Federal Budget Changes

2013-14 FEDERAL BUDGET TAX CHANGES

Personal Taxation

There were some personal tax changes announced in the Federal Budget, see below. United Way Australia was also announced as a deductible gift recipient (“DGR”).

Medical Expense Tax Offset Phased Out

The net medical expense tax offset is to be phased out from 1 July 2013. From that date, taxpayers who claimed the offset in 2012-13 will be eligible for 2013-14 if they have eligible out-of-pocket medical expenses above the $2,120 or $5,000 expense threshold, depending on income. Taxpayers who claim the offset in 2013-14 will be eligible to claim the offset in 2014-15.
Out-of-pocket medical expenses relating to disability aids, attendant care or aged care will continue until 1 July 2019.

Family Medicare Levy Low-Income Threshold Increased

The Medicare levy low-income threshold for families will increase from $32,743 to $33,693 for the 2012-13 income year with effect from 1 July 2012. The additional threshold amounts for each dependent child or student will also increase from $3,007 to $3,094.

Deferral of Tax-Free Threshold Increase

The legislated tax-free threshold increase from $18,200 to $19,400 that was to apply from 1 July 2015 is to be deferred. The increase in the second marginal tax rate from 32.5% to 33%, or that part of taxable income from $37,001 to $80,000, will go ahead from 1 July 2015.

HECS-HELP Discount and Voluntary HELP Repayment Bonus to End

From 1 January 2014, the following discounts relating to the Higher Education Loan Program (HELP) will be removed:
➢ the 10% discount available to students electing to pay their student contribution up-front, and
➢ the 5% bonus on voluntary payments made to the Tax Office of $500 or more.

Previously Announced Changes

The Federal Government confirmed the following previously announced changes:

The Medicare levy would increase from 1.5% to 2% from 1 July 2013 to help fund the proposed National Disability Insurance Scheme; and

The personal self-education deductions cap of $2,000 applying from 1 July 2014 is to proceed. The expenses identified include undertaking courses of study but also include other educational activities such as conferences and workshops and expenses such as tuition fees, text books, professional and trade journals and computer expenses and stationery.

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