- Fringe Benefits Tax (FBT)
- TFN and ABN Withholding Tax
- Family Trust Distributions Tax
- Trusts, where Section 99A applies to retained income
- Excess non-concessional contributions to super (with tax on excess concessional contributions to increase to 32%)
- And numerous others – a total of 11 bills have already been released to introduce the increase to the various tax Acts.
Presumably, any funds raised from these consequential increases would contribute to the general revenue, and not be earmarked for the DisabilityCare Australia Fund.
Medical expense tax offset to be phased out
Currently, a 20% tax offset can be claimed for eligible out-of-pocket medical expenses in excess of $2,060 per annum. The Government intends to phase out this offset. For general medical expenses, only taxpayers who claim the offset for the 2013 income year will be eligible to claim in future years.
- Taxpayers who claim for the 2013 year will be eligible to claim again for the 2014 year
- Taxpayers who claim for the 2014 year will be eligible to claim again for the 2015 year
A gentler phase out will apply to expenses relating to disability aids, attendant care or aged care, with these continuing to qualify for an offset up to the 2019 year.
The Government has announced its intention to limit the allowable deduction for self-education expenses by individual taxpayers to $2,000 per annum from 1 July 2014.
This limit will apply to all related costs, such as travel and accommodation. Clearly the target is self-education that involves significant travel, such as to overseas events. However, the proposal is wide reaching and may catch usual professional development activities and training that is required to maintain vocational qualifications. As a result, it is a measure that runs contrary to the important policy of improving our education and workforce skills.
As announced, it won’t apply to employer expenditure, therefore incentivising employers to spend money on staff training. However, any expenditure for an employee that is salary sacrificed – usually on the basis that it would be otherwise deductible had it been incurred by the employee – will also be subject to the limit.
We expect that this measure will be reviewed prior to its implementation following submissions from professional bodies and educational institutions.
HELP discounts removed
Discounts will be abolished for voluntary and up-front payments made on Higher Education Loan Program (HELP) loans. Currently, a 10% discount applies to up-front payments and a 5% discount to voluntary payments of $500 or more. These discounts are proposed to be abolished from 1 January 2014. Taxpayers making mandatory HELP repayments and/or those close to paying off their debt should consider bringing repayments forward to before 1 January 2014 to benefit from the discount.
Baby Bonus & Family Tax Benefits
The Baby Bonus will be replaced with changes to the Family Tax Benefit Part A (FTB Part A) and the Paid Parental Leave (PPL) system:
- It will increase FTB Part A payments by $2,000, to be paid in the year following the birth or adoption of a first child or each child in multiple births, and $1,000 for second or subsequent children.
- Parents who take up PPL will not be eligible for the additional FTB Part A component, but will benefit from improved access to PPL as their family expands. As part of this package, parents will be able to count time on Government PPL where it occurs in the work test period for a subsequent child; just like employer funded parental leave can be counted now. This change will mean more women will be able to access Government PPL when they have another baby.
The Government announced that it will maintain the higher income thresholds at their current levels for a further 3 years until 1 July 2017 for certain other family payments and supplement amounts.
In additional FTB changes, eligibility will change for FTB Part A for children aged 16 years and over. From 1 January 2014, FTB Part A will only be paid until the end of the calendar year a child completes school. Further, individuals who no longer qualify for FTB Part A may be eligible to receive Youth Allowance, subject to the usual eligibility requirements.
The means test thresholds for eligible income support (eg Newstart Allowance, Sickness Allowance and Partner Allowance Pension) recipients will increase from $62 per fortnight to $100 per fortnight from 20 March 2014 before their income support is reduced. The threshold will also be indexed annually from 1 July 2015.
This information and more can be found here