Taxation & Investment Highlights

The first Labor budget in 13 years was designed to limit inflation.

New Tax Scales

Effective from 1 July 2008:

Income range $
Tax rate
0 - 6,000
0%
6,001 - 34,000
15%
34,001 - 80,000
30%
80,001 - 180,000
40%
190,001 +
45%

Withholding Tax

paid by foreign residents will be cut from 30% to 7.5% over 4 years on investments in Australia (22.5% for 08/09, 15% in 09/10 and 7.5% in 2010/11). This will stimulate investment from abroad.

Low Income Tax Offset

will be increased from $750 to $1200, from 01/07/08.

Child Care Tax Rebate

will be increased from 30% to 50% and paid quarterly.

Thresholds for Medicare Levy Surcharge

will be lifted to $100,000 for singles and $150,000 for couples.

An Education Tax Refund of 50%

will help defray cost of sending children to primary and secondary schools. From 01/07/08, a max refund of $375 for primary and $750 for secondary will be paid.

The Tax on luxury cars

over $57,123 will increase from 25% to 33%.

Computer software used in-house

now must be depreciated at 25% per annum.

Tax Exempt Fringe Benefits

such as laptops and mobile phones will be limited to items used for work use and will be limited to one item per category per employee per year.

Salary sacrificing of meals

from in-house dining facilities, such as work cafeterias, will be stopped.

The government plans to include salary sacrificed amounts of superannuation

from 1 July 2009 under its definition of income for the purposes of calculating superannuation co-contribution and other tax & welfare calculations, such as FTB, HECS, Child Support, etc.

Family Tax Benefits

will be means tested on income over $150,000 from 01/07/08.
In addition, from 01/07/09, recipients that are more than 12 months behind in Tax Lodgement will have their benefits cut off.

Baby Bonus payments

from 1 Jan 2009 will be subject to means testing on income over $150,000. In addition it will no longer be paid as lump sum, but in instalments.

Tax deductibility of Interest on Capital Protected Loans

for investment purposes will be limited to the rate advised by the Reserve Bank for standard housing loans (14.55% down to 9.35%)

First Home Saver Accounts

From 1 October 2008, first home savers can start a Savings A/C with a government subsidy. The government will contribute 17% of the first $5000. Tax on the interest will be only 15%. Accounts will be limited to $75,000 maximum. The saver must save a minimum of $1000 per year for 4 years.

More information on these initiatives will be released in the coming weeks.
If you require more information, please contact us to discuss your circumstances.

* Please note that the above information is to be used for general educational purposes only and is not advice. Before you take any action you should always check with your accounting, legal and/or financial advisers first.

 

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