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Changes for the 2013 year

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PLEASE BE AWARE

There has been a lot of promotion and misunderstanding about the tax free threshold being lifted from $6,000 to $18,000. For the year ending 2012, the effective tax free threshold was $16,000 for lower income earners due to application of the low income offset.

Even though the tax free threshold has increased to $18,000 for the 2013 year, there seems to have been an oversight by the Government to mention the “howevers”. Most of the perceived tax advantages have been clawed back through the reduction of the low income offset, and the raising of the marginal tax rates from 15c to 19c for incomes between $18,000 and $37,000 and then from 30% to 32.5% for incomes from $37,001 to $80,000.

Salary and Wage Earners

Many of those lovely tax offsets that helped to reduce the amount of tax you had to pay have been abolished.

They are as follows:

  • Dependent Spouse Offset – Abolished for any spouses born on orafter 1 July 1952
  • Education Tax Offset – Abolished and replaced with Schoolkids bonus through Centrelink
  • Mature Age worker offset – Being phased out and only applies to taxpayers born on or before 1/7/1957
  • Medical offset – Effectively abolished for singles earning in excess of $84,000 and couples/families in excess of $168,000 adjusted taxable income.
  • Low income offset – Reduced from $1500 to $445.

Small Business

  • Superannuation– For employers, note that the 9% super has increased to 9.25%, starting from 1 July 2013.
  • Entrepreneurs tax offset – Abolished. This reduced tax by 25% for businesses with turnover < $75,000.

New Depreciation Rules

These amendments only apply to you if you are a small business that has an aggregated turnover of less than $2 million. Your aggregated turnover includes the annual turnover of your small business and the annual turnovers of any connected or affiliated businesses.

From the 2012-13 income year:

  1. The small business instant asset write-off threshold has increased from $1,000 to $6,500.
  2. Small businesses can claim an accelerated initial deduction for motor vehicles acquired in 2012-13 and subsequent years of $5,000.
  3. The long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.
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