Govt to close education expense deduction claims

Posted on January 27, 2012 by stephen

As reported earlier , the High Court ruled in 2010 that receipients of Youth Allowance and certain other benefits that are paid only if the beneficiary is undertaking a course of education are allowed to claim a deduction for the costs of undertaking the course

The Australian Government has now released draft amendments to disallow deductions against taxable government assistance payments that are eligible for a rebatable benefit following the High Court’s decision in FCT v Anstis [2010] HCA 40.

Government assistance payments that are currently eligible for the beneficiary rebate include, but are not limited to:

  • Austudy
  • ABSTUDY
  • Newstart Allowance
  • Youth Allowance (student)
  • Youth Allowance (jobseeker)

The amendment is proposed to have effect from 1 July 2011.

 

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Tax treatment of losses

Posted on December 16, 2011 by stephen

The Treasurer, Wayne Swan, has released the Business Tax Working Group’s interim report on the tax treatment of losses. The report sets out four reform elements:

  • replacing the integrity rules restricting access to losses
  • allowing immediate loss refundability
  • allowing losses to be carried back and offset against previous years’ profits
  • allowing losses carried forward to be uplifted by a determined benchmark rate.

The Interim Report says the bias derives from the way Australia allows for tax deductions of losses, which it says can become “trapped” and unavailable as a tax relief vehicle for entrepreneurs. “In some regards,” the Interim report says, “trapped losses represent a windfall gain for governments.” Current treatment of losses also makes cashflow management cumbersome.

 

The final report on the tax treatment of losses is expected in March 2012.

 

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Economic Outlook prompts major super changes

Posted on November 30, 2011 by stephen

In releasing the 2011-12 Mid-Year Economic and Fiscal Outlook (MYEFO) on 29 November 2011, the Treasurer said that GDP growth would not grow as strongly as forecast and that forecast tax receipts had been written down by more than $20bn over the forward estimates. He said global economic and financial conditions had “deteriorated markedly in recent months”. As a result, the Government announced a number of significant tax and superannuation changes.

Superannuation changes

  • The Government will pause the indexation of the superannuation concessional contributions caps for one year in 2013-14.
  • In response to industry feedback, the Assistant Treasurer said the Government would undertake further consultation on compliance cost issues raised by industry in relation to the higher concessional contributions cap for those aged 50 and over.
  • The Government will streamline the low income superannuation contribution (LISC) so that individuals automatically benefit from it without being burdened with extra paperwork. Rather than requiring eligible workers to fill out a tax return or other type of form, the ATO will verify an individual’s income using available data.
    • Individuals who receive less than 10% of their income through employment or business will not be eligible.
    • Individuals will only receive a payment if their LISC entitlement is at least $20, to reduce administration costs.
  • The Government will reduce the matching rate and maximum payment of the voluntary superannuation co-contribution from 1 July 2012, when the new LISC commences. [No details were given of these reductions.]
  • The Government will extend to the 2012-13 year the current drawdown relief for minimum payment amounts for account-based, allocated and market linked pensions. [This means the minimum drawdown for these pensions will be 75% of the required amount for the 2011-12 and 2012-13 years ie a 25% reduction in the minimum drawdown amounts.] Regulations giving effect to this change will be made before the new financial year.

 

Source: Treasurer’s press release Nos 148 and 149; Assistant Treasurer’s press release Nos 160 and 162, 29 November 2011

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