Despite the toughest budget in years CommSec believes that the Australian economy is relatively strong with a predicted economic growth rate between 2.75 and 3.0 percent.
||2014 Year End
||2015 Mid Year
|Predicted Cash Rate
||2.5% – 2.75%
||2.75% – 3.25%
||2.5% – 3.0%
||2.5% – 3.0%
||5.5% – 6.0%
||5.5% – 6.0%
CommSec believes that despite strong gains on the share market (18% for the 2014/14 financial year) there is still a disproportionate amount of assets in cash. This means that the stock market is tipped for continued growth.
CommSec has stated that “Research by Investment Trends showed SMSF trustees still hold 25 per cent of SMSF assets in cash which equates to $143 billion,”
“SMSF investors indicate that around 31 per cent or $45 million of these holdings are ‘excess cash’, or cash that would ordinarily be invested in active assets if it weren’t for the current investor sentiment.”
If you would like to enquire about investing through your SMSF, please contact our office on (03) 9744 7144.
The McMahon Osborne Group have been working hard to make life a little easier for you.
You can now register for our events and seminars via an online booking form. When you receive one of our event/seminar flyers just go to the click here button embedded in the flyer to register your details.
It’s that simple! Go ahead and check it out.
Last week, the Federal Government announced it’s intention to change the method of calculating the Fringe Benefits Tax (FBT) on cars. The proposed changes will abolish the Statutory Formula for all new motor vehicle contracts entered into from 16 July, 2013. As a result, employers will use the operating costs method (logbook method) to calculate FBT.
The operating cost method is more arduous and is based on the actual business use of the car as recorded in a log book. Tax is payable on the portion of operating costs attributable to private use. It is important that sufficient detail is recorded in relation to each work related trip, otherwise the employer risks the logbook being deemed by the Australian Tax Office as invalid and it is therefore assumed that the total running costs of the vehicle be subjected to FBT.
The proposed changes will also affect employees, with those with salary package cars expected to be most affected. The tax saving from packaging cars has traditionally come through the use of the statutory formula method.
It should be noted that this proposal has not yet been passed through Parliament. Should the legislation be passed by Parliament, the change from Statutory Method to Operating Cost Method will apply to all contracts entered into- or materially varied-after the announcement on July 16, 2013, with effect from 1 April, 2014. All existing contracts prior to the announcement will not be affected by the change.
On 14 May 2013, Treasurer Wayne Swan delivered his sixth annual budget.
Below, we cover 5 of the outcomes that are most likely to impact on individual tax payers:
1. Income Tax Rates
Income tax rates will remain unchanged. Importantly though, plans to increase the tax free threshold from the current $18,200 to $19,400 in 2015 have been scrapped.
At this stage, the rates for 2013/14 are set to stay in place until at least 2017/18.
Tax Rates for Non Residents:
From next year (2013/14), non-Australian residents will pay a flat tax rate of 32.5% of their taxable income up to $80,000. From there the tax rates will be same as resident Australians.
2. Medicare Levy
From 1 July 2014 the compulsory Medicare Levy will be increased from 1.5% to 2% to help fund the introduction of the National Disability Insurance Scheme.
3. Net Medical Expenses Tax Offset
The net medical expenses tax offset will be phased out starting from 1 July 2013.
During the phase out period, it will also become more difficult to claim the offset. Only if you claim the offset in your 2012/13 tax return, can you then claim it again in 2013/14. Taxpayers who then claim it in 2013/14 can claim it again in 2014/15.
So, if you are not eligible or choose not to claim the offset in 2012-2013, you will not be able to claim the offset in future years.
4. Work Related Self-Education Expenses
From 1 July 2014 the amount of self education expenses you can claim under item D4 in your tax return will be limited to a maximum deduction of $2,000. Previously there has been no limit in place on these deductions.
5. Baby Bonus
The current $5,000 baby bonus will be abolished from 1 March 2014. Instead – families who are eligible for Family Tax Benefit A will receive $2000 following the birth of their first child and $1000 for each subsequent child.
With the intention of driving more business investment during these difficult times, the Federal Government has announced new deductions for most plant and equipment, motor vehicle and other business assets either ordered or acquired from 1 July 2012 for eligible small businesses with a turnover of less than $2 million.
The new measures mean small businesses can instantly write off most assets (including Motor Vehicles) purchased after 1 July 2012 and costing less than $6,500 as a once off tax deduction.
Also available is an immediate one off deduction of $5,000 for new or used motor vehicles purchased from 1 July 2012 and costing more than $6,500 with the balance of the cost depreciated as per the normal depreciation rules.
Make sure you talk to us about this fantastic opportunity to generate a big tax break for your business for the 2013 tax year and beyond.
Singles earning more than $129,001 and families earning more than $258,001 will lose access to their private health insurance rebate from the 2012-2013 financial year onwards, under a means test that recently secured passage through the House of Representatives and which will be effective on July 1, 2012.
The measures- which still have to pass the Senate, expected to be a formality- also mean the Medicare surcharge for the groups above will increase from 1% to 1.5% if they do not take out private health insurance. That translates into $1,935 p/a for high earning singles and $3,870 pa for high earning families.
At present, almost anyone aged less than 65 years old, regardless of how much they earn, can get a 30% refund from the Federal Government for the cost of their private health insurance. Those aged between 65 and 69 years old can receive a 35% refund and those aged over 70 years old can get 40% back.
The income test is based on the total sum of the taxable income, reportable fringe benefits, reportable super contributions and total net investment losses, less other taxed elements depending on a person’s age and circumstances.
Private Health Insurance Tiers for 2012-2013.
The beginning of February marks a significant yet costly time for families with children, as parents busy themselves with the purchasing of school textbooks, stationary and uniforms amongst numerous other items.
If school expenses are weighing you down, the Schoolkids Bonus can help lighten the load. It replaces the old Education Tax Refund and it is simple: there’s no need to collect receipts or claim it through your tax, this is one of the significant benefits of the Schoolkids Bonus.
Each year, eligible families and students will receive:
- $410 a year for each primary student ($205 paid in January and $205 paid in July)
- $820 a year for each secondary student ($410 paid in January and $410 paid in July).
To get the Schoolkids Bonus you need to be receiving an eligible payment from Centrelink or a Department of Veterans’ Affairs Education Allowance either for yourself or on behalf of your child on the 1 January and/or 30 June test dates and you or your child must be undertaking primary or secondary studies and under 20 years of age. If you receive an eligible payment from Centrelink, you just need to let them know:
- when you or your child starts primary school to start receiving the payment
- when you or your child changes from primary to secondary school to start receiving the secondary school payment and
- when you or your child complete secondary school to receive the final secondary school payment.
I have more than one child. Will I receive the Schoolkids Bonus for each child?
Yes, if you have more than one child in primary and/or secondary study and meet the eligibility requirements, you will receive the Schoolkids Bonus for each child in primary and/or secondary study. For example, if you have a child in primary school and a child in secondary school in January you will receive $205 for your child in primary school and $410 for your child in secondary school. That’s a total of $615 to help with back-to-school costs for your children’s education.
When will I receive it?
Payments are made in January and July every year unless you claim your Family Tax Benefit Part A as a lump sum. You must be receiving one of the eligible payments on 1 January to receive the January payment. Similarly, you must be receiving one of the eligible payments on 30 June to receive the July payment. If you have deferred your Family Tax Benefit Part A, you will still receive the Schoolkids Bonus.
The above information has been obtained from the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs. For further information please visit http://www.fahcsia.gov.au/our-responsibilities/families-and-children/benefits-payments/schoolkids-bonus