The new financial year brought many new tax changes

The following tax changes commenced on 1 July, 2014. Below is an outline of the major tax changes that could affect you.

The 2% Budget deficit levy now applies to people with incomes of over $180,000. The levy works by applying a rate of 2% on part of their taxable income that is in excess of $180,000 per annum. The levy is only active for a certain period of time though, from 1 July 2014 to 30 June 2017.

The top marginal tax rate is now 49% and the FTB rate is 49% from 1 April 2015. Other rates have also been affected including Family Trust Distribution (Primary Liability), TFN Withholding Tax (ESS), Superannuation Excess Non-Concessional Contributions Tax and more.

Other changes include the Medicare levy rising from 1.5% to 2% and compulsory employer-paid super rising from 9.25% to 9.5%. You will be provided with a tax receipt with this year’s return showing where your taxes are paid to.

Another change is that the dependant offset has been abolished. The Government plans to abolish almost all of the dependant tax offsets though this has not been legislated at this stage.

PAYG instalment threshold changes have commence. From now on, the business or investment income threshold will increase from $2,000 to $4,000 or more of the gross income reported on their most recent tax return.

The balance of assessment threshold is also increasing, from $500 to $1,000, while the notional tax threshold will increase from $250 to $500.

Superannuation caps have change too; general concession cap increased from $25,000 to $30,000, non-concessional cap increased from $150,000 to $180,000 and the 3 year bring forward goes up to $540,000.

Bank details on tax returns completed in ELS and e-tax are now required to include Australian Financial Institution Account details where a refund is estimated. The requirement extends to the following electronic lodgements: FBT return, company income tax return, trust income tax return, SMSF annual return, superannuation fund income tax return.

The ATO has also been given new powers to issue administrative penalties for breaches by SMSF trustees. A trustee may be liable to an administrative penalty for specified contraventions e.g. failure to prepare accounts, providing financial assistance to fund members or relatives, failing to keep minutes, etc.

Other things to note include; job commitment bonus will be exempt from income tax and the Child Care rebate stays at $7,500 for the next three years.

The net medical expenses tax offset is being phased out. To be eligible for it this year, you need to have received the offset in your 2012-2013 income tax assessment. To claim it in this next financial year, you need to have received it in the 2013-2014 financial year. 2014-2015 is the final year you can claim it. This change does not apply to you if you have medical expenses relating to disability care, attendant care and aged care who claim these expenses until 30 June, 2019.

If you would like further information on any of these changes, or would like to chat about how they affect you. Please click here to email us or call 07 5575 1344. You can also visit the ATO website for more information.

TaxGrace MackayTax