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2012 Tax Changes - The loss carry back

Saturday, July 28, 2012

The loss carry-back

The loss carry-back scheme is one of the most anticipated tax changes by SMEs – one of few.

At the moment, businesses can only carry losses forward to offset future income and profits. They can’t carry their current loss back and offset it against past profits.

But under the new scheme, businesses will be able to claim losses of up to $1 million against tax paid in the past two years.

To be eligible, a business needs to have made a profit and then a loss from July 1, 2012. So while that provides some relief for SMEs, it doesn’t mean anything for businesses that have made a loss in the past few years.

Of course, there are a few caveats – businesses structured as partnerships, sole traders and trusts are ineligible.

2012 Tax Changes - Entrepreneurs tax offset

Saturday, July 28, 2012

Entrepreneurs’ tax offset

Last year, the government announced the entrepreneurs’ tax offset would be scrapped in order to help fund the $5,000 deduction for any vehicle purchase – that will take effect from next month.

The offset provided businesses an offset equal to 25% of the income tax payable on business income. While the move is a disappointing one for small business, it was only available for entrepreneurs earning less than $75,000 a year.

On the upside, businesses will now be able to access an immediate $5,000 deduction for all vehicle purchases from next month.

2012 Tax Changes - Termination Payment

Saturday, July 28, 2012

Changes to employee termination payments

There will be a few changes made to employment termination payments next month. From July 1, the offset is limited so it only applies where it takes up the person’s total annual taxable income to no more than $180,000.

Any amount above this will be taxed at marginal rates. Any existing arrangements will remain in place for genuine redundancies, or for compensation due to death or an employment-related dispute.

2012 Tax Changes - R&D Scheme

Saturday, July 28, 2012

Research and development tax scheme

From July 1, businesses will be able to register for and claim the new research and development tax incentive. The incentive has two key components.

Firstly, a 45% refundable tax offset for research and development entities with turnover less than $20 million per year, and secondly, a 40% non-refundable tax offset for any other companies with turnover above that amount. Unused offset amounts may be carried forward in some circumstances.

If a business has a standard income year starting from July 2011, you can start to register and claim the incentive from next month.

But to do so, you need to first establish that you’re an eligible entity, that you meet the requirements of the R&D incentive and that you’ve registered your R&D activities with AusIndustry.

You’ll need to justify your R&D activity under the new incentive, and you’ll need to identify which activities are “core”, or “supporting” activities. You can check out the definition of both of those here, but essentially, core activity is an activity whose outcome cannot be known or determined in advance on the basis of current knowledge.

The business records you keep must be sufficient to verify the amount of money you spend on R&D, and you’ll need to satisfy a few tests as well.

In short, there’s a lot to get in order. To get all the details about how you can access the R&D incentive, you should head over to the AusIndustry site here, which will give you all the details.

2012 Tax Changes - Private Health Rebate

Saturday, July 28, 2012

Changes to the private health rebate

The government will start testing the private health insurance rebate and the Medicare levy surcharge against income, in three different thresholds. High income earners will receive less of the private health insurance rebate, and the surcharge may increase.

The thresholds are a bit complex, but here’s the table straight from the ATO.

2012 Tax Changes - Instant Tax Write Off

Saturday, July 28, 2012

Instant asset write-off

Perhaps the instant write-off for assets under $6,500 is the biggest assistance businesses will receive for the carbon tax.

From July this year, any SME with under $2 million in turnover will be able to write off any asset worth less than $6,500 immediately. Right now, the threshold is just $1,500.

2012 Tax Changes - Carbon Tax

Saturday, July 28, 2012

Carbon tax assistance – individuals

This is a huge area of tax change, so we’ll break it down into two categories – individuals, and then businesses.

Most of the assistance is taken care of with the adjusted tax brackets, and they’ll mostly help lower-income earners. But there will be some changes to the way pensions and the Family Tax benefits are handed out.

For instance, pensioner payments have already started arriving, equating to $250 for singles and $380 for couples. After July, pensioners will start receiving supplements worth a 1.7% increase in the maximum pension rate.

Family Tax Benefit A recipients will receive up to $110 extra per child, while those receiving Family Tax Benefit B will get up to $59. Single parents will receive up to $234, as well.

2012 Tax Changes - new Tax Brackets

Saturday, July 28, 2012

Brand new tax brackets – including carbon tax assistance

As part of the government’s introduction of the carbon tax, there’ll be some dramatic changes to the income tax rates – including the adjustment of the tax-free threshold to $18,200 from the current level of $6,000. That means you’ll be able to earn up to $20,542 before any tax is payable at all.

These changes are crucial for employers. Next year, your staff will have less tax withheld from their paychecks, so you’ll need to make the necessary changes to ensure they’re being paid correctly.

Here are the tax brackets for the 2011-12 year, followed by the new tax brackets, which will take effect from the 2012-13 year.


  • $0 - $6,000 = Nil
  • $6,001 - $37,000 = 15c for every $1 over $6,000
  • $37,001 - $80,000 = $4,650 plus 30c for every $1 over $37,000
  • $80,001 - $180,000 = $17,550 plus 37c for every $1 over $80,000
  • $180,001 and over = $54,550 plus 45c for every $1 over $180,000


  • $0 - $18,201 = Nil
  • $18,201 - $37,000 = 19c for each $1 over $18,200
  • $37,001 - $80,000 = $3,572 plus 32.5c for every $1 over $37,000
  • $80,001 - $180,000 = $17,547 plus 37c for every $1 over $80,000
  • $180,001 and over = $54,547 plus 45c for each $1 over $180,000

At the same time, the maximum value of the low-income tax offset reduces from $1,500 to $445, and after that, will be reduced by 1.5 cents in every dollar over $37,000. Previously, that number was at $30,000. From 2015, that figure will be reduced to just $300.

The pensioner tax offset will merge with the new senior Australians tax offset. Meanwhile, there have also been some changes to the Medicare levy and Medicare levy surcharge thresholds.

From July 1, the Medicare levy surcharge thresholds will be changed, while the low-income thresholds will be changed as well. The full details of those changes are available on the Australian Tax Office’s website here.

2012 Tax Changes you need to know about

Saturday, July 28, 2012

The end of the flood levy

You may remember the huge debate last year over the Federal Government’s flood levy, which was introduced to help the Commonwealth pay for the damages caused by the Queensland floods. From July 2012, the levy will no longer apply.

2012 Tax Changes you need to know about

Saturday, July 28, 2012

The end of the flood levy

You may remember the huge debate last year over the Federal Government’s flood levy, which was introduced to help the Commonwealth pay for the damages caused by the Queensland floods. From July 2012, the levy will no longer apply.

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