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May 2012 Federal Budget Update

Basics

  • Budget surplus of $1.5 billion as promised, turnaround from $44 billion deficit in 2011/12
  • Asian led recovery due to strong growth on Australia’s doorstep
  • Families not companies to benefit from the mining boom through the Minerals Resource Rent Tax. Four years of surpluses to give the RBA room to cut interest rates

Families

School Kids Bonus to replace Education Tax Refund

  • Rate increases to Family Tax Benefit Part A

Summary

The key new announcements include:

  • tax may increase on certain employment termination payments
  • the reduction in the company tax rate isn’t going ahead
  • the increase in the concessional contribution cap for people aged 50 or over with less than $400,000 in super will be postponed until 1 July 2014
  • the tax payable on concessional super contributions by people earning $300,000 p.a. or more will increase from 15% to 30%
  •  ‘School Kids Bonus’ of $820 a year for each child at high school and $410 for every child in primary school will automatically be paid to parents who are eligible for Family Tax Benefit Part A, replacing the Education Tax Refund

 The Government has also confirmed that:

  • people earning under $80,000 p.a. will receive modest tax cuts
  • the minimum income payments for a superannuation pension/income stream won’t increase until 1 July, 2013
  • funding will go ahead for the landmark changes to Australia’s Aged Care System announced recently

Businesses

  • Company Loss Carry Back
  • No reduction to Company Tax

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Taxation Changes

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Superannuation

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Discarded Measures

Previously announced measure no longer proceeding:
–  company tax cuts
–  interest income discount
–  work-related expenses

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For further information please do not hesitate to contact us

The information contained is current as at 9 May 2012. Any advice in this Federal Budget Analysis has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs.