The key points from this year’s Commonwealth Budget include:
Loss carry-back scheme : Companies that incur losses from 2012-13 will be able to carry back losses so that they get a refund against income tax previously paid in respect of the 2011-12 income year. 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 and later years, companies will be able to carry back up to $1 million worth of losses against income tax paid up to two years earlier.
Write-offs: From 1 July 2012, small businesses will be able to write-off any new business asset costing less than $6,500, for as many assets as they purchase. Assets costing $6,500 or more can be depreciated in a single pool from 2012-13 (15 per cent in the year they are purchased, 30 per cent in each subsequent year). Small businesses will be able to also instantly write-off the first $5,000 of a motor vehicle, from 1 July this year.
Increasing the tax-free threshold: the tax free personal income tax threshold will be increased from $6,000 to $18,200.
Tax on employment termination payments: The existing concession for termination payments will be limited to payments related to hardship, namely redundancy payments, compensation for employment-related disputes, and payments for invalidity or death.
Tax concessions on the super contributions of those earning over $300,000: From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30 per cent to 15 per cent (excluding the Medicare levy).The reduced tax concession will only apply to the part of the contributions that are in excess of the threshold. The 15 per cent flat tax on earnings within superannuation (and tax exemption for assets supporting pension payments) will not be affected in any way by this reform.
Measures not being proceeded with:
- Standard tax deduction for work-related expenses
- 50 per cent tax discount for interest income
- the 1% cut in company tax due to start for small businesses from July 2012 and for larger businesses a year later.
- plans to introduce a higher concessional contribution cap (ie $50,000 instead of $25,000 a year) for those with less than $500,000 in super have been deferred until 1 July 2014.