On 14 May 2013, Treasurer Wayne Swan delivered his sixth annual budget.
Below, we cover 5 of the outcomes that are most likely to impact on individual tax payers:
1. Income Tax Rates
Income tax rates will remain unchanged. Importantly though, plans to increase the tax free threshold from the current $18,200 to $19,400 in 2015 have been scrapped.
At this stage, the rates for 2013/14 are set to stay in place until at least 2017/18.
Tax Rates for Non Residents:
From next year (2013/14), non-Australian residents will pay a flat tax rate of 32.5% of their taxable income up to $80,000. From there the tax rates will be same as resident Australians.
2. Medicare Levy
From 1 July 2014 the compulsory Medicare Levy will be increased from 1.5% to 2% to help fund the introduction of the National Disability Insurance Scheme.
3. Net Medical Expenses Tax Offset
The net medical expenses tax offset will be phased out starting from 1 July 2013.
During the phase out period, it will also become more difficult to claim the offset. Only if you claim the offset in your 2012/13 tax return, can you then claim it again in 2013/14. Taxpayers who then claim it in 2013/14 can claim it again in 2014/15.
So, if you are not eligible or choose not to claim the offset in 2012-2013, you will not be able to claim the offset in future years.
4. Work Related Self-Education Expenses
From 1 July 2014 the amount of self education expenses you can claim under item D4 in your tax return will be limited to a maximum deduction of $2,000. Previously there has been no limit in place on these deductions.
5. Baby Bonus
The current $5,000 baby bonus will be abolished from 1 March 2014. Instead – families who are eligible for Family Tax Benefit A will receive $2000 following the birth of their first child and $1000 for each subsequent child.