Private Health Insurance Rebate Means Test

A reminder that from 1 July 2012 the private health insurance rebate will be means tested as per the table below. One strategy to consider is to prepay your annual private health insurance premium before the 30 June 2012 to gain an additional year at the current rebate level.

Private Health Insurance Rebate Means Test: Individuals

Private Health Insurance Rebate Means Test: Families

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Hire Purchase Agreements

New rules planned for Hire Purchase Agreements Small businesses registered for GST can currently claim GST credits on the finance of assets for business purposes in the following situations:

  1. If you purchase the asset through a Chattel Mortgage, you can claim the whole of your GST credits at the time of the first payment, whether your business reports on a cash or accrual method for GST purposes.
  2. If you lease the asset, you cannot claim GST credits on the leased asset, but you can claim the GST included in each lease payment at the time of making each lease payment;
  3. If you purchase the asset through a Hire Purchase agreement, you can claim the principal component of your repayments (excluding interest):
  • If you use Cash Basis reporting, you claim back GST credits over the life of the agreement, on each
  • If you use Accruals Basis reporting (i.e. non-cash basis), you claim back the whole of your GST credits in the reporting period for the first payment.
  • This has meant that small businesses using Cash Basis reporting are disadvantaged compared to those using Accruals Basis reporting. New rules are planned from 1 July 2012 for new Hire Purchase Agreements entered into from 1 July 2012. From that date you will be able to claim the whole of the GST credits at the time of the first payment, whether you use Cash Basis or Accruals Basis reporting.
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Budget Changes in 2012

Budget Changes Affect Small Businesses
The recent budget handed down by the Government included several changes that will affect small businesses. Each change is outlined below.

Changes to the Medical Expenses Tax Offset
Currently, the medical expenses tax offset (NMETO) is available where net medical expenses exceed $2,060 for the 2011–12 income year. From 1 July 2012, for singles with an adjusted taxable income of more than $84,000, and for couple or families with an adjusted taxable income of more than $168,000, the net medical expenses tax offset reduces from 20 per cent to 10 per cent of net medical expenses over $5,000.

Company Loss Carry-Back
The Government will allow companies to carry-back tax losses of up to $1 million to receive a refund against tax previously paid. A one year loss carry-back will apply in 2012/13, where tax losses incurred in that year can be carried back and offset against tax paid in 2011/12. For 2013/14 and later years, tax losses can be carried back and offset against tax paid up to two years earlier. It will apply to their revenue losses only and will be subject to integrity rules, and limited to a company’s franking
account balance.

Company Tax Rate Reductions will not to Proceed
The Government will not proceed with the measure to lower the company tax rate to 29 per cent for small business from the 2012–13 income year, and companies generally from the 2013–14 income year. Superannuation Contributions Tax for High Income Earners Superannuation contributions tax for high income earners Individuals whose adjusted taxable income (ATI) is more than $300,000 will have their concessional contributions taxed in the fund at 30 per cent. Individuals whose ATI is $300,000 or less
will continue to have their concessional contributions taxed in the fund at 15 per cent.

Those individuals whose ATI exceeds $300,000 solely because of the inclusion of concessional superannuation contributions in the calculation of their ATI will have their contributions taxed at the rate of 30 per cent only on the amount that has caused the ATI to exceed $300,000. Concessional Contributions Cap for those Aged 50 and Over For the next two years commencing on 1 July 2012 the
concessional cap will be $25,000 irrespective of a person’s age.

Those individuals salary sacrificing superannuation should review their salary sacrifice agreement to ensure that they do not exceed their concessional caps for the year commencing 1 July 2012.

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Time Saving Strategies

Trying to juggle too many things at once? Never seem to get any task finished? Multitasking might be the problem.

Try timing yourself as you write the numbers 1-26 and letters a-z down, but write one number then one letter – 1 a 2 b 3 c… Once that is done, time yourself writing the numbers 1–26 and letters a-z. How much faster were you when you focused on one task at a time?

When running a business it is hard to avoid interruptions but try these easy ideas:

  • Turn off your email message notification and instead check your emails once an hour.
  • Set aside time each day to return calls. That could be 30 minutes before lunch and another 30 minutes inthe afternoon.
  • Take breaks – get out of the office at least twice a day  – go for a walk to clear your head. It may take five minutes.  The break will de-stress you and make you  more focused.
  • Eat lunch away from your desk. Use your lunch break as an opportunity to interact with staff in the lunch room.
  • Close your office door and ask for no interruptions if  you are working on a difficult task
  • Try to handle each piece of paper only once.

Taking these suggestions will save you time and help bring order to your day.

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2011-2012 Budget Summary

The Government announced a number of measures in the 2011-2012 budget that will impact SMEs and their employees. An outline of these is provided below. It is, however, important to note they have not yet been passed into law and are subject to change.

Minimum pensions
During the global financial crisis the government reduced the minimum pension required to be drawn down for account-based, allocated and market linked pensions. This relief will be reduced by 25 per cent for 2011-12 and phased out in 2012-13.

Low income tax offset for minors
From 1 July 2011 minors receiving non-work income, such as dividends, interest or family trust distributions, will not be entitled to the low income tax offset. This will reduce their tax free threshold to $416.

Accelerated depreciation for small business enterprises
Any motor vehicle purchased from 2012-13 will be eligible for an instant tax write-off for the first $5,000 of its purchase price. The remainder of the purchase value is then depreciated. Depreciating assets acquired from 2013, valued under $5,000 will be able to be written off immediately.

Log books may help reduce FBT
The 2011 Federal budget also announced changes to the calculation of FBT on motor vehicles. The FBT payable will increase if an employer provided car travels over 25,000 kilometres in the FBT year. The table included here provides a concise breakdown of the current and proposed FBT rates based on kilometres travelled.

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Super Co-Contributions & Concessional Contributions

With the 2011 end of financial year just about wrapped up, we would like to inform you about your super co-contribution and concessional contributions for which you may be eligible.

Super Co-contribution
You could be eligible to receive up to $1,000 from the government just by adding some extra money to your superannuation.You can also reduce your tax payable by making concessional contributions to your superannuation fund.

Is there a deadline?
YES, you must make your contribution by 30th June 2011 in order to receive the 2011 co-contribution.

What is a concessional contribution?
Concessional contributions are paid to a super fund before tax is taken out of your wage.

For Example:

  • The mandatory 9% superannuation paid by your employer
  • Any extra money that you pay directly to the super fund
  • Any money you pay to the fund and get a tax deduction for if you are self employed

What is the concessional contributions cap?
Contributions made by you up to the following amounts will only be taxed in the super fund at 15%. You must be careful not to exceed the annual cap as the excess amount will be taxed at a high rate.

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