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International Superannuation and Pension Management |
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Federal Budget Summary 2008/09
The 2008/09 Australian Federal Budget was handed down on 13 May 2008 and contains a number of proposals focusing on personal tax and integrity measures for existing regimes. We have outlined some key proposals in our summary below.
Personal Taxation
Further tax cuts for Australian resident individual taxpayers have been announced. The proposed new tax thresholds and rates are as follows (excluding the 1.5% Medicare Levy):
| Current marginal tax rates | Current income thresholds to 30 June 2008 (AUD) | Proposed income thresholds from 1 July 2008 | Proposed income thresholds and marginal tax rates from 1 July 2009 | Proposed income thresholds and marginal tax rates from 1 July 2010 | ||
| 0% | 0 – 6,000 | 0 – 6,000 | 0% | 0 – 6,000 | 0% | 0 – 6,000 |
| 15% | 6,001 – 30,000 | 6,001 – 34,000 | 15% | 6,001 – 35,000 | 15% | 6,001 – 37,000 |
| 30% | 30,001 – 75,000 | 34,001 – 80,000 | 30% | 35,001 – 80,000 | 30% | 37,001 – 80,000 |
| 40% | 75,001 – 150,000 | 80,001 – 180,000 | 38% | 80,001 – 180,000 | 37% | 80,001 – 180,000 |
| 45% | 150,001 + | 180,001 + | 45% | 180,001 + | 45% | 180,001 + |
Family Trusts – Utilisation of Tax Losses
The Government has proposed to limit the utilisation of tax losses by family trusts. The recommended measures are as follows:
Final withholding tax on distributions from Australian managed investment trusts
Currently, distributions from Australian managed investment trusts to non-residents are subject to a 30% non-final withholding tax. The Government has proposed to replace this with a new regime commencing the year after the enabling legislation receives Royal Assent (intended to be 2009).
For residents of specified countries, these new rates are: a non-final withholding tax of 22.5% for the first year; a final withholding tax of 15% for the second year; and a final withholding tax of 7.5% for the third and later years.
Residents of other countries will be subject to a 30% final withholding tax.
Temporary Residents’ Superannuation
The previous Government announced that, effective 1 July 2008, all superannuation contributions and current and future superannuation balances held for former and current temporary residents will be paid to the Australian Government. Where a temporary resident becomes a permanent resident, the balance can be reclaimed with interest.
The Budget proposes a deferral of the start date to the date of Royal Assent of the enabling legislation (expected to be before the end of 2008).
Tax Reform
The Government announced that a comprehensive review of the Australian taxation system (the Australia’s Future Tax System review) will be conducted from July 2008 to the end of 2009.
Other Aspects
The Government will decrease the tax deductible component of capital protected borrowing arrangements entered into after 13 May 2008 by adjusting the benchmark interest rate.
The Government also announced measures to tighten the rules relating to fringe benefits tax, the GST margin scheme and the employee share scheme regime.
Further information
For further information on the proposals summarised above, please refer to the following resources:
http://www.budget.gov.au/2008-09/content/speech/download/speech.pdf
http://www.budget.gov.au/2008-09/content/bp2/html/revenue-07.htm
http://www.budget.gov.au/2008-09/content/overview/download/Budget_Overview.pdf
This information has been prepared in good faith, is in the nature of general comment only, and neither purports, nor is intended, to be advice on any particular matter. You should not act or rely upon any matter or information contained in or implied without taking appropriate professional advice which relates specifically to your particular circumstances. The authors and consultants expressly disclaim all and any liability to any person (whether a reader or not) who acts or fails to act as a consequence of reliance upon the whole or any part of this information.
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