Welcome to our special May Budget edition of the ‘Ark Informer’. In this Informer, we have covered of the main outcomes of the budget from a financial planning perspective. Overall it was a quiet budget for financial services but there are still a few key items that may have a material impact on your personal situation.
In regards to superannuation the main points are:-
1. $50,000 concession contribution limit extended for those who are age over 50 and have a superannuation balance of under $500,000. Previously this limit was to be decreased to $25,000 from the 1 of July 2012. There is still no clarification of how they will calculate the $500,000 and if it includes withdrawals and pensions. The opportunity here is for those with individuals who are approaching retirement to continue to increase their superannuation benefits and for those over 60 to take advantage of the very beneficial transition to retirement income stream.
2. Reduction in Penalty for excess contributions – For those individuals who make excess concession contributions of less than $10,000, this excess will be taxed at your Marginal Tax Rate as opposed to 46.5%. This is a once off allowance from the 1 of July 2011.
3. Minimum Pension phased out – The Federal Government previously lowered the minimum pension payment to 2%. By 2012/13, this will have been phased out and it will be back to the 4% minimum for those aged under 65.
In regards to taxation, the main points to consider are the following;
1. Introduction of one off flood levy
2. Simplification of Fringe Benefits Tax in relation to cars – This will be change to a flat 20% calculation as opposed to the current tiered structure which is based on kilometers driven. This will reduce the need for those employees to drive additional kilometers towards the end of the financial year.
3. $5,000 write off for small business owners – This allows small business owners to purchase a car and write of the first $5,000 in the first year as a deduction. The remaining purchase price will be added to the depreciation pool and written off at either 15% or 30%
4. Tax treatment clarified for Instalment Warrants – This confirms the previous clarification that a capital gains tax event will not occur for those who own an instalment warrant over a security and then that security is then later transferred directly into their name.
These are just some of the proposed changes from the Federal Budget 2011. If you would like more information and you would like to know how these changes may influence your personal situation please do not hesitate to contact us on 02 9262 3333 or email [email protected]
The Ark Total Wealth Team