With the election date set for 14 September 2013, we can expect promises from both parties. The topic of immediate concern will be the 2013 Budget in May.
In last year’s Budget, the Government was optimistic about returning the budget into a surplus on time and spreading the wealth of the mining boom.
This has not been the case with the resource tax that was introduced only raising $126 million - well short of Government calculations of $2 billion in revenue.
We eagerly anticipate the Budget in May of this year and will comment on the outcomes as soon as they become available.
What's New in the World of Tax for 2013?
In general part IVA is an anti-avoidance provision aimed mainly at obtaining a Tax benefit through a scheme and the main purpose of that scheme is for a tax benefit.
Commercial transactions to obtain a tax benefit are not considered Part IVA.
Therefore, the operation of Part IVA should only be applicable in circumstances where the taxpayer has acted in a blatant, artificial or contrived manner in order to pay less tax than otherwise.
There have been court actions in recent times and hence the Government is proposing to make amendments to Part IVA which will cause some confusion over how it now applies. We will keep you updated as and when they’re available.
Division 7A is an integrity measure aimed at preventing private companies from making tax-free distributions of profits to shareholders (or their associates).
In particular, advances, loans and other payments or credits to shareholders (or their associates) are, unless they come within specified exclusions, treated as assessable dividends to the extent that the private company has a distributable surplus.
The various taxation bodies have placed their submissions for comment to Government. As more information becomes available I will draw your attention the changes.
R&D tax incentive
The Government announced a $1 billion investment to boost Australian innovation, productivity and competitiveness and is aimed at generating business opportunities and economic growth for the future.
The Key-tax measures are:
- Large businesses with annual Australian turnover of $20 billion or more will no longer be eligible for the R&D Tax Incentive from 1 July 2013, but will be eligible to claim their R&D expenditure as a general deduction.
- A new $350 million round of the Innovation Investment Fund to stimulate private investment in innovative Australian start-up companies.
Means testing the net medical expenses tax offset – draft legislation released
The government is proposing the net medical expenses tax offset to be means tested. It is yet to be released as to what that income level will be, but it is likely to be in line with current thresholds that apply to Medicare Levy surcharge.
Currently the offset is not means tested and a taxpayer may obtain a tax offset on out of pocket expenses greater than $2,000.
For taxpayers with adjusted taxable income above the Medicare levy surcharge thresholds, the amount above which a taxpayer may claim the NMETO will be increased to $5,000 (indexed annually thereafter).
The rate of offset will be reduced to 10% of eligible out of-pocket expenses incurred above the $5,000 claim amount. People with income below the income thresholds will be unaffected by this change.
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