Budget

Well, not much happened. And less again of relevance to most property investors.

Quick snapshot;

  • Tax on interest received a 50% discount, but only for the first $1,000 earned.
  • Low income offset is increasing and scheduled income tax cuts are going ahead.
  • Company tax reduced to 28% by 2014
  • Increased thresholds for businesses to claim assets up to $5,000 outright
  • Super guarantee will eventually increase to 12%
  • $500 bonus super contributions from the government for low income earners
  • Childcare rebates are being capped at $7,500 without any indexed increases.
Taxpayers with basic affairs (won't be many of them on SS) won't have to lodge returns soon either if they're happy with minimal deductions. Big brother knows enough to give them a refund without it. The various accountant associations don't like this one, for obvious reasons.

Those nasty first-home buyer saving accounts will become a little more flexible, too, as withdrawals will be allowed for use in paying off a mortgage.

The superprofit tax for mining companies was prominently featured, as well. Swan appears to be quite keen for it to get through.

As with every year, it's important to remember that this is only a budget; hardly crystal ball material. It's all got to get through parliament before it becomes reality. Also worth noting that Swan's budget from last year was out by $16b... so, we'll see what happens as it happens.
 
Thanks for the update James.

What's interesting is the 50% reduction in tax on savings interest up to $1,000. In light of the GFC, and tightening on fiscal (and monetary) policy, this is another incentive for people to save.
 
How generous, if you save $1,000 you normally pay $500 in tax on the top marginal rate and now you pay $250. Ok $250 is a decent amount but it isn't earth shattering.
 
yeah the small business incentives are great - and surprising from a labour government.

the low write-off, single pool and reduced tax rates are good measures.
 
Any comments about this paragraph from the Age?

"The savings tax break is a good first step towards Ken Henry's goal of levelling the playing field for taxation of savings, but it is just the first step. A discount rate of 50 per cent, applied to investment income and losses alike, would go a long way to improve the taxation system.

By halving the tax break for negative gearing, it would also greatly improve the Australian housing market, incentives for productive investment, and the prospect of younger and less wealthy Australians being able to own their own home."

I couldn't found anything about changes on the negative gearing, but that is what I understood reading the above article

Full note here:

http://www.theage.com.au/business/f...y-of-the-world-20100511-uv2n.html?autostart=1
 
Anyone have the new tax tables for 2010-11?

I understand the tax free threshold has been lifted to 16k .... trying to get my head around the rest.

I've checked the budget website ... but can't find the straightforward tax tables
 
Golfer - the Henry review recommended the changes to negative gearing, but the government has not implemented these changes. I'm not sure if they have ruled out making changes, or they have just ignored this recommendation for the time being. (Like they have with most of the report).

tdh78au - The tax free threshold remains at $6,000, but the effective rate, taking into account the Low Income Offset, means you don't pay any tax until you earn at least $16,000.
 
The difference between the Low Income Tax Offset and changing the tax free threshold, of course, being that the Low Income Tax Offset disappears at a certain level of income (67,500, I think for 10/11) while obviously changing the tax free threshold would apply to everyone regardless of income.
 
The difference between the Low Income Tax Offset and changing the tax free threshold, of course, being that the Low Income Tax Offset disappears at a certain level of income (67,500, I think for 10/11) while obviously changing the tax free threshold would apply to everyone regardless of income.

And the reason the effective tax free amount increases to $16k is that the Low Income Rebate has increased.
 
And the reason the effective tax free amount increases to $16k is that the Low Income Rebate has increased.

Yes, but my understanding is that if you make 70k, say, then the low income rebate doesn't apply. i.e. the effective tax free amount is only relevant if you make below a certain level of income.
 
Any comments about this paragraph from the Age?

"The savings tax break is a good first step towards Ken Henry's goal of levelling the playing field for taxation of savings, but it is just the first step. A discount rate of 50 per cent, applied to investment income and losses alike, would go a long way to improve the taxation system.

By halving the tax break for negative gearing, it would also greatly improve the Australian housing market, incentives for productive investment, and the prospect of younger and less wealthy Australians being able to own their own home."

I couldn't found anything about changes on the negative gearing, but that is what I understood reading the above article

Full note here:

http://www.theage.com.au/business/f...y-of-the-world-20100511-uv2n.html?autostart=1

I read that too. I dont recall any mention of this about the impact on negative gearing in the press. Is this a mistake in the Age article or is this something being swept under the carpet and not widely discussed. I am a little confused.
 
I couldn't found anything about changes on the negative gearing, but that is what I understood reading the above article

This is not a commentary about changes from the government in the budget, but Tim Colebatch's comments about what he sees as the government's failings by not addressing ie taking away negative gearing.
 
I read that too. I dont recall any mention of this about the impact on negative gearing in the press. Is this a mistake in the Age article or is this something being swept under the carpet and not widely discussed. I am a little confused.

I think it is a matter of interpretation. Have a look at the end of the first paragraph they changed the will to WOULD, so they are saying further changes like A discount rate of 50 per cent, applied to investment income and losses alike and halving the tax break for negative gearing, it WOULD also greatly improve the Australian housing market
 
Tim Colbach seems to have forgotten that they tried getting rid of negative gearing in the past and that there are many people with a vested financial interest in keeping things as they are. I still maintain that it is political suicide to get rid of negative gearing.

http://www.aes.id.au/?p=109
 
tdh78au - The tax free threshold remains at $6,000, but the effective rate, taking into account the Low Income Offset, means you don't pay any tax until you earn at least $16,000.

That's right, it starts to phase out at about $40k, and completely phases out somewhere around $65k.

ah ha .... now it makes more sense. Sorry should have read/heard the budget words more carefully. Missed the "effective" part of the statement (in my defence the wife's nagging was feeding into my left ear with the right one concentrating on Kev. She wanted me to change to another channel).

Appreciate your responses Dan.
 
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