Sent: 14-04-2009 11:59:02
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Important Tax Concessions Disappear on 1 July '09
In late March a new tax law received Royal Assent and it will dramatically alter income tax planning from July 2009 for some taxpayers.
The measures are known as the "reform to income tests".
Primarily salary sacrifice super contributions will be included in the definition of income for a range of government benefits or taxes including the following:
- Family Tax Benefit (Parts A & B)
- Child care benefit
- Medicare Levy Surcharge
- Child Support
- Low Income Rebate
- Mature age worker's tax offset
- Personal super contribution tax deduction
- Rebate for spouse contributions
- Medicare Levy
- Government Co-contribution
Anyone who has used salary sacrifice contributions to fall under the 10% income test to claim personal super contributions as a tax deduction will need to think again.
This will impact many doctors, and other medical specialists, who work in a public hospital part-time and also run their own practice.
In some cases net investment losses (from most investment sources) will be added to the definition of income.
One of the big changes of these rules is that employers will need to report salary sacrifice contributions on their employee's PAYG Statements.
The government said in the relevant legislation's explanatory memorandum that over the next three financial years, it expected to raise an additional $500m in revenue from this measure.
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