Mid-Year Economic and Fiscal Outlook 2012/13 (MYEFO)
Tuesday, Oct 23, 2012
Yesterday 22/10/12, the Treasurer delivered his Mid-Year Economic and Fiscal Outlook 2012/13 (MYEFO), revising the 2012/13 budget down to a $1.1b surplus. This includes a write down of $4b in receipts and a variety of savings measures. The MYEFO was relatively uneventful and did not include hikes to tobacco or alcohol excise or any substantial reform to superannuation which had been rumoured in the lead up to the release.
The taxation measures include:
- Changes to the SMSF Levy – If you have a Self Managed Superannuation Fund, the annual levy payable to the ATO will increase from $191 to $259 from the 2013/14 financial year. It will also be brought forward so that it is payable in the year of income instead of after year end on lodgement of the SMSF tax return.
- Changes to super pensions upon death – Currently the income tax exemption for pensions ceases upon the death of the member and may result in CGT issues where assets are sold to pay death benefits. Under the measures announced, the income tax exemption will continue to be available until the members benefits have been paid to beneficiaries.
- Transfer of lost super accounts to the ATO – A reduction in the time frame from 5 years to 12 months for superfunds to transfer lost member account balances to the ATO. This measure is expected to return lost super to members in a more timely manner. It also helps the Government balance the budget, delivering an expected $555m in additional revenue for the 2012/13 financial year.
- ATO compliance activities – An additional $390m for tax compliance activities including focussing on lodgements for business with two or more years of outstanding tax returns, following up long-term outstanding debts and addressing tax avoidance schemes.
- Increase in penalties – The base penalty unit used to determine penalties for items such as late lodgements of BAS, tax returns and PAYG payment summaries will increase from $110 to $170 per unit effective one month after the amending legislation receives royal assent. For example, if your 2012 PAYG payment summary report (due on 30/9/12) is lodged on 30/1/13, your late lodgement penalty will now be $850 instead of $550 for small withholders and $1,700 instead of $1,100 for medium withholders. A medium payer is anyone with annual PAYG withholding exceeding $25,000.
- Monthly income tax instalments for large business – A change from quarterly to monthly PAYG instalments for large businesses to be effective from 1 January 2014 for companies with a turnover of $1b or more, 1 January 2015 for companies with a turnover of $100m or more and 1 January 2016 for companies with a turnover of $20m or more.
- Private health insurance rebates – The government rebate will be calculated using commercial premiums at 1 April 2013 with increases capped at CPI. Currently the rebate is generally 30% of the cost of the policy (subject to a means test). Additionally, the rebate will no longer be paid on the lifetime health cover loading effective from 1 July 2013. i.e. the loading paid if you take out insurance after your 31st birthday.
- Living away from home allowances – The commencement of previously announced changes to living away from home allowances has once again been deferred, this time from 1 July 2012 to 1 October 2012.
- In-house fringe benefits – A concession for salary packaging items such as trading stock has been removed effective 22 October for new arrangements and 1 April 2014 for existing arrangements.
Other measures include:
- Reduction in the baby bonus – From $5,000 to $3,000 for the second child and subsequent children commencing 1 July 2013 and saving $461m over 3 years.
- Cuts to university and trade training programs – A total of $575m over 4 years.
- Cuts to payments to employers of part-time and casual apprentices – A total of $277m over 4 years.
- Increased visa charges – Charges for a number of visas including temporary workers, skilled graduates, partners and working holiday makers to be increased. This is expected to raise $520m over 4 years.
- Specific grants – Cuts/reduced increases in grants mean that $765m less will be paid to State Governments over 4 years.
- Bank Deposits – Unclaimed deposits to be handed to the Government after 3 years instead of 7 years resulting in a $300m windfall for the 2013/14 financial year.
- Court fees – Fees charged by the Family Court, the Federal Court, the Federal Magistrates Court and the High Court to be increased.
The most pertinent item above for many small businesses will be the increase in late lodgement penalties and increased ATO activity in relation to the lodgement and payment of taxes. Let us know if you require assistance in keeping up to date with your lodgement and payment obligations.