There are a number of key changes this year that may affect your tax either this year or in the future. These are the main changes that you need to be aware of come tax time:
1. Private health insurance rebate changes
This year, there have been changes to the way the private health insurance rebate is calculated and applied to premiums. The two main changes are in the form of rebate adjustments and lifetime health cover loading. From 1 April 2014, rebate percentages are adjusted annually by a rebate adjustment factor. This adjustment factor averages the increase in the consumer price index and the premium price increase from insurers. The adjusted rebate percentages are applied to premiums paid on or after 1 April. In terms of the lifetime health cover loading, from 1 July 2013, the rebate will also be calculated on the premium minus any Lifetime Health Cover (LHC) loading. This loading is a penalty that applies to individuals who have not taken out and maintained private health insurance from the year they turned 31. The private health insurance rebate may be calculated on an amount which is less than the total cost of the policy, reducing the amount of rebate you are eligible to receive.
2. Net medical expenses tax offset phase-out
The net medical expenses tax offset is being phased out from 1 July 2013. To be eligible this year, you must have received the offset in your 2012-13 income tax assessment. Also, if you received the tax offset in your 2013-14 income tax assessment, you will continue to be eligible for the offset in 2014-15. Please note: this does not apply to those with out-of-pocket medical expenses relating to disability aids, attendant care and aged care.
3. Temporary Budget Repair Levy
From 1 July 2014, those earning over $180,000 will be taxed an additional 2%, referred to as the Temporary Budget Levy. This levy applies to every dollar earned over $180,000.
4. Abolished tax offsets
From 1 July 2014, the Dependent Spouse Tax Offset and the Mature Age Worker Tax Offset will both be abolished.
5. Superannuation guarantee increase
From 1 July 2014, the superannuation guarantee will increase from 9.25% to 9.5%. It will then remain at 9.5% until July 2018.
6. Changes to instant asset write offs
From 1 January 2014, instant asset write offs were reduced to $1,000. This is reduced from the $6,500 it was previously set at. The $1,000 instant asset write off applies to individual assets first use or installed ready for use on or after 1 January 2014.
7. Increase in Medicare Levy
From 1 July 2014, the Medicare levy for individual resident taxpayers will increase from 1.5% to 2% of taxable income. The Medicare levy surcharge will remain the same.
8. Changes to age-based concessional superannuation caps
The following concessional superannuation caps apply for the 2014/15 year: those aged 49 and over on 30 June 2014 have a $35,000 contribution cap and those aged 48 and under on 30 June 2014 have a $30,000 contribution cap.
9. Increase in Fringe Benefits Tax (FBT)
A new FBT rate and gross-up rates apply from 1 April 2014 (the start of the FBT year). The 2015 FBT rate is 47%. For gross-up rates, type 1 benefits grossed-up by 2.0802 and type 2 benefits grossed-up by 1.8868. Also, due to the Temporary Budget Repair Levy, the FBT rate will be further increased to 49% from 1 April 2015 until 31 March 2017 to correspond with the FBT year.
10. Fuel tax credits
From 1 July 2014, some fuel tax credit rates are changing. For fuel you acquire for your business, you will claim: different rates because of an increase in carbon charge amounts and more for transport of gaseous fuels. For the exact fuel rates please check out the ATO Fuel Rate Page.
11. Tax receipt
Starting from 1 July 2014, the majority of taxpayers will receive a tax receipt as part of the annual income tax return process in an attempt to make the expenditure system more transparent.
12. SMSF penalties
From July 1 2014, SMSF trustees can receive penalties of up to $10,000 for contravening certain provisions of the Superannuation (Supervision) Act 1993. The ATO can also direct a trustee, or director to take action to correct the contravention or participate in education.
For more information on 2014 tax changes and how any of the above may affect you, please feel free to reach out to the team at Fortis Accounting Partners. You can get in touch via info@exemplary-financial.flywheelsites.com, or by giving us a call on 02 9267 0108.
