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The Spry Roughley Report - Federal Budget 2013 Edition

 Welcome to the Federal Budget 2013 edition of the Spry Roughley Report

The Federal Government has handed down its Budget for 2013 and there is little to get really excited about. It is an unusual budget for an election year though.

The headline items are the introduction of the National Disability Insurance Scheme (NDIS) and additional funding for education - $9.8B over 6 years for schools. Both are worthy initiatives. The other headline is the $18B deficit, followed by further deficits before returning to surplus in 2016/17.

To achieve this the Government are targeting a range of “savings” measures – read increased taxation by stealth and the cutting of funding in other areas. The list is extensive and includes:

  • Increasing the Medicare Levy by 0.5% to 2.0% from 1 July 2014. The effective top marginal rate will be 47.0% at that time (currently 46.5%);

  • Phase out of the Net Medical Expenses Tax Offset;

  • Abolishment of the Baby Bonus;

  • Removal of CGT concessions for non-residents on taxable Australian property;

  • Focus on corporate profits particularly international transactions including business re-structures, loans and dividend washing;

  • Further review of tax avoidance issues related to the use of trusts;

  • Tightening of FBT concessions and capping of self-education expense claims;

  • Advancing PAYG Instalments to monthly basis;

  • Increasing the cost of 457 visa applications.

There were some positive measures including an increase to superannuation contribution limits, taking them to $35,000 for those over the age of 50. This limit will phase in from 1 July 2013 for those over 60 years and from 1 July 2014 for those aged 50 – 59 years.

Click on the links below or scroll down for further summary of the Federal Budget

The major concern is the uncertainty created over how extensively these measures will be implemented with the Federal Election looming in September. Time will tell.

As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email.

Warm regards,

Martin

Martin Roughley, Director
Spry Roughley Services Pty Limited

 

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PERSONAL TAXATION

  • 2015 tax-free threshold increase "deferred", otherwise no changes

  • Medicare levy to increase to 2%

  • Medicare levy low-income threshold for families increased

  • Phase-out of medical expenses tax offset

SOCIAL SECURITY

  • Baby Bonus to be abolished and replaced

  • Family payments: indexation pauses for upper income limits and supplements

BUSINESS TAXATION

Further extension of monthly pay-as-you-go (PAYG) instalments

The Government will extend the requirement to make monthly PAYG income tax instalments to all large entities in the PAYG instalment system, including trusts, superannuation funds, sole traders and large investors.

TAX COMPLIANCE

  • Preventing "dividend washing" and doubling-up of franking credits

  • CGT integrity measures for foreign residents

  • Funding for data-matching and trust tax compliance

SUPERANNUATION

No further major reforms announced

The Treasurer did not announce any new major superannuation measures in the Budget. This will be a welcome relief for the superannuation industry, which is already suffering from "reform fatigue”.

OTHER CHANGES

HELP discounts to be abolished

The Government will remove the discounts applying to up-front and voluntary payments made under the Higher Education Loan Program (HELP) from 1 January 2014

DISCLAIMER

This is not advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Spry Roughley Report is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.