What does the May 2011 federal budget mean for Family Day Care ?
Below are some important measures that were announced in the May 2011 Federal Budget
which may affect either you individually or other friends and family:
Tax Rates:
Unlike previous years, there have been no changes made to personal tax thresholds
or rates, which was great news.
Personal Tax Changes:
1. Children under the age of 18 will no longer be able to access the low income
tax offset (LITO) to reduce tax payable on unearned income such as dividends, interest
and rent.
2. This change won’t impact income earned by children from work, unearned income
of orphaned or disabled children and compensation payments and inheritances received
by children.
3. Lower income tax earners will have larger pay packets during the year rather
than waiting for larger tax returns at the end of the Financial Year. This will
be achieved by increasing the Low Income Tax Offset (LITO) from 50% to 70%.
4. The maximum LITO will still be $1,500, and the maximum amount of tax-free income
lower income earners can receive each year will still be $16,000. The upper limit
to which a partial low income tax offset can be claimed is still $67,500.
5. Dependant spouses born after June 30 1971 will no longer be able to claim the
Dependant Spouse Tax Offset. This doesn’t apply to stay and home Mums or Dads, and
is being used to get non-working spouses back into the workforce.
Superannuation:
1. Peopled aged 50 and over with less than $500,000 in super will be able to contribute
an extra $25,000 in pre-tax (concessional) contributions each year. There are eligibility
requirements, and these changes will start to apply from 2 July 2012.
2. If you are over 50 you can make pre-tax contributions of up to $50,000 until
1 July 2012 regardless of their super balance.
3. From 1 July 2012 employers will be required to include the amount of super contributions
actually paid into employee’s super accounts on their payslips. Super funds will
also be required to notify the employee on a quarterly basis if regular payments
from their employer cease.
Write Offs for Motor Vehicles:
1. Small businesses will be allowed to claim up to $5,000 as an immediate deduction
of any car purchased in the 2012-13 financial year.
2. At the moment, Small Business Entity Rules see small businesses already depreciating
vehicles at 15% in the first year,then 30 % on every year after that.
3. Under the new budget there will be an immediate write off of $5,000 plus a further
reduction of 15%, then a 30% reduction in following years.
Single Fringe Benefit Tax (FBT) Statutory Rate of 20%:
1. The treatment of cars under Fringe Benefit Tax has been streamlined under a single
rate of 20%, no matter how far you drive.
2. This means that those people driving longer distances will no longer be (unintentionally)
rewarded.
3. This change will only apply to vehicle contracts established after May 10, 2011
and will be phased in over a period of four years.
4. This means that if you travel over 40,000 kms a year the statutory rate will
increase from 10 cents this year, to 13 cents in 2012 and 17 cents in 2013, with
the standard 20 cents kicking in from 2014.
5. From a Family Day Care perspective this is great news.
6. Most Educators would currently travel less than 25kms per annum, with many travelling
less than 15,000kms per annum.
