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Federal Budget 2012 – Overview

Budget2012-13

Federal Budget 2012 – Overview

The Federal Budget delivered one major surprise this year……..that was, there were no major surprises!

Unlike previous budgets, there aren’t any major policy changes that will dramatically impact on new or existing salary sacrifice arrangements.

Key areas of interest:

Living Away From Home Allowance reform
As had been previously announced by the Government on the 29th November 2011 as part of their Mid-Year Economic and Fiscal Outlook, further limitations have now been placed on Living Away From Home allowance and benefits. In short:
1. Tax concessions will only apply if an employee maintains a home for their own in Australia that they are living away from for work purposes…..so, no more concessions for employees coming to Australia from overseas
2. Tax Concessions will be limited to a maximum period of 12 months for any particular work location

On a brighter note, the transitional rules will mean that existing arrangements will not be impacted until the 1st of July 2014.

Car Fringe Benefits
No changes to car fringe benefits in this Budget. So, the transitional reform implemented last year will continue until the 1st April 2014 by which time there will be one statutory rate of 20%.

Superannuation
Superannuation is one area which the Government has indicated will undergo significant reform. One of the reforms which specifically relates to salary sacrifice arrangements has been the concessional tax rate on super contributions. Individuals had previously been able to salary sacrifice $25,000 per annum into a superfund with contributions only taxed at 15%

From the 1st of July 2012, contributions made by individuals with income greater than $300,000 per annum will be effectively taxed at 30% instead of 15%. This isn’t all bad as these high income earners are already taxed at the highest possible rate (46.5%), so a 30% concessional tax rate on super contributions still provides considerable tax savings.

Not much more to report from this year’s Federal Budget.

Don’t forget, if you require any assistance setting up and/or managing new or existing salary sacrifice arrangements in your workplace, please contact my team on 1300 664 323. We’re here to help!

Thanks,
Bobby