Budget Alert 2010

50% tax savings discount
From 1 July 2011, the Government will provide a 50% tax discount on up to $1,000 of interest earned by individuals (including interest  income earned indirectly via a trust or managed investment scheme).

Standard deduction for work-related expenses
Individual taxpayers will get a standard deduction of $500 for work-related expenses and the cost of managing tax affairs from 1 July 2012 (increasing to $1,000 from 1 July 2013).

Personal tax rates
No change to already legislated cuts to the individual tax rates for 2010-11.

Medicare levy low-income thresholds
From 1 July 2009, increased for singles to $18,488 ($31,196 for members of a family).

Medical expenses rebate threshold
Will increase from $1,500 to $2,000 from 1 July 2010.

“Earn-out” arrangements
All payments under a qualifying “earn-out” arrangement will be treated as relating to the underlying business asset.

Consolidated groups
Rules relating to the calculation and collection of income tax liabilities from consolidated groups and MEC groups to be amended to allow an entity in a tax sharing agreement to leave a consolidated group or MEC group clear of any future income tax liabilities relating to the group.

Reforms to the GST financial supply provisions
The Government will amend the provisions to clarify the operation of the legislation and reduce compliance and administrative costs.

Reforms to the margin scheme
The Government has proposed to restructure the margin scheme provisions to give prominence to the main principles with exceptions set out separately and insert objects clauses for the key provisions so that the intention is clear.

Increase in funding for ATO
The Tax Office will receive $337.5m over 4 years to fund additional activities that will promote voluntary GST compliance and will provide a level playing field for Australian businesses. The funding will also assist the Tax Office in addressing issues relating to fraudulent GST refunds, systematic under-reporting of GST liabilities, non-lodgment of GST returns and non-payment of GST debts.

Capital protected borrowings
Benchmark interest rate to be adjusted for capital protected borrowings entered into from 7:30 pm (AEST) 13 May 2008.

Cash economy
Increased Tax Office funding to address small business operators who use cash transactions to avoid tax.

CGT rollover for Indigenous incorporated bodies
CGT rollover provisions to be extended to allow Indigenous incorporated bodies to convert to a company under the Corporations (Aboriginal and Torres Strait Islander) Act 2006.

Super co-contributions
Government to permanently set the matching rate for the superannuation co-contribution at 100% and freeze the eligibility income thresholds for 2010-11 and 2011-12.

Terminal medical condition benefits
Range of benefits that are deductible by complying superannuation funds to be extended to include terminal medical condition (TMC) benefits.

Family Tax Benefit (FTB)
Various amendments proposed.

Child Care Rebate
Annual Child Care Rebate to be capped.

This 2010 Budget Alert was compiled by Perks' Tax Consulting Specialists. For more information on these articles, contact Brian Nimmo or Neil Oakes.

To view the
Budget 2010 Overview 
click here 

Adelaide
247 Fullarton Road
Eastwood SA 5063
T: (08) 8273 9300
F: (08) 8274 1466
Web: perks.com.au

Victor Harbor
163 Hindmarsh Road
Victor Harbor SA 5211
T: (08) 8552 3711
F: (08) 8552 3771

Darwin
59 Smith Street
Darwin NT 0800
T: (08) 8941 8600
F: (08) 8941 9600

Alice Springs
73 Hartley Street
Alice Springs NT 0870
T: (08) 8953 4400
F: (08) 8953 4599