How the 2012 federal budget affects individuals and families?

Here is a quick snap shot of how yesterday's federal budget would affect individuals and families.

FOR FINANCIAL YEAR ENDING 30 JUNE 2013

Tax Rates for 2012/2013 financial year
Taxable income $	Tax payable $
0 - 18,200 18,201 - 37,000 37,001 - 80,000 80,001 - 180,000 180,001+	Nil Nil + 19% of excess over 18,200 3,572 + 32.5% of excess over 37,000 17,547 + 37% of excess over 80,000 54,547 + 45% of excess over $180,000

Together with the Low Income Tax Offset low-income earners will have an effective tax-free threshold of $20,542.

 

Replacing the Education Tax Refund with a Schoolkids Bonus

From January 2013, every family with a child at school will be paid $410 per annum for each primary school student and $820 per annum for each secondary school student. All eligible families will receive the full rate of payment and will no longer need to keep receipts as proof of expense, or wait until lodging their income tax return to obtain the benefit.

Means testing medical expenses offset

The medical expenses tax offset will be means tested from 1 July 2012.

For people with adjusted taxable income above the Medicare levy surcharge thresholds ($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 (indexed annually thereafter). In addition, the rate of reimbursement will be reduced to 10% for eligible out-of-pocket expenses incurred. People with income below the surcharge thresholds will be unaffected.

Reduction of superannuation tax concessions for high income taxpayers

From 1 July 2012 the contributions tax paid on concessional contributions for individuals with income greater than a threshold figure of $300,000 will increase from the current 15% rate to the higher rate of 30%.

The definition of ‘income' under this measure is expected to include taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free government pensions and benefits, less child support.

 

FOR FINANCIAL YEAR ENDING 30 JUNE 2014

Family Tax Benefit Part A

The maximum payment rate will increase by $300 per annum for families with one child and $600 per annum for two or more children from 1 July 2013.

SUMMARISED BY SURESH RAJANI

If you want to discuss the above further or want to know about how the budget affects you in person give Suresh Rajani a call at 08 8372 7837. 

Suresh Rajani is the Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia.