2015 Budget — Personal taxation
The 2015 Australian Government budget contains no significant changes to personal taxation but there are changes to existing tax measures affecting the Medicare Levy low-income threshold and family tax benefits.
Increasing The Medicare Levy Low-income Thresholds —
The Government will increase the Medicare levy low-income thresholds for singles, families and single seniors and pensioners from the 2014-15 income year, to take account of movements in the Consumer Price Index so that low-income taxpayers generally continue to be exempted from paying the Medicare levy. The threshold for singles will be increased to $20,896. For couples with no children, the threshold will be increased to $35,261 and the additional amount of threshold for each dependent child or student will be increased to $3,238. For single seniors and pensioners, the threshold will be increased to $33,044.
This measure is estimated to have a cost to revenue of $231.0 million over the forward estimates period.
Tax Benefit Part A: Cessation of the Large Family Supplement of Family —
The Government will achieve savings of $177.3 million over four years from the cessation of the additional Family Tax Benefit (FTB) Part A Large Family Supplement from 1 July 2016. Families will continue to receive a per child rate of FTB Part A for each eligible child in their family.
The savings from this measure will be redirected by the Government to repair the Budget and fund policy priorities.
Tax Benefit Part A: Reduced Portability —
The Government will achieve savings of $42.1 million over five years by reducing the amount of time Family Tax Benefit (FTB) Part A will be paid to recipients who are outside Australia. From 1 January 2016, families will only be able to receive FTB Part A for six weeks in a 12 month period while they are overseas. Currently, FTB Part A recipients who are overseas are able to receive their usual rate of payment for six weeks and then the base rate for a further 50 weeks. Portability extension and exception provisions which allow longer portability under special circumstances will continue to apply.
Savings for this measure have already been provided for by the Government.
Means Testing Arrangements For Youth Payments —
The Government will provide $262.7 million over five years to amend parental income testing arrangements to provide more support for families with dependent young people who qualify for certain income support payments, including Youth Allowance, ABSTUDY Living allowance (ABSTUDY), and the Assistance for Isolated Children Scheme. From 1 January 2016, families with dependent children receiving income support payments would be subject to the Parental Income Test arrangements currently in place for Family Tax Benefit (FTB) Part A and will no longer be subject to the Family Assets Test or Family Actual Means Test. The removal of these two tests will result in a more consistent level of support for families, as young people move from FTB Part A to an individual income support payment.
In addition, from 1 July 2016, where a family has a dependent child who receives an individual income support payment and younger siblings who qualify the family to receive FTB Part A, a single Parental Income Test will be applied taking into account all income support benefits the family receive. This will result in a lower rate of reduction to the dependent child’s individual payment than is currently the case where separate Parental Income Tests are applied to each payment.
Employee Share Schemes Tax Treatment —
Consultations on draft legislation to implement changes to the taxation of the employee share schemes announced in the Mid-Year Economic and Fiscal Outlook 2014-15 (MYEFO) identified some minor technical changes that could be made to the legislation. This measure addresses these issues by:
||Excluding eligible venture capital investments from the aggregated turnover test and grouping rules (for the start-up concession);
||Providing the capital gains tax discount to employee share scheme interests that are subject to the start-up concession, where options are converted into shares and the resulting shares are sold within 12 months of exercise; and
||Allowing the Commissioner of Taxation to exercise discretion in relation to the minimum three-year holding period where there are circumstances outside the employee’s control that make it impossible for them to meet this criterion.
A number of other amendments accompany these changes to make employee share schemes more accessible for Australian businesses and their employees.
These changes will take effect with the remainder of the enabling legislation from 1 July 2015 and are estimated to have a small but unquantifiable cost to revenue over the forward estimates period.
This update was issued on 13 May 2015 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change tax compliance obligations. It is recommended that expert advice be sought before taking action based upon the information presented here.
Member Engagement —
ADIA provides leadership, strategy, advocacy and support. Our members set our agenda, fund our activities and directly benefit from the results. With respect to the Association's work to ensure that the initiatives within the 2015 Australian Government budget support the dental industry, the team in the ADIA national office receive advice and guidance from members serving on the ADIA-BAC Business Affairs Committee.
Further Information —
To keep up to date with how ADIA is working to ensure that the Australian Government budget supports the dental industry, subscribe to the Twitter feed @AusDental or follow us on Facebook at www.facebook.com/dental.industry. Alternatively, you can contact the Association via email at firstname.lastname@example.org or by telephone on 1300 943 094.
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