End of Financial Year 2012
This year the Australian Taxation office has requested much more information be provided
by taxpayers and their spouses on their income tax returns.
Most of this information will not affect the taxable income of the taxpayer but will be used to
ascertain the taxable income of the spouse to determine your entitlement to rebates and
other benefits.
Taxpayers will need to provide us with the following additional information this year:
Income
-
Reportable Fringe Benefits received by you and your spouse;
-
Amount of own and spouse Superannuation contributions (either after
tax or salary sacrifice);
-
Amounts of Tax Free Government Pensions - Disability pension,
Support pension, Carer payments, wife's pension, Veteran affairs,
Invalidity and Disability payments received by you and your spouse;
***except Defence Force income pensions***
-
Amounts of payments received from Government Superannuation
pensions and other income streams (taxable or not taxable) received
by you and your spouse;
Expenses
-
Tax Free Foreign Income received;
-
Child Support you have paid to your ex-spouse;
-
Contributions to your Superannuation Fund and contributions paid by
your spouse into their Super Fund;
-
Share Disposal -
Salary Sacrifice Superannuation you have paid.
Full documentation (date purchased and sold and amounts paid and
received) in relation to all these disposals.
I advise the following changes for the 2011/2012 tax return:
ATO Targets – The ATO is concerned about the rise in tax deductible work expense claims
over the last 5 years.
The ATO is targeting particular employees:
-
-
Real Estate employees – motor vehicle, mobile phone, home office, referral
claims
Airline employees – hairdressing and make-up, Vaccination expenses cannot be
claimed
Building industry employees – claiming expenses automatically against
allowances (ie tools, travel) are not allowable
Bulky, Heavy equipment – claiming home to work travel expenses to carry heavy
equipment. Special conditions need to apply to make such expenses allowable
deduction
Seminar and conferences – care needs to be taken when attending seminars in
holiday destinations to distinguish between private and business expenses.
CGT on Sale of Rental Properties – care needed to retain all records
Overtime Meal Allowances – clients must be able to substantiate the claim
irrespective of the amount claimed
Investment Loan Interest – and apportioning between investment loans and
private nature loans.
Dependent Spouse Rebate
-
From 2011/2012 Tax Return onwards, a dependent spouse rebate is applicable
to spouses born before 1/7/1971 (ie age 40 years plus)
National spouse rebate for zone allowance purposes will still apply to all
dependent spouses.
Temporary Flood Levy
In 2011/2012 all taxpayers with taxable income above $50,000 will pay a once off levy to
fund the rebuilding work from the natural disasters in 2011.
Details are:
Taxable Income
Levy
$ 50,001 - $100,000
0.5% on taxable income over $50,000
$100,001 +
$250.00 + 1% on taxable income above $100,000
Medical Expenses
I remind clients that you can claim a rebate for medical expenses paid out of your own
pocket (after receiving monies back from Medicare and your private health fund) which
exceed $2,060.00.These expenses include chemist prescription items (not over the counter
medications) GP, Physio, Chiro, Dental, Optical, Surgery and other specialist medical
expenses paid to Australian practitioners. Please note that Cosmetic Surgery costs cannot
be claimed.
Low Income Tax Offset (LITO)
In 2011/2012 the ATO has abolished the Low Income Tax Offset applicable to minors
(children) who earn non exertion (non-working) income. Children can now earn only
$416.00pa in bank interest and investment income before they are taxed at 66%.
Education Tax Refund
During the last financial year 2011/2012 the ATO has been advising us that eligible tax
payers can claim various children’s’ education expenses (including school uniforms)
providing you had receipts.
In the May 2012 Federal Budget the Education Tax Rebate was scrapped in favour of the
“School Kids Bonus” which was paid direct to taxpayers in June 2012.
All future payments will come from Centrelink in January and June each year.
Bank Details – Electronic Refunds
The ATO is directing clients to have their income tax refunds credited directly to their bank
account. This will mean a quicker receipt of your refund. Please provide us with a BSB and
account number (Credit Card is not acceptable) for receipt of these funds.
Please note that if you owe the ATO money, the quoting of your bank details will not mean
the ATO can direct debit your bank account.
Changes for 2012/2013 (if from 1/7/2012 onward)
Living Away from Home Allowance (LAFHA)
The ATO has recently significantly overhauled the LAFHA rules. It is now only applicable to
those employees who:
-
Has established a second (alternate) temporary work location
Maintain an existing principal residence and have a clear and definite intention to
return to it
Lives away from home for a limited/finite/fixed period
Work away from home for more than 21 days.
In future the LAFHA received by an employee will be treated as income and the employee
can then claim accommodation and food expenses actually incurred.
Private Health Insurance Rebate (PHIR)
The rebate for private hospital health cover will be means tested from 1/7/2012.
Taxpayers falling outside these limits and not having private hospital cover will be subject to
an additional Medicare levy of 1% - 1.5% depending on income.
The new limits from 01/07/12 will be:
Income Tier
Income Level
No Tier
Singles
(PHIR)
Medicare
Surcharge
65yrs – 70yrs
Age 70yrs +
30%
35%
40%
Nil
20%
25%
30%
1%
10%
15%
20%
1.25%
Nil
10%
15%
1.5%
Under 65 yrs
$0 - $84,000
Couples
$0 - $168,000
Tier 1
Singles
$84,000 - $97,000
Couples
$168,001 – 194,000
Tier 2
Singles
$97,001 - $130,000
Couples
$194,001 - $260,000
Tier 3
Singles
$130,000 +
Couples
$260,001 +
Should a taxpayer’s income change to a different nominated tier where the PHIR has
already been claimed from the Health fund, any adjustment (positive or negative) will be
made on the 2012/2013 income tax return.
Non Residents – Removal of 50% CGT Discount
As from Federal Budget night 8/5/2012 the 50% CGT discount or Capital Gains accrued by
non-residents on sale of Australian Property has been abolished.
Taxpayers affected by this change should obtain a written valuation/assessment of the
market value of the property as at 8/5/2012 to assist in calculation of any future CGT liability.
Mature Age Worker Tax offset (MAWTO)
From 1/7/2012 (ie from the 2012/2013 year) the mature age worker tax offset will be phased
out.
Net Medical Expenses Tax Offset (NMETO)
From 1/7/2012, further changes will mean that eligible net medical expenses above
$5,000.00 (currently $2,060.00) will attract a 20% rebate.
For singles earning above $84,000.00pa (and couples earning $168,000.00spa), the rebate
is reduced to 10% of expenses above $5,000.00.
Marginal Tax Rebates
As a result of the introduction of the Carbon Tax, Personal Marginal income tax rates and
thresholds will change.
Currently
Nil
$ 6,001 $ 37,001 $ 80,001 $181,001 +
From 1/7/2012
$ 6,000
$ 37,000
$ 80,000
$ 18,000
Nil
15%
$ 4,650 + 30%
$17,550 + 37%
$54,550 + 45%
Nil
- $ 18,200
$ 18,201 - $ 37,000
$ 37,001 - $ 80,000
$ 80,001 - $180,000
$181,001 +
Nil
19%
$ 3,572 + 32.5%
$17,547 + 37%
$54,547 + 45%
Pensioner Tax Offset / Senior Australian Tax Offset
From 1/7/2012 the Pensioner Tax Offset will no longer exist. All those previously eligible will
be eligible for the Seniors and Pensioners Tax Offset (SAPTO)
Superannuation – Concessional Contributions caps
From 1/7/2012 all taxpayers, irrespective of age, will be subject to a concessional
contributions (contributions you can claim a tax deduction for) cap of $25,000.00pa.
This limit includes employer superannuation guarantee contribution and employee salary
sacrifice.