Due to the budget being "handed down" this week my accountancy firm has sent out their newsletter outlining everything ... making the budget easier to understand (for me at least). Here are some "sound bites" (which I have also placed in the FOR AUSTRALIANS thread as this post will be eventually drowned out by all the other posts) that I felt were relevant................
YAY I won't be paying GST any time soon! Woohoo!!!
Plus less tax!!
A Relaxed and Comfortable Budget
The main revenue focus of this budget is on tax cuts for low income earners, easing restrictions for large loss makers and easing the compliance costs of small and medium businesses. On the spending side there are more benefits being provided to the elderly and an increased focus on environment and education issues.
Generally, it is not the big tax cut pre-election budget that was expected with middle and higher income earners having to wait until after the election before getting any additional income tax relief. It appears the Government is relying on the good economic conditions and possibly some relief from drought conditions to assist in the upcoming election campaign rather than huge tax cuts.
For Business it appears to be a 'business as usual' budget with some clarifying and expected changexd to assist in compliance and tax techincial issues.
Personal Income Tax Cuts
The Budget has provided personal income tax cuts. These are in addition to those previously announced in the 2006-07 Budget.
From 1 July 2007: - 30% threshold will increase form $25,001 to $30,001
From 1 July 2008: - 40% threshold will increase from $75,001 to $80,001
- 45% threshold will increase from $150,001 to $180,001
So here are the new tax rates effective 1 July 2007 (start of next financial year here in Australia)............$0-6,000 ............................ 0%
6,001-30,000 ...................... 15%
30,001-75,000 ..................... 30%
75,001-150,000 ................... 40%
15,0001+ ............................. 45%
Low Income Tax Offset (LITO)
From 1 July 2007, the low income tax offset (LITO) will increase from $600 to $750 and will begin to phase-out from $30,000. Taxpayers eligible for the full LITO will not pay tax until their annual income exceed $11,000 (up from $10,000 currently). In addition, the income threshold at which the offset begins to reduce will increase from $25,000 to $30,000.
As a result of both of these changes, the cinome limit up to which some offset can be claimed will increase from $40,000 to $48,750. Taxpayers with annual incomes between $25,00 and $48,750 will benefit from both the increase in the 30% threshold to $30,0001 and the increase in the LITO.
Screen Media Industry Tax incentives
The Government has announced a range of tax incentives to strengthen and reform Australia's sceen media industry.
Producer Tax Rebate
With effect from 1 July 2007, the Government will introduce a 40 percent refundable tax rebate on domestic feature films and a 20 per cent refundable tax rebate on other eligible domestic screen media productions (including television series, documentaries, and mini-series).
To be eligible for the rebate, domestic productions will need to meet certain requirements, including creative control by Australians and minimum qualifying expenditure thresholds. The rebate will apply to expenditure incurred on eligible productions form 1 July 2007.
The rebate will also extend to international film producers and will replace the current refundable film tax offset (RFTO) available to these producers. The rebate for international producers will be 15 per cent of qualifying expenditure (compared to the existing RFTO of 12.5 per cent) and eligibility for the rebate will be extended beyond the current criteria for the RFTO to include qualifying expenditure exceeding $5.0 million on post, digital and visual effects production in Australia for foreign films. These enhancements will apply to films for which production commences after 1 July 2007.
As part of these reforms, the current tax incentives for capital expenditure incurred in acquiring an interest in the copyright relating to an Australian film will be phased out, with no new appplications to be accepted after 30 June 2007.
Indirect Tax Changes
Continuing the trend of recent Budgets, GST collections are budgeted to increase by more than twice the rate of anticipated inflation over the next 4 years (rising to more than $50B in 2010/11), reaching 3.8% of GDP in 2007/08 (up from 3.6% in 2001/02).
GST - Increasing GST Registion Threshold
The Tresuerer announced an increas in the GST registration annual turnover threshold effective 1 July 2007. For businesses, the threshold will increase from $50,000 to $75,000.
Voluntary registration and the option of remitting annually will continue to be available.
GST - Additional ATO GST Audit Budget
The ATO is to be given an additional $15.2 million over the next 4 years to help reduce the existing levels of taxation debt. The additional funding is expected to generate an additional $65 million in GST collections over the next 4 years.
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