Individuals - Impacts of Federal Budget 2010				Commentary regarding   the impacts of the 2010 Federal Budget
Impacts on Personal Taxation The previously legislated changes to the personal income tax rates and thresholds will remain unchanged. The rates effective from 1 July 2010 are as follows: Current thresholds 2009-10 Tax rate Thresholds in  2010-11 Tax rate   $0 - $6,000   0%   $0 - $6,000   0%   $6,001 - $35,000   15%   $6,001 - $37,000   15%   $35,001 - $80,000   30%   $37,001 - $80,000   30%   $80,001 - $180,000   38%   $80,001 - $180,000   37%   $180,000 +   45%   $180,000 +   45%				Overview Small Business Measures Individuals - Impacts of the Budget  including: Personal Tax Low Income Tax Offset Work-related Expenses Interest Income Medicare Levy and Medical Expenses Rebate Home Saver Account Superannuation GST Compliance Measures
Low Income Tax Offset From 1 July 2010 the low income tax offset will increase from $1,350 to $1,500 effectively increasing the tax-free threshold to $16,000 for some low income and part-time workers. Additionally, the upper limit to which a partial low income tax offset can be claimed will increase from $63,750 to $67,500.
Standard Deduction for Work-related Expenses From 1 July 2012, the Government will provide an optional standard deduction of $500 to cover work related expenses and tax agent fees. This deduction is said to increase to $1,000 from 1 July 2013. Individuals will have the option of listing and claiming actual deductions where their expenses exceed the stated standard deduction figure.
50% Savings Discount for Interest Income  From 1 July 2011, individuals will be eligible for a 50% tax discount on up to $1,000 of interest earned on deposits with authorised deposit taking institutions, bonds, debentures and annuity products. The discount will be available for interest income earned directly as well as indirectly via trusts or managed investment schemes. This discount will reduce many individuals’ adjusted taxable income, which may in turn increase their eligibility for payments and entitlements such as the Family Tax Benefit, Baby Bonus and the Commonwealth Seniors Health Card.
Medicare Levy and Medical Expenses Rebate Threshold Raised  From 1 July 2010, the medical expenses threshold, above which an individual can claim the net medical expenses rebate (20% of net un-reimbursed eligible medical expenses), will increase from $1,500 to $2,000. In addition, the Medicare levy low-income thresholds will be increased from $17,794 to $18,488 for individuals and $30,025 to $31,196 for couples, with effect from 1 July 2009. An additional amount of threshold for each dependant child or student will increase from $2,757 to $2,865.
Home Saver Account The Government has made a minor amendment to the First Home Saver Account (FHSA) effective from 1 July 2011. The incentives provided by the FHSA include a Government co-contribution of 17 per cent on the first $5,000 (indexed) of individual contributions made each year.  Also included are taxation incentives comprising the taxation of investment earnings (or interest) that accrue in the account at 15 per cent and tax-free withdrawals when used to purchase a first home to live in after the four year savings horizon. The effect of the amendment is to increase the flexibility of the rules to allow individuals to roll the balance into mortgages on the purchase of an eligible first home during the four year savings period. Under the original legislation, home purchases prior to the end of a four year period resulted in the balance of the account being rolled into superannuation.
Superannuation  Previously, the Government legislated to increase the matching rate for superannuation co-contribution to 125% (for the years commencing 1 July 2012 and 1 July 2013), and to 150% for later years.  It also committed to index the income thresholds above which the co-contribution begins to phase-down. That position is to now be reversed. Consequently, the matching rate will remain at 100% subject to a cap of $1,000. And the income thresholds will remain at $31,920 and $61,920, for the next 2 years. On a separate note, the Government’s response to the Henry Tax Report included a proposal to introduce a rebate, of up to $500, to offset the tax payable by a superannuation fund in relation to contributions made on behalf of low income earners. This rebate is to apply from 1 July 2012 for individuals on incomes of up to $37,000. No further comment was made in reaction to the Government’s previous announcement to allow people over 50 years of age, with superannuation balances of less than $500,000, to continue to make concessional contributions up to $50,000 after 1 July 2012 (when the current arrangements cease). Time and Government legislation will tell whether individuals ought to consider various strategies to secure continued access to this concession, such as: ensuring contributions are made on behalf of superannuation fund members whose balance is below $500,000; using transition to retirement withdrawal benefit payout and re-contribution strategies to drop the member’s balance below the threshold.
Please contact your local office if you would like more information about the outcomes of the 2010 Federal Budget. We hope that you have found this commentary surrounding the 2010 Federal Budget release of benefit.  The information provided is a general guide only and Bentleys accepts no responsibility for the accuracy of the information or opinions contained herein. The contents do not constitute business, accounting, taxation or financial advice and should not be relied upon as such.