2012 Budget Report Summary

2012 Budget Report Summary

1. PERSONAL TAXATION

- Personal tax rates

The Government did not make any changes to the currently legislated tax rates for residents that are to apply from 1 July 2012.

There will be 2 rounds of tax cuts through increases in the tax-free threshold and corresponding adjustments to statutory tax rates and thresholds - the first,

from 1 July 2012, the tax-free threshold will be increased to $18,200, and the first 2 marginal tax rates will be increased from 15% to 19% and from 30% to 32.5% respectively; and the second,
from 1 July 2015, the tax-free threshold will be $19,400, and the second marginal tax rate will be increased from 32.5% to 33%.


- Standard work-related expenses deduction will not proceed

- 50% Discount for interest income will not proceed

- Schooolkids Bonus cash payment to replace Education Tax Offset

It will apply from 1 January 2012, and each year, families (receiving Family Tax Benefit Part A) will receive the Schoolkids Bonus worth:

$410 for each child in primary school
$820 for each child in high school


- Limit on ETP offset for "golden handshakes"

From 1 July 2012, only that part of an affected ETP, such as "golden handshake", that takes a person's total annual taxable income to no more than $180,000 will receive the ETP tax offset. Amounts above this whole of income cap will be taxed at marginal rates.

- Medical Expenses Tax Offset Tightened

For people with adjusted taxable income above $84,000 for singles and $168,000 for couples or families in 2012-13, the threshold above which a taxpayer may claim the medical expenses offset will be increased to $5,000. In addition, the rate of reimbursement will be reduced to 10% for eligible out-of-pocket expenses incurred.

2. BUSINESS TAXATION

- Company tax cut will not proceed

The Treasurer has announced that the proposed reduction in the company tax rate to 29% will not proceed.

- Businesses to be allowed to 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. From 1 July 2013, companies will be able to carry back up to $1m worth of losses against tax paid up to 2 years earlier.

- Bad debts - related party financing deduction denial

This will be achieved by denying a tax deduction for a bad debt written off where the debtor is related party not in the same tax consolidated group.

3. CGT

- Removal of CGT discount for non-residents

The Government will remove the 50% CGT discount for non-residents on capital gains accrued after 8 May 2012.

- Integrity changes to scrip for scrip roll-over

The Government will amend the integrity provisions of the scrip for scrip roll-over to remove significant tax minimisation opportunities.

4. SUPERANNUATION

- Superannuation contributions tax to double to 30% for incomes above $300,000

From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their conessional contributions reduced from 30% to 15% (excluding the Medicare levy). This means that the tax rate on concessional contributions will effectively double from 15% to 30% for very high income earners from 1 July 2012.

- Deferral of Higher concessional contributions cap for over 50s

The proposed higher concessional contributions cap for individuals aged 50 and over with superannuation balances below $500,000 will be deferred from 1 July 2012 to 1 July 2014. Accordingly, all taxpayers, regardless of age, will be subject to a concessional contributions cap of $25,000 for the 2012-13 and 2013-14 income years. In 2014-15, the general cap is expected to increase to $30,000 through indexation, and the higher cap would then commence at $55,000 for eligible taxpayers aged 50 and over.

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