New Government, New Financial Year: What’s Happening with Personal Tax Matters for 2013/14?
Following the election of the Abbott Coalition Government in September, there has been some confusion around the status of impending tax changes announced by the previous Labor Government. Some of those announced changes had yet to be legislated. We summarise the status of some of those announcements, as well as policies announced by the Coalition during the campaign.
The medical expenses tax offset is being phased out. From 1 July 2013, only taxpayers who claim the net medical expenses offset in their 2012/13 income tax return will be eligible to claim it in their 2013/14 tax returns and only if their out-of-pocket medical expenses meet the relevant threshold for that year. The threshold is means tested and is currently $2,120 for individuals earning $84,000 p.a. or less and also for families earning $168,000 p.a. or less. For everyone else, the threshold is $5,000.
The Labor Government had introduced means testing of the Private Health Insurance Rebate (maximum 30% reduction in premiums) effective from the 2012/13 financial year. The Coalition has stated their desire to abolish the means testing of this rebate at some point in the future when fiscal circumstances allow. For 2013/14 at least, the rebate will remain subject to means testing.
The Coalition Government has agreed to proceed with the 0.5% increase in the Medicare Levy announced by the previous government to fund disability care. The increase will only apply after 1 July 2014, so the Medicare Levy remains at 1.5% for 2013/14.
The Abbott Government has announced they will repeal the annual School Kids Bonus of $410 and $820 for primary and secondary school children respectively from January 2014.
The Labor Government had announced a $2,000 annual cap on tax deductions for self-education expenses. The cap had yet to take effect and the Coalition will not proceed with its introduction.
Should you have any queries regarding these changes please contact your applicable ESV engagement partner on 02 9283 1666.
Article by David Prichard