Tax changes: will you benefit? The Australian Federal Budget 2007
Tax cuts and simpler tax returns were the changes highlighted following the recent Federal budget with the average family set to save around $16 per week. Treasurer Peter Costello claimed all Australian taxpayers will share in tax cuts worth $31.5 billion over the next four years although the press called it an election stunt and hounded him for pulling money from essential social services such as health, education and environment.
Interestingly, taxpayers will soon be able to go onto the Web to examine a preliminary income tax return prepared by the ATO. If they agree with the figures, there’s no need to do anything else. (Now that is a simple tax return!). Other changes are outlined below.
Changes apply to the following groups and areas
- Extremely low income earners. From July 2007, the 30 percent threshold will be raised from $25,000 to $30,000, while the low income tax offset will be increased from $600 to $750, with the effective tax-free threshold being increased to $11,000
- Higher end earners. From July 2008 the 40 percent threshold will be raised from $75,000 to $80,000.
- Senior Australian tax offset. Those eligible will pay no tax on income up to $25, 867 for singles and $43, 360 for couples.
- Dependent spouses. This goes up to $2,100 from $1,655.
- Medicare levy low-income. The threshold is increased to $16,740 for individuals and $28, 247 for families.
- Apprentices. From July, apprentices under 30 years old will receive a tax-free bonus payment of $1000 per annum.
- Child care assistance. The rates from July will increase by 10 percent on top of indexation.
- Superannuation co-contributions. This will be doubled for contributions made in 2005-06.
- Senior bonus. A one-off payment of $500 will be made to those eligible for the Seniors Concession Allowance.
- Carer bonuses. A one-off payment of $500 for those eligible for the utilities allowance and a $600 bonus for those receiving the carer allowance.
- Veterans. The Special Rate Disability Pension will be increased by $50 from July, the Intermediate Rate Pension by $25.
- Small Businesses. Small businesses will no longer be required to register for GST if the annual turnover is less than $75,000.
- Non-profit organisations. If annual turnover is less than $150,000 non-profit organisations will no longer be required to register for GST.
Other major changes outlined in the Budget include ostensibly green-friendly schemes such as carbon sink forest bonuses, removal of the cap on the same business test, changes to research and development taxation, the establishment of a Higher Education Endowment Fund and increasing money available for transport infrastructure.
Spare money and co-contributions
If you’ve found yourself better off, it might be worth looking into superannuation co-contribution schemes, investments in high-interest accounts, shares or property. The incentive of a Government payment of up to $1,500 for lower income employees who make personal contributions to their own superannuation fund has been around since 2003. Depending on your income, the Government pays up to $1.50 for every $1 contributed. This year’s budget announced a one-off double payment of the co-contributions paid for the 2005/2006 financial year. This basically means lower income earners can get up to $3000 put into their super by the Government if they make a personal payment of $1000 in that year.