In finance, July is a month for good news. You survived the tax season (hopefully) intact and are ready to tackle 2007/2008. So, now that you have reclaimed sanity and put the Panadol back in the medicine cabinet, let’s go through the tax cuts and changes to super that will be phased in for 2007/2008 and 2008/2009.
Individuals will be keeping more of their earnings as a result of this year’s Federal Budget’s raised income thresholds and income tax cuts. The 30% threshold will increase from $25,001 to $30,001. From 1 July 2008, the 40% threshold will also bump up from $75,001 to $80,001, and the top marginal rate (45%) threshold will shift from $150,001 to $180,001.
Businesses will also see changed thresholds and those with a turnover of less than $75,000 will no longer be required to register for GST, and the GST registration threshold for non-profit bodies will increase to $150,000. Moreover, the eligibility criteria for a variety of small business concessions covering GST, CGT, the Simplified Tax System, PBT and PAYG will be streamlined so they all apply to businesses with a turnover of less than $2 million. New PAYG withholding tax tables were sent to businesses in the last weeks of June. From July 2008, some employers will be able to remit PAYG on an annual basis.
For some small taxpayers making mixed supplies, there will be increased discretion by the ATO to allow more simplified accounting methodologies in completing Business Activity Statements. ‘Eligible termination payments’ will change to ‘employment termination payments’ and generally can no longer be rolled over into super funds – other new rules will also apply. Reasonable benefit limits (RBLs) will be abolished, meaning businesses will not have to report payments made after 30 June 2007, for RBL purposes. Finally, purchases by businesses of less than $75 will no longer require an approved tax invoice to claim an input tax credit.
Some of the most important changes for businesses to take note of are those to superannuation. Employers must declare tax file numbers for all employees to the superannuation fund. Eligible termination payments will no longer be able to be rolled into super. All contributions made to super will be subject to a cap, and contributions made in excess of the cap will be taxed at 31.5%. Payment of benefits as a lump sum or pension will be tax-free for the over 60’s. The self employed can claim a full tax deduction for before-tax super contributions. For more information on changes to super, check out www.ato.gov.au/super.
Jan Wrack is a MYOB certified consultant with Millbrook Accounting Software Solutions. Information provided is a guide only, and should not be relied on as a substitute for seeking professional advice relevant to your circumstances.
