Budget Blues

I have a case of the budget blues today, it’s sort of like being a kid at Christmas and once the day is over you feel a bit flat. It’s most likely because most of the tax side of things were already leaked or just implementations from budget recommendations last year.  Or maybe I just have “election year-itus.”

Let’s have a recap on what I deem to be the 5 most applicable topics for our client base:

1.  Net Medical Expense Tax Offset

As it stands right now, anyone who spends out of pocket medical expenses above $2,000 receives a 20c/$1 offset against their tax. Most of us will be waving a sad goodbye to this offset after June 30th because unless you make a claim in the 2012/13 financial year (the one we are in now) then you will be ineligible to claim the tax offset for any future years.  For those that claim in the 2012/13 year you will be able to claim in the 2013/14 year and so on. There are some further exemptions for disability expenses.

2.  HECS/HELP Discounts

There is currently a 10% discount available to students who elect to pay their contribution up front and also a 5% bonus (discount) on voluntary repayments of HELP debts.  We’ve been recommending to all clients who will pay out their HELP or HECS debts during the year to pay this as a voluntary payment prior to lodging their return as a strategy of saving 10% of the HELP debt. Unfortunately this is also removed effective 1st January 2014.

3.  Increase of Medicare Levy to 2%

Effective from 1st July 2014, the medicare levy is rising from 1.5% to 2%.  This is the levy that everyone pays, not the additional surcharge for those with higher incomes and without appropriate private health insurance.  The increase is going to fund the NDIS (National Disability Insurance Scheme) which is being renamed DisabilityCare Australia.  Wayne Swan specifically noted that there will be a special fund set up to hold these additional taxes for the purpose of the NDIS.

4.  Self Education Expenses capped to $2,000

The government is introducing a cap on medical expenses for a maximum deduction of $2,000 beginning 1st July 2014.  In basic terms, get all of your self education out of the way before 30th June 2014 if you want to be able to make a claim.  This deduction covers expenses such as tuition fees, registration fees, textbooks, professional journals and travel and accommodation expenses for the same.  I can’t contain my disappointment with this change.  We have many clients who will be seriously effected by this, particularly those who choose to work and study simultaneously as I did back in the day.

5.  Increase of the concessional superannuation contributions cap

The maximum amount able to be contributed to superannuation is currently $25,000 in an income year.  The government has confirmed will will introduce legislation to allow contributions of up to $35,000 for those 60 years and over from 1st July 2013. Based on this, I highly recommend everyone who is 59 years or over on June 30th should really consider reviewing their salary sacrificing arrangements, TRIS and personal super deductions to account for this increase.

There were many other announcements, in fact I’ve got 100 pages of budget commentary to wade through so if you have any questions about anything you have read or heard, please get in contact – I’d love to chat to you about this.

 

1 Comment

  1. Take take take take take take take……….. Broke broke broke broke broke broke………. #$@&%! @$#* $#@?@% !!!!!

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