years
$
Bakery
1,310
655
Butcher
780
390
Restaurant/cafe (licensed)
4,350
1,695
Restaurant/cafe (unlicensed)
3,390
1,695
Caterer
3,670
1,835
Delicatessen
3,390
1,695
Fruiterer/greengrocer
760
380
Take-away food shop
3,270
1,635
Mixed business (e.g., milk bar, convenience store)
4,070
2,035
1
These amounts are taken from TD 2013/13 which is the current determination and which applies for the 2012/13 income
year.
2
Amounts are GST-exclusive.
Page 18
July Supplement 2013
July Supplement 2013
Income-producing Building Write-off Rates
Capital Works Commenced
Write-off
Rate
%
27/2/1992+1
4
20/7/1982 – 21/8/1984
2.5
22/8/1984 – 15/9/1987
4.0
16/9/1987+
2.5
21/11/1987+
2.5
22/8/1979 – 21/8/1984
2.5
22/8/1984 – 15/9/1987
4.0
16/9/1987 – 26/2/1992
2.5
27/2/1992+
4.0
18/7/1985 – 15/9/1987
4.0
16/9/1987+
2.5
Structural improvements
27/2/1992+
2.5
Environment protection earthworks
19/8/1992+
2.5
Use of Building
Non-residential buildings
Industrial
Non-industrial buildings
Research & Development buildings
Residential buildings
Short-term traveller accommodation
Residential income-producing buildings
1
For an industrial building constructed before 27 February 1992, the rates for non-industrial non-residential buildings are
applied.
Voice
Page 19
Voice
Prime Cost and Diminishing Value Rates (150% and 200%)
For most items of plant and equipment acquired* on or after 10 May 2006, the diminishing value method
(DVM) rate has been increased from 150% to 200%. This means that the DVM depreciation rate is
twice the prime cost (PC) rate of depreciation for such assets.
Note(*): For these purposes, a taxpayer acquires an asset when they commence to hold it (e.g., on
settlement of a contract). Therefore, a taxpayer may acquire an asset on or after 10 May 2006 under
a contract entered into before 10 May 2006, and still use the 200% DVM rate.
The 200% DVM depreciation rates apply to new and second-hand assets, including those with statutory
caps (e.g., trucks). The new rates also apply to both business assets and investment assets (e.g.,
assets used in a rental property).
However, the 200% DVM depreciation rates do not apply to taxpayers using the SBE rules and assets
classes for which there are special arrangements (e.g., new horticultural plants).
of assets excluded from the 200% DVM depreciation rates are:
In-house software
Spectrum licences
Datacasting transmitter licences
Telecommunications site access rights
The following table sets out the effective PC and DVM rates of depreciation that apply to an asset
based on its effective life.
For example, a taxpayer may choose to use the Commissioner’s effective life of 10 years for a particular
asset. In that case, the PC rate of depreciation would be 10% (i.e., 100% divided by 10 (years)).
The equivalent DVM rate of depreciation would be either 15% (at 150% DVM rates) or 20% (at 200%
DVM rates) depending on whether it was acquired before 10 May 2006 or on or after 10 May 2006.
Effective Life
(years)
0.5
1
1.5
2
3
3.33
3.5
4
4.5
5
5.5
6
6.67
7
Page 20
Prime cost rate
%
*
100
66.67
50
33.33
30
28.57
25
22.22
20
18.18
16.67
15
14.29
Diminishing value rate Diminishing value rate
(150%)
(200%)
%
%
*
*
100
75
50
45
42.86
37.5
33.33
30
27.27
25
22.5
21.43
*
*
*
100
66.67
60
57.14
50
44.44
40
36.36
33.33
30
28.57
July Supplement 2013
July Supplement 2013
Effective Life
(years)
7.5
8
8.33
9
10
11
12
12.5
13
13.33
15
16
16.67
17
17.5
18
20
23
25
30
33
33.33
35
40
45
47.5
50
80
100
Prime cost rate
%
13.33
12.5
12
11.11
10
9.09
8.33
8
7.69
7.5
6.67
6.25
6
5.88
5.71
5.56
5
4.35
4
3.33
3.03
3
2.86
2.5
2.22
2.11
2
1.25
1
Diminishing value rate Diminishing value rate
(150%)
(200%)
%
%
20
18.75
18
16.67
15
13.64
12.5
12
11.54
11.25
10
9.375
9
8.82
8.57
8.33
7.5
6.52
6
5
4.55
4.5
4.29
3.75
3.33
3.16
3
1.88
1.5
26.67
25
24
22.22
20
18.18
16.67
16
15.38
15
13.33
12.5
12
11.76
11.43
11.11
10
8.70
8
6.67
6.06
6
5.71
5
4.44
4.21
4
2.5
2
Note: Where assets are acquired during the year, depreciation must be calculated on a per day basis. Therefore a 100% or
higher depreciation rate does not equate to an immediate write-off unless the asset is held for (up to) a full year.
claimed cannot exceed the asset's original cost.
Voice
Page 21
Voice
FBT Rate
FBT Year Ended
Rate of Tax
31 March 2014
46.5%
31 March 2013
46.5%
Gross-up Rates – 2012/13 & 2013/14
Description
Gross-up Rate
Type 1
2.0647
Type 2
1.8692
Statutory Fraction
Annualised kilometres
Cars acquired under contracts entered into
after 7.30pm 10 May 2011
Contracts in
existence up
to 7.30pm
10 May 2011
From 10 May
2011
From 1 April
2012
From 1 April
2013
From 1 April
2014
0 – 14,999
0.26
0.20
0.20
0.20
0.20
15,000 – 24,999
0.20
0.20
0.20
0.20
0.20
25,000 – 40,000
0.11
0.14
0.17
0.20
0.20
0.07
0.10
0.13
0.17
0.20
40,001+
Rates for Vehicles other than Cars1
Engine Capacity
Rate per Km
2013/14 FBT Year
$
Rate per Km
2012/13 FBT Year
$
0 – 2,500cc
0.49
0.48
2,501cc+
0.59
0.57
Motor cycles
0.15
0.14
FBT Year Ended
Rate
31 March
%
2014
6.45
2013
7.40
Car Parking Threshold
Page 22
FBT Year Ended
31 March
Threshold
$
2014
8.03
2013
7.83
July Supplement 2013