2011 Budget Impact

How will the 2011 Federal Budget affect you? This is a brief summary of the impact to families (and clients).

There were not to many surprises in the Budget this year, which is probably a good thing as I would have needed a few more coffees to handle it. The two major areas I look at in my summary are tax and super, but there are heaps of other things impacted as well, just nothing substantial.

Social Security highlights

• Paid Paternity Leave – delayed by 6 months, starts in January 2013.
• FTB part A – increasing for kids 16-19 years of age.
• FTB part A advance – you can now get an advance of up to $1,000 on your payments.

Taxation highlights

• Low Income Tax Offset (LITO) catch for unearned income to minors – if you income split to kids, the LITO wont apply to that income = higher tax payable!
• FBT changes for cars – if you salary package a car and drive heaps you will be up for more tax, if you drive less than 15,000 kms per year, you’ll pay less.
• Small Business vehicle write-off – claim $5,000 upfront deduction for a new business vehicle
• Dependant Spouse Offset – the tax deduction for a non-working spouse under 40 is being phased out
• HECS lump sum rates changing – previously the Government took a bonus 20% off your HECS bill for any lumps sums over $500, this is reduced to 10% (still you will pay less in the long run)
• Not-for-profit tax concessions – doesn’t apply to many, I am wondering about many Churches on this one, non-altruistic purpose activities no longer apply for tax concessions. Does this mean any Church owned property will now be subject to CGT? I’m yet to get clarification on this one.

Superannuation highlights (including SMSFs)

• $10,000 excess contributions “undo” button – some leeway for people who go over their caps instead of a huge tax bill.
• $50,000 concessional contribution limit for over 50s – this has been in “phase-out” mode, but the Government finally decided people need to be able to put more money into super as they approach retirement, only if you have less than $500,000 already.
• Pension minimums increasing – the discounted limits (50% of normal) are moving up to 75% of normal for next financial year, and SMSFs need to carefully check they make their required payments.
• SMSF Levy – increasing to $180 up from $150 (this is a pretty new levy anyway).
• SMSF minor members with corporate trustee – your kids (<18yo) can be a member of your SMSF, and you can have a corporate trustee with you as director, old rule of thumb was no corporate trustee available.