Superannuation
From 1 July 2012 all taxpayers, regardless of age, will have their concessional contributions capped at $25,000. Accordingly, the 2011–12 financial year is the last year that an individual taxpayer aged 50 or over may make eligible superannuation concessional contributions of up to $50,000 under the current rules.
The Australian Government’s superannuation co-contribution limit will also drop from $1000 to $500 from 1 July 2012. This cut will adversely affect many low-income earners, who should consider making after-tax contributions to obtain the maximum superannuation co-contribution before the window closes on 1 July 2012.
The Australian Government’s superannuation co-contribution limit will also drop from $1000 to $500 from 1 July 2012. This cut will adversely affect many low-income earners, who should consider making after-tax contributions to obtain the maximum superannuation co-contribution before the window closes on 1 July 2012.
Medical expenses
The medical expenses offset will be means tested for those whose income exceeds the Medicare levy surcharge next year ($84,000 for singles, $168,000 for families). They will only be able to claim a 10 per cent tax refund for net medical expenses exceeding $5000 in the 2012–13 financial year. Hence, where practicable, it may be best to bring forward eligible medical expenses before 30 June.
Deferring income and accelerate deductions
The decrease in income tax rates for middle and low-income earners next year may make it desirable for individuals to defer income or bring forward deductions.
Schoolkids bonus
From 1 January 2013, families will receive the Schoolkids Bonus cash payment worth $410 for each child in primary school and $820 for each child in high school each year. The new automatic payment will replace the Education Tax Refund (no more saving all those receipts).
Trusts
Trustees of discretionary trusts are now required to make and document trustee resolutions as to how the income of such trusts for the 2011–12 financial year is distributed among beneficiaries by 30 June 2012.
Deferring the purchase of depreciating business assets
An eligible small business may consider deferring the purchase of assets (such as desks, computer equipment, and lawn mowers) until after June 30, when the immediate deduction for a depreciating asset increases from $1000 to $6500.
Claim the entrepreneur’s tax offset
The 2011–12 is the final financial year in which eligible small business entities can claim the entrepreneur’s tax offset, which is equal to 25 per cent of the income tax payable on the business's net income. Care should be taken in claiming the offset as it is subject to means testing.
Complying with Division 7A
The ATO is currently highly-vigilant in cracking down on shareholders and associates who use either the funds or assets of a private company for personal purposes.
Carry back losses
From 1 July 2012, companies will be able to carry back up to $1m worth of losses to get a refund of tax paid in the previous year. This will provide a cash benefit of up to $300,000 a year subject to available franking credits.
No company tax reduction
The Government has decided not to proceed with the previously announced decision to reduce the company tax rate to 29%.
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