6 Aug 2011

2011 Tax Time

 Things to consider for 2010/11

  • The marginal tax thresholds for 2010/11 for individuals have changed as follows:

        30% starts at $37,001 up from $35,001

        37% starts at $80,001 this rate was 38% in 2009/10

        45% starts at $180,001 no change from 2009/10

  • The Low Income Tax Offset will increase again from $1,350 to $1,500 in the 2010/11 tax year. This effectively means those eligible will not pay tax until their taxable income exceeds $16,000.
  • Also, due to the Low Income Tax Offset, minors receiving non-excepted income (e.g. trust distributions) will be allowed to receive $3,333 in 2011 financial year without paying tax compared to $3,000 in 2010 financial year. (See below for big changes from 2011/12).
  • Medical expenses rebate threshold has been raised from $1,500 to $2,000 from 1 July 2010. The rebate is 20% of expenses over the threshold. From 1 July 2011, the threshold will be increased annually in line with the CPI.
  • Education tax refund – this offset is 50% of eligible education expenses up to:
    • $750 for each child undertaking primary studies (maximum offset $375); and
    • $1,500 for each child undertaking secondary studies (maximum offset $750).

Eligible families will be those eligible for Family Tax Benefit (Part A). Independent students may also be eligible. Please note, the ATO says you must actually apply for FTB and not just be eligible.

Eligible expenses include: laptop or home computers; computer related equipment or repairs; internet; textbooks and stationery; tools for trade courses, educational software.

You CANNOT CLAIM for school fees; uniforms; excursions and camps; tutoring; sport equipment; musical instruments; school subject levies eg consumables for woodwork or home science; building levies; library book fees; photos; donations; canteen; transport.

Uniforms will be eligible from 1 July 2011.

  • Senior Australians eligible for the Senior Australians Tax Offset will not pay tax on income up to $30,685 for singles and $26,680 for each couple living together because of the combined effect of the Senior Australians Tax Offset and the Low Income Tax Offset. (The max offset or 2010/11 is $2,230 for singles or $1,602 for each couple).
  • Individuals receiving government assistance payments (such as youth allowance) are able to claim costs for self-education expenses following a 2010 High Court decision. For the years 2006/07 to 2009/10 the Tax Office is allowing an automatic $500 deduction. For 2010/11 year you can claim up to the amount that you can substantiate with receipts. (See below for 2011/12 year and forwards).Don’t Forget
  • To substantiate your expenses, you must retain all your receipts for five years from date of lodgement.
  • Adding and summarising your income and expenses before your appointment will help us tremendously and save you time during our interview.


New for 2011/12

  • No change to personal income tax rates this year, however the government has introduced the Flood Levy.
  • The Flood Levy applies after 1 July 2011 and is calculated as follows:
    • $0 - $50,000                                          Nil%
    • $50,001 - $100,000                                 [Taxable Income - $50,000] x 0.5%
    • $100,001 +                                            $250 + [(Taxable Income - $100,000) x 1%]
  • Proposed in the May 2011 budget and effective 1 July 2011, Minors (children under 18 years) will no longer be eligible for the low income tax offset (LITO) on unearned income. This means minors can only receive $416 p.a. (previously $3,333 in 2010/11) of trust distributions (or other unearned income) before being penalised with higher tax rates. Income earned by minors for work will still be eligible for the LITO.
  • Proposed in the May 2011 budget and effective 1 July 2011, Individuals receiving government assistance payments (such as youth allowance) WILL NOT BE able to claim costs for self-education expenses.
  • Proposed in the May 2011 budget and effective 1 July 2011, taxpayers with a dependant spouse aged less than 40 years ( ie, born on or after 1 July 1971) will no longer be able to claim the dependant spouse tax offset. (Due to other existing provisions this will probably not affect a lot of people).
  • Proposed during the 2010 election and to be effective 1 July 2011, the education tax refund will allow uniforms as an eligible expenditure.
  • The Government’s proposed 50% discount on up to $1,000 of interest earned by individuals has been deferred and reduced. It is now proposed to be effective 1 July 2012 and will be 50% discount up to $500 in 2012/13 and $1,000 for later years.
  • From 1 July 2012, the government proposes individuals will get a standard deduction of $500 for work related expenses and the cost of managing tax affairs. This will increase to $1,000 from 1 July 2013.
  • From 1 July 2012, it is proposed small businesses will be able to immediately write off assets valued under $5,000 (currently $1,000) and all other assets (except buildings) will be written off in a single depreciation pool at a rate of 30%. The company tax rate is expected to reduce to 29% for small businesses.
  • Proposed in the May 2011 budget and effective 1 July 2012, small businesses will be entitled to an instant tax write off of the first $5,000 of any motor vehicle purchased. This measure will replace the entrepreneur’s tax offset for small businesses. 
  • Novated lease changes and FBT – Any novated leases entered into after the 10th of May 2011 will be subject to proposed changes in statutory percentages. 
Kerslake Gray Accountants - (02) 4751 4091
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