federal budget 2010 – brief summary

On Tuesday, Treasurer Wayne Swan handed down the 2010-2011 Federal Budget. Below is a summary of some of the points announced by the Treasurer.

    1. A 50% Discount on Tax Savings for Interest Income from 1 July 2011

The government plans to provide a 50% tax discount on up to $1,000 of interest earned from 1 July 2011 either directly, or via a trust or managed investment scheme.

    1. Personal Tax Rate Reductions Legislated from 1 July 2010

The Government has not made any changes to the already legislated rates for the 2010-11 year in relation to personal income tax thresholds. These are as follows:

Income Threshold Tax Rate
$0 – $6,000 0%
$6,001 – $37,000 15%
$37,001 – $80,000 30%
$80,000 – $180,000 37%
$180,000+ 45%
    1. Standard Tax Deduction from 1 July 2012

For the 2012-13 financial year, individual tax payers will receive a standard $500 deduction in relation to work related expenses. This will increase to $1,000 from the 2013-14 financial year onwards. Where an individual’s deductible work related expenses are in excess of this standard deduction, the actual expense amount will apply. This measure was in response to the Henry Review.

    1. Net Medical Expenses Tax Offset from 1 July 2010

The medical expenses rebate threshold will increase from $1,500 to $2,000 from 1 July 2010. This threshold will then be indexed to the Consumer Price Index (CPI) annually. Taxpayers will now need to be out of pocket by $2,000 before receiving the 20% tax offset on net unreimbursed eligible medical expenses.

    1. Co-contribution – Permanently Reduced to 100%

The previously announced increase in the co-contribution rate to 125% for 2012-13 and 150% for 2013-14 and onwards will not proceed. Instead, the government will cap the maximum co- contribution at $1,000 and the rate at 100%.

    1. Child Care Rebate capped from 1 July 2010

From 1 July 2010, the Child Care Rebate will be capped at $7,500 per child down from the current annual cap of $7,778 per child. The indexation of the cap will also be paused for four years from 1 July 2010. Out of pocket expenses reimbursed by the Government, however, will not be affected and remain at 50% up to the annual cap.

    1. Company Income Tax Rate Reduction

The income tax rate for Small Business companies will reduce from 30% to 28% from 1 July 2012. For other companies the income tax rate will reduce to 29% in the 2013-14 year and then to 28% from 1 July 2014.

    1. Small Business Asset Write-offs

From 1 July 2012, the following capital allowance (or depreciation) concessions will be available to small businesses:

    • An immediate write-off for assets valued at under $5,000 (currently the threshold is $1,000); and
    • All other assets (except buildings) can be depreciated in a single depreciation pool at a rate of 30 percent.
  1. Superannuation Changes Confirmed
    • Superannuation Guarantee (SG) contribution rate will gradually increase from 9% to 12%, commencing 1 July 2013.
    • From 1 July 2013, the SG age limit will increase from 70 to 75.
    • From 1 July 2012, the Government will provide a contribution of up to $500 for workers with an income of up to $37,000.
    • Concessional contribution cap of $50,000 for people aged 50 or over will be retained for those who have superannuation balances below $500,000.

If you would like to discuss how the 2010-2011 Federal Budget will affect you, call us today on 07 3833 3999 or email info@elliottsgroup.com.au.