Issue: 483
Sent: 19-06-2012 08:59:03
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Europe Tastes RealityA How To Book Of Self Managed Super FundsNew Income Tax Rates from 1 JulyEmail Marketing For Planners
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New Income Tax Rates from 1 July

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

Over the last couple of weeks I have been looking at the income tax cuts to come into play from 1 July '12.

I haven't looked at the additional Family Tax Benefit and other payments that also need to be factored into your modelling. I've also kept away from the Carbon Tax mainly because it seems almost impossible to work out how it will be passed onto the ultimate consumers.

But back to the income tax cuts. Once you hit taxable income of $180,000 the tax cut levels out to a constant amount of money. In other words the more you earn the less it's worth in percentage terms.

At the other end of the scale people on some low incomes - in particular those who earn between $20,000 and $28,000 a year - receive very significant reductions in tax payable especially in percentage terms.

One good feature of the new scales is that the impact of the low income rebate has been largely removed. This means that lower income earners pay lower tax throughout the financial year rather than waiting until they submit their income tax returns.

Taken on its own this is a good reform in my view and I can't understand why this wasn't done many years ago.

Interestingly these reductions - and additional reductions in July 2015 - make superannuation for low income earners even less attractive from a tax perspective.

It's compulsory so it doesn't have to be taxed concessionally might be the argument.

I have to admit to being truly amazing that this situation is allowed to persist. It's equally amazing that no one seems to be pushing to get this changed - perhaps they're just keeping a low profile. Thus far the only substantial response seems to be to increase the taxes paid by higher income earners so the 'system' seems fairer.

But this doesn't take away the fundamental flaw in the system.

You now hit an average 15% tax at a taxable income of about $50,000. Under the old scales it was about $48,000.

On another note the Government needs to be releasing something about the Cooper Review SMSF changes which are meant to be starting on 1 July 2012. Are we going to have to deal with retrospective legislation or will the start date of the measures be amended?

We need an announcement soon please.

Version 6.0 of my SMSF book is now available.

You can see all the changes that have been made between Version 5.1 and 6.0 (the latest edition).

You can look at the contents page at the following link:

For details of the changes made from version 5 to version 6 visit:

As you'll see from the list there have been many changes.

Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link:

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