Well it appears our government has ignored that advice.  After a number of years of spending millions of dollars on reports on how the country can have a more robust tax system and long term economic prosperity, it appears they have ignored it.

Mr Swan wants us to understand that the current Budget Deficit of $18 Billion dollars from his previous estimated of $1.5 billion Surplus he indicated in last years budget is the result of a high Australian Dollar and lower commodity prices. 

If this was a business venture and Management got the figures so wrong, they would be heading for Liquidation.  The problem I feel is that last years forecasts relied too much on Revenue from the Resources Tax and Carbon Tax.  The government believed it would raise billions from these taxes over four years, only to now advise this will not be the case, with the budget losing an estimated $13.8 billion of the amounts forecast.

Though many may not agree, a robust tax system is the foundation the Australian economy and business need for long-term prosperity.  The government has failed to take a hard stance on real tax reform that will aid the Australian economy.  Instead like it did with the Resources Tax, it believes reducing the loopholes the multinationals are currently accessing will reap the benefits and help put the budget back in surplus.  Well we all know how the Resources Tax faired on that count.

The 2013 Budget has only succeed to bring more uncertainty and in balances to the business landscape.  It promises Jobs and Growth , but at the same time has done very little to help small business on this aspect, which is disappointing given small business are the backbone of the economy and contribute one third of Gross GDP and are the growing employer. 

Now let u see a snap shot of what was handed down by Mr Swan last night.

Budget Highlights

  •        The net medical expenses tax offset will be phased out, with transitional arrangements applying to those who currently claim the offset.
  •        Medicare levy increase by 0.5% to fund  DisabilityCare Australia Program
  •        Tax cuts promised in past Budgets have been shelved and believe will not make an appearance until 2018-19 if at all
  •        The Medicare levy low income thresholds for the 2012/13 income year will increase to: (i) $20,542 for individuals, and $32,279 for pensioners eligible for the Seniors and Pensioners Tax Offset; and (ii)                  $33,693 for families, with the additional family threshold amount for each dependent child or student increasing to $3,094.
  •        New family payment arrangements for newborns will replace the Baby Bonus from 1 March 2014, and the "work test" under the Paid Parental Leave scheme will be extended.
  •        The discounts applying to up-front and voluntary payments made under the Higher Education Loan Program (HELP) will be removed from 1 January 2014.
  •        Work Related Self-Education Deductible Expenses will be capped at $2,000.00 from 1 July 2014" if you are considering salary packaging Self Education Expenses, the Government has                                                imposed Fringe Benefits for such arrangements so serious considerations would be required to determine impact.   This to me appears in direct contrast to the government Education Package, as it                      appears it  is putting Billions of dollars into secondary education but at the same time taking away from Higher Education, which is really how a country becomes the clever country.
  •        ATO Compliance Activity -  $77.8 million over the next four years to the ATO to assist them with data matching capacity.  What does this mean to you, well if you plan to try to hide activity of a Revenue nature              from the ATO, would not be recommending it.

The extra funding will allow the ATO to expand its data matching capabilities into a  range of different investigations.  For example matching 3rd party data, cross matching other government departments to insure taxable grants and other government payments are included in tax returns, it will also expand to data regarding Sale of property, shares, managed funds, merchant and credit card sales, company dividends as well as analysing transactions provided to it by the Australian Transaction Reports and Analysis Centre.

  •         Research & Development Tax Incentive will no longer be accessible to companies with Australian turnover of $20 Billion
  •         Superannuation

o       Concessional Contribution Cap increase from 1 July 2013 to $35,000 for those aged 60 and over, from 1 July 2014 age will drop to 50 years and over

o       High Income Earners to pay an additional 15% tax taking total Superannuation Tax to 30% - Those earning $300,000 and above

o       Excess Concessional Contributions to be allowed to be taxed at personal level rather then at an additional 31.5% (in addition to 15% already paid)  This will benefit taxpayers who are not on the top marginal tax rate.

o       Taxing Pension Funds, members receiving more than $100,000 of income each year will now be taxed at 15%, where currently tax free, some transition rules for capital Gains Tax will apply.

Should you have any questions or concerns on the impact of the above please contact our office on 02 96979155 or email us at success@akagroup.com.au