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Peter R. Belinfante & Co Pty Ltd   ACN 003 386 221

Chartered Accountants.

 

 

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Tax news:

THE AUSTRALIAN BUDGET 1998-99        12 May 1998

Outline of Key Features :

PERSONAL INCOME TAX

* No increase in personal tax rates or Medicare levy low income thresholds

* '99 Provisional tax uplift down to 5 %

* Dependant rebates 1999 unchanged if CPI falls.

* Beneficiary rebate - access for Community Development Employment Project participants 1/7/98

* High wealth individuals task force - ATO to continue focus on compliance by investigations & changing tax laws to combat "undue tax minimisation."

* Seniors Card - The income threshold for eligibility for the Commonwealth Seniors Health Card will change from 1 January 1999 to one based on taxable income and the limits will be extended to $40,000 for singles; $67,000 in the case of couples.


SUPERANNUATION AND SAVINGS

* Self-managed ("excluded") super funds:
New definition : Funds with less than five members, where all members are trustees and there are no other trustees. Where there are two or more members, they must be either partners, directors or trustees of the employer-sponsor or family relatives.

* Self-managed superannuation funds: The levy will be reduced from $200 to below $50 per fund.

* Investment rules tightened

* No Access to superannuation for housing

BUSINESS AND COMPANY TAXATION

* Fringe benefits tax: Re car parking benefits : The CPI-indexed threshold for all-day parking will remain unchanged at $ 5.25 per day for the FBT year-ending 31 March 1999

SALES TAX & CUSTOMS

* Sales tax: quarterly remitter threshold unchanged even if CPI is negative

* Departure tax $ 3 increase to $ 30 from 1 Jan 99

* Visas: new application charges

* Stevedoring levy of $12 per container & $ 6 per vehicle

* Customs warehouse fees to fall


Year 2000 Compliance ("Y2K")

All clients who use a computer as an essential tool in their working lives, must now examine their exposure to computer malfunction on or before 1 January 2000. Please see checklist.


Federal Budget proposals :

A deduction will be allowed for the cost of acquiring new software (including upgrades) or substantially rebuilding current software which has the predominant nature of ensuring Y2K compliance, provided such expenditure is incurred up to 31 December 1999.

Allowable Expenditure will include the cost of :

initial diagnosis work on computer software to determine the extent to which it is not Y2K compliant, even if no further work is necessary,

modifying (and subsequently testing) computer software to make it Y2K compliant, even if it also provides minor improvements to the software,

modifying or completely replacing a computer chip or firmware to make computer hardware or computer operated equipment Y2K compliant. This includes the modification or complete replacement of software embedded in firmware.


TAXATION OF SOFTWARE

Software costing more than $ 300, not relating to Y2K compliance may now only be claimed over 2.5 years (40 % p.a. prime cost) NB Hardware depreciates at 40 % Diminishing value. Upgrades & maintenance will continue to be allowed in full provided there is no enhancement of the functional capacity of the software .

CAPITAL GAINS TAX

* Change in majority underlying interests test for public companies.

SIMPLIFICATION OF TAX PENALTIES

The current late penalty arrangements will be replaced with an 'Interest on Outstanding Balance' (IOB) charge

EXTENSION OF PPS

The PPS system will be extended to allow payers in non-PPS industries to apply to to be included where the payer & payee agree..

LANDCARE REBATE

As from this 1998 Tax Year, a tax rebate for landcare works of 34 per cent of expenditure to an annual limit of $10,000 will be allowed for eligible landcare expenditure including works on:

levee or contour banks to control soil erosion,

drainage works to control salinity, and

the eradication of pests.

      Primary producers will be able to claim for :

fencing to exclude animals from areas affected by land degradation and
other works as above

CHILD SUPPORT

More flexible arrangements for non-agency payments as part of child support liabilities will include accepting certain payments as credits towards the payer's child support liability (up to a limit of 25% of monthly liability) provided that 100% of the monthly liability is met. Approved items include : bona fide school fees, essential medical items, rent, rates, mortgages, utilities, child care costs.

Changes are to impact on Trusts.

 

 

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Last modified: January 04, 1999