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Key 2012 Federal Budget Outcomes

  Budgeted 2011/12
Forecasts 2012/13
Projected 2013/14
 GDP Growth
3% 3.25% 3.0%
 CPI  1.25% 3.25%
 Unemployment Rate
 5.25%  5.5%  5.5%
 Wage Price Index
 3.5%  3.75%  3.75%
 Forecast Deficit/Surplus
 $44.4 deficit
 $1.5B surplus
 $2B surplus

Personal Income Tax Rates 2012/13:

Taxable Income
2012/13 Marginal Tax Rate %
 $0 - $18,200  0%
 $18,201 - $37,000  19%
 $37,001 - $80,000  32.5%
 $80,001 - $180,000  37%
 $180,001 plus  45%

Federal Budget 2012 - Issues For SMEs

The Australian government's Federal Treasurer, Mr Wayne Swan, delivered the Labor government's budget on the 8th May 2012.  This special edition of Business Plus+ refers to many of the matters contained in the budget which will affect small/medium enterprises.

None of the items contained within the budget will become law until the budget has been passed by the House of Representatives and the Senate and signed by the Executive Council.

Article provided by Acclipse Business Advisor and ESS BIZTOOLS Pty Ltd.

Key Issues Announced In The Budget

Previous announcements not being proceeded with:
  • The government has indicated it will not proceed with the 1% reduction in company tax, due to commence from the 1st July 2012.
  • Standard Tax Deductions For Work Related Expenses - has been withdrawn.
  • Tax Breaks for "Green Building Fund", estimated to cost $405M, has been withdrawn.  (This related to the government's intention to allow an automatic deduction for work related expenses in the hope that taxpayers would not wish to lodge personal tax returns).
  • The higher cap for superannuation contributions for people aged over 50, with under $500,000 invested in superannuation, has been deferred for two years.  (The affect of this is that superannuation contributions for persons aged over 50, with under $500,000 invested in superannuation, will only be $25,000 per annum, from 1st July 2012, as compared to the original commitment to increase the allowable deduction to $50,000).
  • The announced tax break on interest earned on bank deposits (a 50% tax discount) has been scrapped.
Article provided by Acclipse Business Advisor and ESS BIZTOOLS Pty Ltd.

Previous Announcements By The Government

  • The small business assistance previously announced with immediate write-off of eligible assets which cost less than $6,500 and an accelerated write-off of $5,000 for the purchase of cars and utilities, operational from 1st July 2012, will continue.  The cashflow benefit from this initiative will not accrue to taxpayers until 2013/14.
  • The budget includes massive cash handouts to boost Family Tax Benefit Part A recipients and introduces a new school children's bonus to replace the education tax refund which was not being fully utilised.
  • Changes to Private Health Insurance Rebate and Medicare Levy Surcharge - the government has already announced measures to change the entitlement to the Private Health Insurance Rebate and the Medicare Levy Surcharge which will be income tested against three income tier thresholds.  The income thresholds that apply to the 2012/13 financial year are:
Full Entitlement Tier 1 Tier 2 Tier 3

 Taxable Income
 Private Health Insurance Rebate        
 Singles  $84,000 or less  $84,001 to $97,000  $97,001 to $130,000  Over $130,000
 Families  $168,000 or less  $168,001 to $194,000  $194,001 to $260,000  Over $260,000
 Aged under 65 years  30%  20%  10%  0%
 Aged 65 to 69 years  35%  25%  15%  0%
 Aged 70 and over  40%  30%  20%  0%
 Medicare Levy Surcharge        
 All ages  0%  1%  1.25%  1.5%

In view of these changes, consideration should be given as to the financial affect of private health insurance cover.  It may be possible to retain the full 30% rebate currently available for private health insurance premiums for the 2012/13 year if the premium is prepaid before the 1st July 2012.

Article provided by Acclipse Business Advisor and ESS BIZTOOLS Pty Ltd.
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