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.
Reminder
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.