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Treasurer Hockey Takes an Axe to Labor’s Tax Plan

Article By Adam Hurwood | | Accounting & Tax
Treasurer Joe Hockey and Assistant Treasurer Arthur Sinodinos have outlined the federal  government’s plans regarding announced but not yet legislated tax and superannuation proposals.  Of the 92 reforms and changes, the government has announced that it will proceed with only 18 with a further 3 initiatives being significantly changed.

Some of the reforms that are being axed or amended include:

Self-education expenses cap

The proposed cap of $2,000 in deductions for self education expenses will not proceed. Self education expenses include training and educational courses, textbooks and other accreditation expenses.

Not proceeding with this measure means that these expenses will continue to be deductible in accordance with current rules.

Fringe benefits tax reform for company or salary sacrificed cars

As per election promises, the Coalition will not continue with Labor’s proposed changes to the FBT treatment of company or salary sacrificed vehicles.

However, the government has flagged the need for an overall tax review, which will include FBT as a whole.

Tax on superannuation pension earnings over $100,000

The government will not proceed with taxing superannuation earnings above $100,000, when the fund is in pension phase. The removal of the tax on superannuation pensions is widely considered a reasonable move, given the additional complexity that the measure introduced and its minimal revenue benefit.

Removal of the low income superannuation contribution scheme

This removal is part of the mining tax repeal measures which provide payments of up to $500 to low income earners to top up their superannuation savings.

Net Medical Expenses Tax Offset (NMETO) phase out

The NMETO provides an offset for people when their medical expenses are high. The phasing out will allow current claimants to remain eligible for the offset until 2014-15.

Contact your Altitude accountant for any further queries you may have on how these changes will affect your personal corcumstances.