Newsletter
THE CARBON TAX17 May 2012 15:01:41 PM From 1 July 2012, Australia's biggest polluting businesses (approximately 500 in number) will be required to pay $23 for each tonne of carbon pollution they emit into the atmosphere each year. The carbon price will increase by 2.5% each year for the next two years as follows: • 1 July 2012: $23 per tonne • 1 July 2013: $24.15 per tonne • 1 July 2014: $25.40 per tonne. From 1 July 2015 the fixed price carbon tax will cease and be replaced by a carbon trading scheme where the affected 500 high polluting businesses will trade permits to pollute, with the carbon price per tonne set by the market. Householders will not pay the carbon tax directly, however it is expected that affected businesses will pass on any increased costs to its consumers. Therefore, indirectly consumers will feel the price impact of the carbon tax. The Government has estimated the overall price increase for households will be $9.90 per week, but average compensation will be $10.10. However, the actual cost will vary depending on what goods and services you consume ¬ some goods and services will be impacted by the carbon tax, while others will not. The main items that are expected to have a sizable increase in cost include electricity and water at 7.9%. The first form of compensation most people will receive through the tax cuts tha will commence on 1 July 2012. The increase to the tax-free threshold from the current $6 000 to $18 200 will result in every taxpayer earning up to $80 000 per year paying less tax than 2011/2012 as follows: Taxable Income $ Value of Tax Cuts $15,000 $503 $20,000 $600 $25,000 $503 $30,000 $303 $35,000 $303 $40,000 $303 $45,000 $303 $50,000 $303 $55,000 $303 $60,000 $303 $65,000 $303 $70,000 $253 $75,000 $128 $80,000+ $3 The 2nd round of tax cuts scheduled to commence on 1 July 2015, are much more modest, and will also be dependent on the outcome of the next Federal election. The second form of compensation will be in the form of increased Government payments which will primarily commence from 1 July 2012 (in some cases earlier) and take the following form: • Up to an extra $338 per year for single pensioners and self-funded retirees, and up to $510 for pensioner couples combined. This will be delivered as a new, permanent, and tax exempt `Clean Energy Supplement' which will be paid in line with regular pensioner payment cycles from 20 March 2013. So pensioners don't have to wait until this date to receive compensation, they will receive a `Clean Energy Advance' which will be paid as an up-front and tax exempt lump sum payment of up to $250 for singles and $190 for each eligible member of a couple. This payment will be made in May-June 2012. Pensioners eligible for this assistance include recipients of the Age Pension, Disability Support Pension, Carer Payment, Service Pension and Wife Pension. • Commonwealth Seniors Health Care card holders will receive assistance through a `Seniors Supplement' of $338 for singles, and $255 for each eligible member of a couple. This is the same amount of assistance pensioners will receive. Many self-funded retirees will benefit from this measure which will be paid similarly to the increase in the pension (i.e. an up-front payment in May-June 2012, followed by an annual payment from March 2013). Self-funded retirees on low incomes who do not receive adequate Clean Energy assistance may also be eligible for an annual, tax exempt low income supplement of $300. • Up to $110 extra per child, per year, for a family that receives Family Tax Benefit Part A; • Up to $69 extra per year for families that receive Family Tax Benefit Part B; • For people on Government allowances (such as New Start, Austudy etc.), up to $218 extra per year for singles and $390 per year for couples combined; and • Up to $234 per year for single parents in addition to increased family payments they receive. The largest 500 carbon emitting businesses are those which generate over 25,000 tonnes of CO2 emissions each year. Of the 500 businesses approximately: • 60 are involved in electricity generation; • 100 are involved in coal or other mining; • 40 are natural gas retailers; • 60 are involved in industrial processes (cement, chemicals and metal processing); • 50 operate in a range of other fossil fuel intensive sectors; and • 190 operate in the waste disposal sector. Small and medium size businesses will not pay the carbon tax directly however as consumers, certain business inputs such as electricity, water etc. will increase and directly impact the business The Government has introduced its small business depreciation measures (covered in the What’s New Informer April 2012) to help offset the impacts of the carbon tax. The depreciation measures are as follows: Increased Instant Asset Write-Off Threshold From 1 July 2012, small businesses will be able to write-off depreciating assets costing less than $6 500 (up from $1 000) in the income year in which they start to use the asset or have it installed ready for use. Pooling From 1 July, the small business long life pool will cease to exist. From this date, all assets other than buildings will be depreciated in a general small business pool at 30% (with the rate of 15% applying in the first year). Special Write off Provisions for Cars From 1 July 2012, small businesses can write-off $5 000 of a car in the income year in which they start to use the car (new or second-hand). The remaining value is depreciated through the general pool at a rate of 15% in the first year and 30% in later years. These measures really only provide a cashflow benefit rather than compensation for the carbon tax. Also they are only available to small business entities with an annual turnover of less than $2 million (including the turnover of any connected entities). Compensation is largely restricted to directly affected industries. Incentives that the Government is offering includes: • Incentives for farmers, forest growers and landholders to reduce their carbon emissions; • Competitive grants for manufacturing and food businesses to invest in energy-efficient capital equipment and low emission technologies; • Competitive grant project funding for projects in renewable energy; • Assistance through Aus-Industry to develop new, more efficient technologies and services to reduce your business carbon footprint. The Government has identified and written directly to the 500 businesses that will be required to pay the carbon tax ¬ clearly detailing their payment and reporting obligations. Affected businesses should deal directly with the Department of Climate Change. |
ENTREPRENEURS TAX OFFSET TO CEASE17 May 2012 14:58:59 PM From 1 July 2012, the entrepreneur's tax offset can no longer be claimed. The entrepreneur's tax offset may still be claimed on the 2012 tax return. |
COMPANY TAX RATE CUTS17 May 2012 14:57:53 PM Draft legislation was introduced which proposes to amend the Income Tax Rates Act 1986 to reduce the Company tax rate from 30% to 29% for the 2013-14 income year onwards. Small business Companies would receive the 29% tax rate in the 2012-2013 income year. |
INCREASING THE SUPERANNUATION GUARANTEE RATE17 May 2012 14:57:06 PM The Superannuation Guarantee rate (currently 9%) will be increased gradually with initial increments of 0.25 percentage points on 1 July 2013 and on 1 July 2014. Further increments of 0.5 percentage points will apply annually up to 2019-20, when the Superannuation Guarantee rate will be set at 12 per cent. Around 8.4 million employees are expected to benefit from this measure. Australia's system of compulsory superannuation savings, which has been in place since 1992, has contributed significantly to national saving. Australia's pool of superannuation savings today stands at over $1 trillion, increasing investment potential and ensuring that reliance on foreign funds is lower than otherwise. The number of Australians aged over 65 is projected to grow from 3 million to 8.1 million by 2050. Over the next 40 years, the ratio of working age Australians to those aged over 65 will decrease from 5-to-1 to just 2.7-to-1. The challenge in the future will be to ensure an adequate retirement income for our ageing population. The superannuation measures that the Government is introducing are projected to generate an additional $10 billion by 2020 and $35 billion by 2035 in private saving each year. The phasing in of the increased Superannuation Guarantee is designed to allow employers to take the increased super contributions into account when negotiating future wage settlements. The Government expects that with the reduction in the Company tax rates that future increases in real wages will continue. Below is a table showing what the Superannuation Guarantee will be increased to in the respective years until it reaches the full 12%. SUPERANNUATION GUARANTEE RATES Year Rate (%) 2013-14 9.25 2014-15 9.5 2015-16 10 2016-17 10.5 2017-18 11 2018-19 11.5 2019-20 12 |
New indirect tax laws take effect 1 July 201216 May 2012 15:09:16 PM The Indirect Tax Laws Amendment (Assessment) Act 2012 has received royal assent and will take effect from 1 July 2012. The legislation will apply to tax periods and fuel tax return periods starting on or after 1 July 2012. The legislation harmonises the self-actuating system for goods and services tax (GST), wine equalisation tax (WET), luxury car tax (LCT) and fuel tax credits with the income tax system of self-assessment. The legislation also: -allows for a four year period of review that will be refreshed in respect to particulars that have been amended -allows the Commissioner to make a determination that a taxpayer can correct errors for a preceding business activity statement (BAS) on their current BAS -confirms that LCT and WET are included in the calculation of the net amount -establishes a set of generic assessment provisions. The existing self-actuating system will continue to apply to tax periods and fuel tax return periods starting before 1 July 2012. You can view more information at: http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/00267984.htm |
