Happy New Year
Welcome to the Personal Tax Specialists 2012 Tax Time Update.
Your 2012 tax return
It’s hard to believe that another tax year has passed already and its time to start getting your records together again. We will be emailing your ‘2012 Quick Update Form’ to you early next week to make sure that we have all of your details up to date. On this form you can also indicate which month you would like us to get started on your tax return this year.
Major changes in 2012
This year there have been lots of changes in the tax world. Some that you might need to be aware of are:
1. The education tax refund is gone
In the 2012 budget, the government announced that the education tax refund will be replaced by a Schoolkids bonus. That means that from the 2012 financial year you will NOT be able to claim the education tax refund and you won’t need to keep receipts for educational expenses for your children any more. The new payment will be made by the Department of Human Services, not the ATO.
2. Standard deductions are also gone
Again in the 2012 budget, the government announced that the planned standard deduction of $500 for all taxpayers is not going ahead. This would have meant that some individuals would not have needed to lodge tax returns any more, but the government has decided not to proceed with this idea.
3. Tax-free threshold increase
For some this is good news. The tax-free threshold will increase from $6,000 to $18,200 on the 1st July 2012. That means that we can all earn $18,200 and pay no tax. The bad news is that the tax rates will increase for any income we earn over $18,200. The new tax scales are:
0 – 18,200 = no tax
18,201 – 37,000 = 19% tax
37,001 – 80,000 = 32.5% tax
80,001 – 180,000 = 37% tax
180,001 and over = 45% tax
These rates do not include the Medicare levy.
Your employer should start using these new tax rates from your first pay after 1st July 2012, so make sure you check your pay slips.
4. Superannuation contributions caps
Once again the government has decided to reduce the amount you can contribute to super each year without paying excess contributions tax. This year, no matter how old you are, the maximum tax deductible (or concessional) contributions that can be made into your super fund are $25,000. This limit includes any compulsory superannuation contributions made by your employer or salary sacrificed contributions you make.
If your concessional contributions exceed these limits, you will be required to pay a total of 46.5% tax on the excess contributions. If you think this may apply to you, it may be worth speaking with your financial adviser about possible alternative options.
5. Changes to super guarantee rates
The government has announced that the superannuation guarantee rate will gradually increase from 9% to 12% over the next 7 years. This means that your employer will be required to make additional superannuation contributions to your super fund on your behalf, beginning on 1st July 2013. The full 12% will not be required until 1st July 2019.
6. Changes to the Medical expenses tax offset
From the 1st July 2012, the government has announced that if your adjusted taxable income is more than $84,000 for singles or $168,000 for couples or families, then you will only be allowed to claim the Medical expenses tax offset once you have spent $5,000 on eligible medical expenses. The offset is then calculated at 10% of the eligible expenses above $5,000.
If your income is below these thresholds you will still be able to claim the medical expenses tax offset once your eligible expenses exceed $2,000 and the rate you can claim remains at 20% of the excess expenses.
This year’s audit targets
This year the Tax Office will be paying close attention to tax returns lodged by:
- Information technology managers, and
- Defence force non-commissioned officers,
as well as anyone who has large or unusual tax deductions for their occupation.
So what does this mean for you and your tax return? The most important thing is that if you want to claim for your work expenses, you must have the right records in case the Tax Office wants to check them.
At the very minimum, the records you need to keep for your work expenses are:
- receipts for all work expenses costing $10 or more
- a diary record of any minor work expenses (costing $10 or less and up to a total of $200 for the year) where you haven’t kept the receipt
- a diary record of any work related trips you have made in your personal car
- a diary record of your internet use for work for one month during the year
- a diary record of your telephone use (mobile and home) for work for one month during the year
If you are unsure about what expenses you can claim for in your occupation have a look at the updated ‘what deductions can you claim’ page on our website or organise a time to speak with one of our accountants on the phone or via Skype.
If you know of anyone who might find any of the information in this email useful, please feel free to forward it on to them.
Thanks for your support over the last year and as always, if you have any tax related questions, please just ask. We look forward to catching up with you over the next few months.
The Personal Tax Specialists team