Comprehensive facts and figures for financial advisers MASTECH MAY 2015

Transcription

1 Big Black Book 2014/15 Comprehensive facts and figures for financial advisers MASTECH MAY 2015

2 The MAStech Big Black Book The MAStech Big Black Book is an extensive reference tool containing financial planning related facts and figures for the use of financial services professionals. The Big Black Book covers key rules, rates and thresholds relating to: Personal taxation Insurance Superannuation accumulation phase Self managed super funds (SMSF) Superannuation - access to benefits Superannuation pension phase Superannuation benefits tax Superannuation and estate planning Social security and aged care Little Black Book A quick reference tool is available to download free for both Android and Apple devices. The latest version of the app includes embedded calculators to assist with simple tax, superannuation and social security related calculations, as well as a news service that will be frequently updated with technical developments that may have an impact on financial services professionals To have the essential facts and figures that you need on a daily basis at your fingertips, download the app now. We hope you find it a valuable tool. Download the Little Black Book Disclaimer: This information is intended for the use of financial services professionals. It is general in nature and does not take into account any individuals personal circumstances, financial needs or objectives, and we strongly recommend that clients consult with their financial adviser and read the relevant Product Disclosure Statement before making a decision about a financial product or class of financial products. This document dated May 2015 issued by Macquarie Investment Management Limited ABN AFSL RSEL L (MIML) is not to be treated as tax or legal advice. The product disclosure statements for any of our products are available from us. The information provided here is given in good faith and is believed to be accurate and reliable based on our understanding of the law and administrative practices of the relevant regulators as at the date of publication. However, where it includes information provided by third parties which we are not able to independently verify, we do not accept responsibility for errors or omissions by those third parties. This information is provided by MIML for information only. We will not be liable for any losses arising from reliance on this information. MIML is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959, and other than as expressly set out in the applicable PDS or other offer document, MIML s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML. 2 of 81

3 Table of Contents The MAStech Big Black Book 2 Little Black Book 2 Personal taxation 4 Higher Education Loan Program (HELP) 7 Medicare levy and surcharge 8 Personal tax offsets 9 Family tax benefits and payments 12 Schoolkids Bonus 13 Paid parental leave 14 Child care benefit 15 Child care rebate 16 Low income supplement 16 Single income family supplement 17 Termination of employment 18 Capital Gains Tax (CGT) calculation method 20 Other general taxation information 20 Interest rates 21 Fringe benefits tax 21 First Home Saver Account 24 First Home Owner Grant 24 Consumer Price Index (CPI) figures 25 Average Weekly Ordinary Time Earnings (AWOTE) 26 Insurance 27 Life insurance 27 Total and permanent disability (TPD) insurance 28 Trauma insurance 29 Income protection and business expenses insurance 30 Insurance within superannuation 30 Deductibility of TPD insurance premiums in super 31 Superannuation accumulation phase 32 Contribution eligibility 32 Contribution caps 33 Historical contribution caps 34 Financial year 34 Concessional contributions cap 34 Non-concessional contributions cap 34 CGT small business cap 34 Government co-contribution 35 Low income super contribution 35 Claiming tax deductions - personal super contributions 36 Fund tax treatment of contributions 37 Contributions tax for higher income earners 38 Superannuation Guarantee (SG) 39 Fund choice and portability 40 Foreign superannuation transfers 40 Spouse contribution splitting 41 Self managed superannuation funds (SMSFs) 42 Membership and trustee rules 42 Super fund residency 42 Acquiring assets from related parties 43 In-house assets 44 Collectables and personal use assets 44 Related parties 45 Limited Recourse Borrowing Arrangements (LRBA) 46 Other SMSF investment rules 46 Superannuation - access to benefits 47 Preservation 47 Conditions of release (COR) 48 Temporary residents 50 Superannuation pension phase 52 Account based pensions (ABPs) 52 TTR account based pensions 53 Allocated Pension - payment factors 54 Term Allocated Pension (TAP) 58 Australian Life Tables 60 Survival probability 62 Superannuation benefits tax 63 Calculation of tax components 63 What is a superannuation interest? 64 Tax treatment of lump sum member benefits 65 Tax treatment of income stream member benefits 66 Disability superannuation benefits 67 3 of 81

4 Terminal illness benefits 67 Departing Australia Super Payments 67 Superannuation and estate planning 68 Tax treatment of lump sum death benefits 68 Anti-detriment benefit 69 Death benefit income streams 69 Definitions of dependant 70 Definitions of spouse, child and interdependency 71 Tax free income thresholds if sole source of income 71 Age Pension ages 72 Service Pension ages (Veterans) 72 Age Pension 73 Superannuation assessment 75 Superannuation income stream assessment 75 Assessment of other assets 76 Commonwealth Seniors Health Card 76 Residential aged care 77 Glossary 80 Social security and aged care 72 4 of 81

5 Personal taxation Personal income tax rates 1 July June Taxable income Tax payable* - residents Tax payable - non-residents Up to $19,400 Nil $19,401 - $37,000 Nil + 19% 33% $37,001 - $80,000 $3, % $80,001 - $180,000 $17, % $26, % Above $180,000 $54, % 2 $63, % 3 * Plus Medicare levy 1 July June 2015 Taxable income Tax payable* - residents Tax payable - non-residents Up to $18,200 Nil $18,201 - $37,000 Nil + 19% 32.5% $37,001 - $80,000 $3, % $80,001 - $180,000 $17, % $26, % Above $180,000 $54, % 3 $63, % 3 * Plus Medicare levy Click to access MAStech Personal Income Tax Calculator Minor tax rates 1 July June 2015 Eligible taxable income or unearned income derived by a minor (ie a child under age 18) is subject to special tax rates. The low income tax offset cannot be used to reduce tax payable on unearned income. Eligible taxable income 4 Up to $416 $417 - $1,347 Above $1,347 Tax payable Nil Greater of: 68% 3 of excess over $416 or difference between tax payable at ordinary tax rates on whole of taxable income and tax on taxable income other than the eligible taxable income at ordinary tax rates 47% 3 * of eligible taxable income * Plus Medicare levy 1 Rates and thresholds for 2015/16 are based on current law at the time of writing. Legislation is before Parliament to repeal the personal income tax cuts that are legislated to commence on 1 July If passed in its current form, the 2014/15 rates and thresholds would be retained. 2 Includes Temporary budget repair levy of 2% in 2014/15, 2015/16 and 2016/17. 3 Includes Temporary budget repair levy of 2% in 2014/15, 2015/16 and 2016/17. 4 Broadly eligible taxable income is unearned income derived in the minor s name. This includes dividends, interest and rent amongst other things. The special rates do not apply to compensation payments or inheritance, or to those minors who are disabled or orphaned. 5 of 81

6 Withholding tax on Australian income for non-resident investors Non-residents are taxed, in Australia, only on certain types of income sourced in Australia. Non-residents are only subject to CGT in relation to certain assets. Broadly, for CGT events on or after 12 December 2006, a non-resident can only make a capital gain/loss if the relevant asset is taxable Australian property. Category Country with DTA 5 Country with no DTA Interest 10% 6 10% 6 Franked dividends 0% 0% Unfranked dividends 15% 6 30% 6 Taxable Australian real property gains and Australian other income 7 Payments from entities other than Managed Investment Trusts (MITs) 8 MIT distributions /13 and later Non-resident tax rates for individuals Company tax rate for corporates 47% 9 for non-resident trustee beneficiaries Country with EOI 11 Country with no EOI 11 15% 5 30% 5 Countries with Double Tax Agreements (DTA) and Exchange of Information (EOI) agreements with Australia Anguilla 12 Fiji Malta South Korea Antigua and Barbuda 12 Finland Mauritius 12 Spain Argentina France Mexico Sri Lanka Aruba 12 Germany Monaco 12 St Kitts and Nevis 12 Austria 13 Gibraltar 12 Netherlands St Vincent and Grenadines 12 Bahamas 12 Guernsey 12 Netherlands Antilles 12 Sweden Belgium Hungary New Zealand Switzerland 13 Belize 12 India Norway Taipei Bermuda 12 Indonesia Papua New Guinea Thailand British Virgin Islands 12 Ireland Philippines 13 Turkey 13 Canada Isle of Man 12 Poland Turks and Caicos Islands 12 Chile 13 Italy Romania United Kingdom China Japan Russia United States Czech Republic Jersey 12 San Marino 12 Vietnam Cayman islands 12 Kiribati Singapore Cook Islands 12 Macau 12 Slovakia Denmark Malaysia South Africa 5 General rates of withholding tax only. Individual DTA with Australia may specify a rate other than that quoted. Where available, refer to the DTA of the country in which the taxpayer is a resident to confirm the correct rate of withholding. 6 Represents a final tax and does not generate an allowable credit when an income tax return is lodged in Australia. 7 The Government proposed in the 2013/14 Federal Budget to apply a 10% non-final withholding tax to the disposal, by foreign residents, of certain taxable property above $2.5 million. This measure is to come into effect from 1 July Not yet law at the time of writing. 8 Non-final withholding tax generates an allowable credit when an income tax return is lodged. 9 Includes Temporary budget repair levy. 10 Distributions are subject to MIT withholding which is a flat and final tax. Broadly, a trust is a MIT if: it satisfies the residency test (at the first time during an income year that the trust makes a distribution (or at an earlier time in that year)), it is not engaged in active trade or business, it is a managed investment scheme, a substantial proportion of its investment management activities are carried out in Australia in respect of certain assets, it is widely held as defined and it satisfies licensing requirements where required. For withholding purposes, this new MIT definition is effective for the first trust distribution made in relation to an income year after 30 June Transitional provisions apply to a trust which qualified as a MIT under the definition as at May The rate of withholding on TARP capital gains and Australian other income is dependent upon whether Australia has an Exchange of Information (EOI) agreement in place with the non-resident s country of residence. 12 Has an EOI but not a DTA with Australia. 13 Has a DTA but not an EOI with Australia. 6 of 81

7 Residency tests The tests outlined in the table below are used to determine residency. Taxation Ruling IT 2650 suggests the first two tests ( resides and domicile ) are usually the most relevant, and that a period of absence from Australia of more than 2 years would generally be regarded as a substantial period of time to support establishing a permanent abode outside Australia. The duration of the taxpayer's stay overseas is not of itself conclusive and must be considered with all the other factors. The Government proposed in the 2015/16 Federal Budget that from 2016/17, most people who are temporarily in Australia for working holidays will be treated as non-residents for Australian tax purposes, regardless of how long they are here. Not yet law at the time of writing. Test When to apply Detail Resides Domicile Primary test: if person resides in Australia according to ordinary meaning of the word, no need to apply other 3 tests Broad definition of the term within ordinary concepts If permanent place of abode (home) is in Australia 183 day rule Secondary / statutory tests: extends the class of persons who are treated as residents beyond those who reside in If present in Australia for more than 183 days If person is a member of certain Commonwealth Superannuation Australia superannuation funds or an eligible Commonwealth government employee. Also covers person s spouse or child under 16 Higher Education Loan Program (HELP) HELP repayments are calculated on repayment income, which is taxable income plus any total net investment loss, reportable fringe benefits total, reportable super contributions (refer to page 80) and exempt foreign employment income. Rate of repayment (applied to repayment income) 2014/15 Repayment income /16 Repayment income 14 Nil Less than $53,345 Less than $54, % $53,345 - $59,421 $54,125 - $60, % $59,422 - $65,497 $60,293 - $66, % $65,498 - $68,939 $66,457 - $69, % $68,940 - $74,105 $69,950 - $75, % $74,106 - $80,257 $75,191 - $81, % $80,258 - $84,481 $81,433 - $85, % $84,482 - $92,970 $85,719 - $94, % $92,971 - $99,069 $94,332 - $100, % $99,070 and above $100,520 and above The Government proposed in the 2015/16 Federal Budget that HELP repayments would be extended from 2016/17 to Australians living overseas for six months or more, if their worldwide income exceeds the minimum payment threshold as it applies within Australia. Not yet law at the time of writing. 14 Voluntary repayments of HELP debts attract a 5% bonus for payments of $500 or more and a discount of 10% is available to students electing to pay their student contribution up-front. The discounts applying to up-front and voluntary payments made under the HELP scheme are proposed to be removed with effect from 1 January The Government has also proposed to introduce a new minimum repayment threshold equal to 90 per cent of the minimum threshold that would otherwise apply from 1 July A repayment rate of 2 per cent will apply to this new minimum threshold. Not yet law at the time of writing. 7 of 81

8 Medicare levy and surcharge Medicare levy is based on taxable income (excluding the taxable component of a superannuation lump sum taxed at 0%). Medicare levy thresholds 1 July June 2014 Singles Families Medicare levy rate Up to $20, Up to $34,367 15,16 Nil $20,543 - $24,167 $34, $40, % of taxable income between thresholds Above $24,167 Above $40, % 18 of taxable income Eligible for Seniors and Pensioners Tax Offset Medicare levy rate Up to $32, Up to $46, Nil $32,280 - $37,975 $46, $54, % of taxable income between thresholds Above $37,975 Above $54, % 18 of taxable income Medicare levy surcharge 20 Medicare levy surcharge may apply to singles and couples who do not have adequate private health cover. Income for surcharge purposes (refer to page 80) is used to determine liability for Medicare levy surcharge. The amount of surcharge payable is calculated on taxable income (excluding assessable income from the taxable component of a superannuation lump sum where the tax rate is 0%) plus reportable fringe benefits total. The family thresholds increase by $1,500 for each dependent child after the first. The couple s threshold is double the singles threshold. 1 July June 2015 Singles Families Medicare levy surcharge Up to $90,000 Up to $180,000 Nil $90,001 - $105,000 $180,001 - $210, % $105,001 - $140,000 $210,001 - $280, % Above $140,000 Above $280, % 1 July June 2014 Singles Families Medicare levy surcharge Up to $88,000 Up to $176,000 Nil $88,001 - $102,000 $176,001 - $204, % $102,001 - $136,000 $204,001 - $272, % Above $136,000 Above $272, % 15 The Government proposed in the 2015/16 Federal Budget to increase the lower threshold for singles to $20,896 for the 2014/15 year and the lower threshold for families with no children to $35,261. Not yet law at the time of writing. 16 Plus $3,156 for each dependent child or student. The 2015/16 Federal Budget announced an increase to $3,238 per additional child for the 2014/15 year. Not yet law at the time of writing. 17 Plus $3,713 for each dependent child or student. The 2015/16 Federal Budget announced an increase to $4,048 per additional child for the 2014/15 year. Not yet law at the time of writing. 18 The Medicare levy will increase from 1.5% to 2% from 1 July 2014 to provide funding for DisabilityCare Australia. 19 The Government proposed in the 2015/16 Federal Budget to increase the lower threshold to $33,044. Not yet law at the time of writing. 20 Indexation of the income thresholds for the Medicare levy surcharge will be paused from 1 July 2015 until 30 June of 81

9 Personal tax offsets Low Income Tax Offset (LITO) Thresholds based on taxable income 2013/14, 2014/ /16 21 Income assessed Taxable income Taxable income Max offset $445 $300 Shade-out threshold $37,000 $37,000 Cut-out threshold $66,667 $67,000 Rate of reduction $0.015 per $1.00 above shade-out threshold $0.010 per $1.00 above shade-out threshold Effective tax free threshold $20,542 $20,979 The amount of LITO delivered through regular pay increased to 70% of total entitlement from 1 July The remaining 30% is paid as a lump sum on assessment of the taxpayer s income tax return. Mature Age Worker Tax Offset (MAWTO) Abolished from 1 July 2014 Income assessed Up to $9,999 Net income from working, includes: personal services income eg salary assessable income from carrying on a business net amount of farm management deposits and withdrawals reportable employer super contributions see page 80 reportable fringe benefits total less any deductions related to personal services or business income $0.05 per $1.00 of net income from working $10,000 - $53,000 $500 $53,001 - $62,999 $500 reduced by $0.05 per $1.00 over $53,000 $63,000 and above Nil Eligibility criteria Claimant must: be born before 1 July 1957 have net income from working (within above limits), and be an Australian resident 21 LITO rates and thresholds for 2015/16 are based on current law at the time of writing. Legislation is before Parliament repeal these rates and thresholds. If passed in its current form, LITO rates and thresholds for 2014/15 will be retained. 9 of 81

10 Seniors and Pensioners Tax Offset (SAPTO) Singles Couples (each) Income assessed Rebate income see page 80 Maximum offset $2,230 $1,602 Shade-out threshold $32,279 $28,974 Cut-out threshold $50,119 $41,790 Rate of reduction $0.125 per $1.00 above shade-out threshold Eligibility criteria Either: reached Age/Service pension age, and meet eligibility requirements for a Government pension or similar Or receiving certain taxable Government payments Dependent spouse tax offset Proposed to be abolished from 1 July Income assessed Adjusted taxable income see page 80 Max spouse tax offset 2013/14 $2,471 Shade-out threshold spouse $282 Cut-out threshold 2013/14 $10,166 Cut-out threshold primary earner $150,000 Rate of reduction $1.00 per $4.00 of spouse s income above shade-out threshold Eligibility criteria dependent spouse must be born before 1 July not eligible for family tax benefit part B, and not receiving parental leave pay under the Paid Parental Leave Act 22 Not yet law at the time of writing. 23 Exceptions apply to taxpayers with an invalid or permanently disabled spouse, supporting a carer or people eligible for the zone, overseas forces and overseas civilian tax offsets. 10 of 81

11 Spouse contribution tax offset Income assessed Less than $10,800 $10,800 - $13,799 $13,800 and above Nil 2014/15 Private health insurance rebate 24 1 July March Based on spouse s: assessable income reportable fringe benefits total reportable employer superannuation contributions see page 80 18% of the lower of: total spouse contributions for the income year; and $3,000 18% of the lower of: total spouse contributions for the income year; and $3,000 (receiving spouse income - $10,800) Private health insurance rebate is means tested based on a taxpayer's income for surcharge purposes (see page 80). The amount of private health insurance rebate will be reduced where income is above the Medicare levy surcharge thresholds. Income for surcharge purposes Private health insurance rebate Singles Families Under Up to $90,000 Up to $180, % 33.88% 38.72% $90,001 - $105,000 $180,001 - $210, % 24.20% 29.04% $105,001 - $140,000 $210,001 - $280, % 14.52% 19.36% Above $140,000 Above $280,000 0% 0% 0% The family thresholds increase by $1,500 for each dependent child after the first. Net medical expense tax offset (NMETO) 26 Taxpayers can claim a tax offset for net medical expenses over the set threshold. There is no upper limit on the amount that can be claimed. 2014/15 Net medical expenses definition Eligible medical expenses less refunds from Medicare or private health insurer Income assessed Adjusted taxable income see page 80 Income threshold - singles Up to $90,000 Above $90,000 Income threshold - couples Up to $180,000 Above $180,000 Expense threshold 27 $2,218 pa $5,233 pa Offset rate 20% of expenses above threshold 10% of expenses above threshold 24 Indexation of the income thresholds for private health insurance rebate will be paused from 1 July 2015 until 30 June Rebate adjusted annually on 1 April. 26 The NMETO will be phased out from 1 July Transitional arrangements apply for those who claimed the offset in 2012/13 and 2013/14. The offset will continue to be available for out of pocket medical expenses relating to disability aides, attendant care or aged care until 1 July Indexed annually with CPI. 11 of 81

12 Family tax benefits and payments 1 July June 2015 Family tax benefit part A Income test Income assessed Families adjusted taxable income see page 80 Maximum rate threshold $50, Reduction above maximum rate threshold $0.20 per $1.00 above max rate threshold Base rate threshold $94, $3,796 for each dependent child after the first 30 Reduction above base rate threshold $0.30 per $1.00 above base rate threshold Maximum rates of payment 31 For each child Legislated maximum rate per annum Proposed maximum rate per annum 32 Under 13 years $5, $5, years $6, $6, years (if full time student) $6, $6, Child in an approved care organisation 0 19 years $1, $1, Base rates of payment 31 For each child Legislated base rate per annum Proposed base rate per annum 32 Under 16 years (or if full time student) $2, $2, A large family supplement 33 of $ per annum is payable for each child after the second. Multiple birth allowance may also be payable. 34 This is an annual payment of $3, for triplets and $5, for multiple births of quadruplets or more This threshold is proposed to remain fixed until 30 June Not yet law at the time of writing. 29 This threshold will remain fixed until 30 June The FTB Part A per child add-on will be removed from 1 July Annual figures include FTB Part A supplement of $ per child and FTB Part A energy supplement. Amount of energy supplement based on child s age and rate of FTB Part A payment. Indexation of the FTB Part A supplement will be paused until 30 June The Government proposed in the 2014/15 Federal Budget to reset the FTB Part A supplement to $ per child and remove indexation from 1 July Not yet law at the time of writing. 32 It is proposed the maximum and base payment rates for FTB Part A will remain fixed until 30 June Not yet law at the time of writing. 33 The Government proposed in the 2015/16 Federal Budget to abolish the large family supplement from 1 July Not yet law at the time of writing. 34 The large family supplement will be limited to families with four or more children from 1 July The supplement will be paid in respect of the fourth child and each additional child thereafter. 35 The Government proposed in the 2014/15 Federal Budget to provide an additional supplement of $750 from 1 July 2015 for each child aged between 6 and 12 for single parents on the maximum payment rate, from when they are ineligible for FTB Part B. Not yet law at the time of writing. 12 of 81

13 Family tax benefit part B 36 1 July June 2015 Income test Income assessed Adjusted taxable income see page 80 Phase-out threshold secondary earner $5, Cut-out threshold secondary earner youngest child under age 5 Cut-out threshold secondary earner youngest child age 5-18 years $27,065 $21,043 Cut-out threshold primary earner/sole parent $150, Reduction above maximum rate threshold $0.20 per $1.00 above secondary earner s phase-out threshold Maximum rates of payment 39 Age of youngest child Legislated maximum rate per fortnight Proposed maximum rate per annum 40 Under 5 years $4, $4, years (or if full time student) $3, $3, Schoolkids Bonus 2014/15 41 Payment - primary school student (each) $211 for six months Payment - secondary school student (each) Eligibility criteria $421 for six months from 5 September 2014 adjusted taxable income must be $100,000 or less in income year eligibility assessment occurs eligibility assessed 1 January and 30 June each year families must be receiving family tax benefit part A, or students must be turning 19 or less in a calendar year and receive youth allowance or certain other income support or veterans' payments 36 The Government proposed in the 2014/15 Federal Budget to limit the receipt of the FTB Part B to families whose youngest child is less than 6 years old, from 1 July Transitional arrangements are proposed so that families who have a child 6 and over on 30 June 2015 will remain eligible for payments for 2 years. Not yet law at the time of writing. 37 It is proposed this threshold will remain fixed until 30 June Not yet law at the time of writing. 38 This threshold will be reduced to $100,000 from 1 July Annual figures include FTB Part B supplement of $ and FTB Part B energy supplement. Amount of energy supplement is based on age of youngest child. Indexation of FTB Part B supplement will be paused until 30 June The Government proposed in the 2014/15 Federal Budget to reset the FTB Part B supplement to $ and remove indexation from 1 July Not yet law at the time of writing. 40 It is proposed the maximum rates of payment for FTB Part B will remain fixed until 30 June Not yet law at the time of writing. 41 The Schoolkids Bonus will be removed with effect from 31 December of 81

14 Paid parental leave 1 July June 2015 Parental Leave Pay (PLP) Dad and Partner Pay (DAPP) Eligibility criteria Claimants of PLP or DAPP must have: worked at least 10 of the 13 months before the birth, adoption or date of claim worked at least 330 hours in the 10 month period adjusted taxable income (see page 80) of $150, or less in the financial year prior to the date of birth, adoption or date of claim, and be an Australian resident Who can claim? Impact of employment A person who is the: primary carer of a newborn or recently adopted child from 1 January 2011 can be taken in conjunction with, or in addition to, employer-provided leave, but not while working 43 A person who is the: biological father of the child partner of the child's mother (including same-sex partner), or adoptive parent of the child And, who is: Term 18 weeks 2 weeks providing care for a child born or adopted from 1 January 2013 can be taken in addition to employerprovided leave, but not at the same time as paid leave or while working Amount Tax Treatment Impact on other family benefits $ pw Assessable income Ineligible for FTB Part B during the 18 week paid parental leave period May continue to receive FTB 42 This threshold will remain fixed until 30 June The Government proposed in the 2015/16 Federal Budget to limit eligibility where individuals have access to employer-provided leave. PLP is proposed to be reduced from 2016/17 by the amount paid by the employer, so that the combined maximum individuals receive from their employer and PLP combined is equivalent to the maximum PLP benefit. Where the employer funded scheme pays a higher rate than the PLP, an individual will not be eligible to receive the PLP. Not yet law at the time of writing. 14 of 81

15 Child care benefit 44 Maximum payment rates Child care benefit 7 July June 2015 Approved care Income tested Yes (see table below) Income assessed Family's adjusted taxable income see page 80 Maximum benefit 1 non school-age child Maximum benefit 2 non school-age children Maximum benefit 3+ non school-age children $ per week ($4.10 per hour) $ per week ($4.28 per hour for each child) $ per week + $ for each child after the third ($4.45 per hour for each child) Registered care Income tested Maximum benefit - non school-age child (each) No $34.20 per week ($0.684 per hour) Payment rates for school age children are 85% of non-school age children rate. Weekly rate assumes 50 hours of care. Income test The maximum rate of child care benefit is payable for families with adjusted taxable income less than the lower income threshold, or families receiving Commonwealth income support. For families with income above the lower income threshold, the following reduction rates and upper income limits apply. Adjusted taxable income Reduction rates and upper income limits 1 child in approved care 2 children in approved care 3+ children in approved care Up to $42,997 Nil Nil Nil $42,997 - $100,268 Nil + 10% Nil + 15% Nil + 15% Above $100,268 $5, % $8, % $8, % Upper income limits $149,597 $155,013 $175,041 + $33,106 for each child after the third Calculating child care benefit approved care Step Description 1 Calculate the maximum approved care entitlement based on 50 hours of approved care over 52 weeks 2 If the family s adjusted taxable income (see page 80) is above $42,997 44, calculate the income test reduction by multiplying the amount of adjusted taxable income in excess of the relevant threshold by the taper rate and adding the base amount payable 3 Reduce the maximum entitlement (step 1) by the income test reduction amount (step 2). 4 Divide the result of step 3 by (52x50) to calculate the per-child per-hour amount 5 For each child multiply the amount in step 4 by the number of hours of care per week and number of weeks per year (rates for school age children are 85% of non-school age children rate). 6 Add together the per child amounts in step 5 to obtain the total benefit. 44 In the 2015/16 Federal Budget the Government proposed to abolish the child care benefit from 30 June It will be replaced with a Child Care Subsidy, which will be calculated based on annual family income and an activity test, determined by the hours spent working, studying or engaged in an eligible activity. Not yet law at the time of writing. 15 of 81

16 Child care rebate 45 From 1 July 2011, child care rebate can be automatically sent to the Approved Child Care Service or credited to the client s bank account. Choosing either of these two options will have 15% of the child care rebate withheld to reduce the chances of a reconciliation debt. Child care rebate 1 July June 2015 Maximum rebate $7, Rebate amount Payment Eligibility criteria 50% of (total child care fees less final child care benefit entitlement) paid fortnightly, quarterly or annually non-refundable tax offset unused rebate can be transferred to a spouse used approved child care applied for child care benefit 47 and worked or had work related commitments at some time during the period. Low income supplement 48 Low income supplement (LIS) 1 July June 2015 Income assessed Amount Prior financial year's: adjusted taxable income see page 80, plus non-assessable, non-exempt super income streams $300 pa Income threshold - singles $30,000 Income threshold - couples $45,000 Income threshold - singles/ couples with a dependent child Tax treatment Other eligibility criteria $60,000 Tax exempt Excluded payment requirement: not have been paid certain clean energy payments for at least 92 days in the year, and if LIS claimant, must not have an FTB child for at least 13 weeks in the year, or if low income family supplement (LIFS) claimant must have had an FTB child for at least 39 weeks in the year, and not have received certain Government assistance payments for at least 13 weeks in the year, Tax requirement: claimant s and partner s taxable income must be less than $18,000 or the person's LIS threshold amount 49 Residency requirement: be an Australian resident and be in Australia for at least 39 weeks of the financial year 45 The Government has proposed to abolish this rebate from 30 June 2017, to be replaced by a new Child Care Subsidy. Not yet law at the time of writing. 46 The maximum rebate will remain fixed until 30 June There is no income test for the Child Care Rebate. If you are eligible for Child Care Benefit, but your Child Care Benefit entitlement is zero due to income, you are still eligible for the Child Care Rebate. 48 The Government has proposed to abolish the low income supplement from 1 July Not yet law at the time of writing. 49 A person's LIS threshold is calculated as: (eligible tax offsets/0.15) + $18,000 Where, eligible tax offsets = a person's tax offsets for the financial year, excluding the Low Income Tax Offset. 16 of 81

17 Single income family supplement Eligible individuals who are receiving family tax benefit (FTB) will not need to make a claim for SIFS as the payment will be automatically calculated and included in their entitlement at the end of the year. Eligible individuals who are not receiving FTB will need to apply to receive this payment. Single income family supplement (SIFS) Income assessed Tax treatment Eligibility criteria Primary earner income test Less than $68,000 1 July June 2015 Taxable income Tax exempt Claimant must: have a least one qualifying FTB child be an Australian resident or be special category visa holder, and not be an absent overseas recipient Nil payment $68,000 - $79,999 $0.025 per $1.00 of income above $68,000 $80,000 - $120,000 $300 $120,001 - $149,999 $300 reduced by $0.01 per $1.00 over $120,000 $150,000 and above Nil payment Secondary earner income test Income limit $16,000 Rate of reduction SIFS calculated under primary earner income test is further reduced by $0.15 per $1.00 of secondary earner s taxable income above limit 17 of 81

18 Termination of employment Accrued annual leave Payment type Assessable Maximum tax rate Resignation/retirement To 17 Aug 1993 From 18 Aug % 100% 30%* Marginal tax rate* Genuine redundancy/invalidity/early retirement 100% 30%* * Plus Medicare levy Accrued long service leave Payment type Assessable Maximum tax rate Resignation/retirement To 15 Aug Aug Aug1993 From 18 Aug1993 Genuine redundancy/invalidity/early retirement To 15 Aug 1978 From 16 Aug 1978 * Plus Medicare levy 5% 100% 100% 5% 100% Marginal tax rate* 30%* Marginal tax rate* Marginal tax rate* 30%* The unused annual/long service leave amounts are added to the taxpayer s assessable income. The taxpayer receives a tax offset to ensure the effective tax rate does not exceed the maximum rate shown above. Genuine redundancy payments The tax-free portion of a genuine redundancy payment is calculated outlined in the table below. An amount above the taxfree portion is an Employment Termination Payment. 2014/ /16 $9,514 plus $4,758 for every completed year of service $9,780 plus $4,891 for every completed year of service 18 of 81

19 Employment Termination Payments (ETPs) Life benefit ETPs Life Benefit ETPs received in 2014/15 will be taxed as follows: Age Tax free component Taxable component Maximum tax rate Under preservation age Preservation age and over Non-assessable non-exempt income 30%* up to cap 47% 50 * above cap 15%* up to cap 47% 50 * above cap Cap on taxable component If ETP relates to: Genuine redundancy 51 Early retirement schemes Invalidity Certain types of compensations For all other ETPs eg golden handshake or gratuity $185, ETP cap Cap is the lesser of: $185, ETP cap, and $180,000 less other taxable income 53 Death benefit ETPs Beneficiary Tax free component Taxable component Maximum tax rate Cap Dependant (Tax definition - see page 70) Non-dependant Non-assessable non-exempt income NANE up to cap 47% 50 * above cap 30%* up to cap 47% 50 * above cap $185, *Plus Medicare levy 50 Includes Temporary budget repair levy of 2% in 2014/15, 2015/16 and 2016/ Includes payments that would otherwise qualify as a genuine redundancy except for the individual s age. 52 Cap is reduced by the taxable component of previous ETPs related to the same termination and ETPs that were received in the same financial year. Cap is increasing to $195,000 in 2015/ The $180,000 whole of income cap is reduced by other taxable income (excluding the ETP) in the same financial year. 19 of 81

20 Capital Gains Tax (CGT) calculation method Purchased Prior to 20 Sept 1985 From 20 Sept 1985 and prior to am 21 Sept 1999 From am 21 Sept 1999 Capital gain treatment Capital gain disregarded Net capital gain calculated using indexed cost base method (indexation frozen at Sept 1999) 54 OR Discount Method (see below) Capital losses - may be used to reduce pre-discounted capital gains attributable to assets held for either less than or more than 12 months. Assets held less than 12 months - gain is calculated by deducting cost base from proceeds. Discount Method (Assets held 12+ months) - net capital gain may be discounted by 50% (individuals or trusts) 55 or 33 1/3% (complying super funds). Other general taxation information Deductions for prepaid expenses Deductions for prepaid expenses General deduction provisions Expenses incurred in gaining or producing assessable income are generally tax deductible Must not be capital, private or domestic in nature, or incurred in relation to producing non-assessable, non-exempt income 12 month rule Individuals can claim an immediate deduction for up to 12 months of prepaid non-business expenses that are otherwise deductible eg interest paid in advance on an investment loan 12 month period must end before the end of the next financial year Not available to superannuation funds, including SMSFs Life policy taxation Investment earnings are taxed at 30%. Additional tax may be payable for withdrawals within 10 years. Annual contributions to the policy may be considered as part of the original investment, provided the amount is less than 125% of the previous year's contributions. Amounts greater than 125% will restart the 10 year period. Year Assessable Part Tax offset Within 8 years All accumulated bonuses 56 During the 9th year 2/3 of accumulated bonuses 56 30% of assessable part 57 During the 10th year 1/3 of accumulated bonuses 56 After 10 years Tax free N/A 54 Refer to table below CPI indexation figures. 55 The 50% discount on capital gains is not available for non-residents in relation to capital gains accrued after 7.30pm (AEST) on 8 May The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May Broadly, this is the growth in the value of the policy. 57 Any excess offset can be used to reduce tax on other income. 20 of 81

21 Other entity taxation rates Entity Type Tax treatment Superannuation fund Complying: pension phase; and accumulation phase 0% 15% Non-complying 47% 58 Corporation Corporate tax entity 30% Interest rates Date RBA Target Rate 59 Date Benchmark rate capital protected borrowings 60 From May % From May 2015 Feb 2015 Apr % Feb 2015 Apr % Aug 2013 Feb % Aug 2013 Feb % May 2013 Jul % May 2013 Jul % Dec 2012 Apr % Dec 2012 Apr % Oct 2012 Dec % Oct 2012 Nov % Jun 2012 Oct % Jul 2012 Sep % May 2012 Jun % May 2012 Jun % Fringe benefits tax Fringe benefits tax is a tax that is payable by employers based upon certain benefits provided to employees or their associates. This information is subject to change each FBT year. FBT 1 April March 2016 FBT Rate 49% 61 Exemption threshold $8,164 Type 1 gross-up rate Type 2 gross-up rate FBT exempt amount Reportable fringe benefit amount (RFBA) (provider entitled to GST input tax credits, 10% GST and 49% FBT rate) (49% FBT rate) $17,667 (Qualifying public or non-profit hospital, public ambulance service), or $31,177 (Public benevolent institution or health promotion charity not covered by $17,667 threshold) $2, Includes Temporary budget repair levy. 59 The rate banks charge each other for overnight borrowings (i.e. the cash rate). 60 The maximum rate that can be claimed as an interest deduction for geared capital protected investments. For contracts entered into after 13 May 2008 the maximum rate is the RBA indicator variable rate for a standard housing loan plus 1%. Transitional arrangements apply for contracts entered into before 13 May For these contracts the RBA indicator variable rate for a personal unsecured loan can be used for this purpose until 30 June Includes Temporary Budget Repair Levy (see page 5). 21 of 81

22 Type Description of taxable value Car benefits See page 23 Loan benefits Debt waiver fringe benefits Expense payment fringe benefits Housing fringe benefits Board fringe benefits Airline transport fringe benefits Living away from home allowance (LAHFA) fringe benefits Property fringe benefits Entertainment fringe benefits The taxable value of a loan fringe benefit is the difference between a notional amount of interest (calculated on a daily balance of the loan) at the statutory rate and the actual amount of interest calculated on the loan Statutory benchmark for period ending 31 March 2014 is 6.45% Taxable benefit arises where employer waives a debt of an employee The taxable value of the benefit is the amount of the debt waived Taxable benefit arises where employer pays or reimburses expenses incurred by an employee Taxable value of expense payment fringe benefits is the amount of the expense paid by the employee but reimbursed by the employer Taxable benefit arises where employer grants an employee an housing right which must be greater than one day The taxable value of the benefit depends on whether housing is in a remote area or not or whether inside or outside Australia Outside Australia taxable value will be the market value of the accommodation less any rent or consideration paid Non-remote housing in Australia generally, the statutory annual value of the right to occupy the accommodation less any rent paid. In the first year it is the market value of the accommodation and in subsequent years it is indexed according to movements in the CPI. Remote area housing in Australia an exempt benefit provided certain criteria are met Board benefits arise when employees are entitled under an industrial award or employment arrangement to accommodation and two meals a day Taxable value is $2 per meal (if 12 or more) or $1 per meal (if under 12) An airline transport benefit arises when an airline operator provides transport to its employees Domestic flights taxable value is 37.5% of standard economy fare less any amounts paid International flights taxable value is 37.5% of lowest advertised fare Exemption for first $1,000 taxable value in benefits employees receive each year LAHFA fringe benefit arises when an employer pays an employee an allowance to compensate for additional expenses because the employee is required to live away from home The taxable value of LAHFA benefits provided is the amount of the allowance paid that exceeds the amount reasonably necessary to compensate the employee for living away from home Reasonable additional food costs - $150 per week per person (12 years or older) or $75 per week per child (12 years or younger) Note: from 1 October 2012 LAFHA will no longer be treated as a fringe benefit for new arrangements entered into after 8 May 2012 and from 1 July 2014 for arrangements entered into prior to that time. Any LAFHA will be included in assessable income of the employee. Property benefits arise when property is provided to an employee. The form of the property may take the form of goods, services, shares or rights The taxable value of property benefits is the amount by which the arm s length cost of the goods provided exceeds the price charged to the employee For in-house property benefits, the first $1,000 of the taxable value for each employee will be exempt The taxable value of meal entertainment fringe benefits is calculated by either: the 50:50 method one half of the expenses incurred is the taxable value of the benefits provided, or the 12 week register method taxable value is the total meal expenditure multiplied by the register percentage. The register percentage is the total percentage of meal entertainment benefits provided divided by total value of meal entertainment provided 22 of 81

23 Type Car parking fringe benefits Residual fringe benefits Description of taxable value Taxable value of car parking benefit can be determined using any of the: Commercial parking station method Market value method Average cost method Statutory formula method 12 week register method A residual benefit is one that is not covered by any of the above. The taxable value of an in-house residual fringe benefit is 75% of the lowest price charged to the public For residual in-house benefits, the first $1,000 of the taxable value for each employee will be exempt For residual benefits that are not in-house benefits, the taxable value is the arm s length cost of the benefit to the employer less any amount paid Car fringe benefits Under the current car fringe benefit rules, the taxable value of a car fringe benefit can be calculated using either the statutory formula method or the operating cost method. Method for determining taxable value Statutory formula method Taxable value of car fringe benefit = ABC - E Where A is base value of car B is statutory rate (see table below) C is number of days during the year on which a car fringe benefit was provided D is the number of days during the year E is the amount of any recipient s payment Taxable value of car fringe benefit = [C x (100% - BP)] - R Where: D C is operating cost of the car during the holding period BP is the business use percentage applicable for the holding period R is the amount of any recipient s payment attributable to the holding period Operating cost method Note - operating cost includes depreciation, which is calculated as: Depreciation = abc Where: d a is the depreciated value b is 0.25 for cars acquired on or after 10 May 2006 ( for cars acquired before 10 May 2006 but on or after 1 July 2002 and otherwise) c is the number of days car is held during the year d is number of days in the year 23 of 81

24 Statutory rates A flat statutory rate of 20% applies to all new contracts entered into after 7.30pm (AEST) on 10 May Changes for new contracts will be phased in over four years unless an employer elects not to apply the transitional arrangements. However, an employer cannot force an employee to move to the new rules where the employee would be directly worse off. Annualised number of whole kilometres Existing contracts prior to 10 May 2011 From 10 May 2011 From 1 April 2012 From 1 April 2013 New contracts From 1 April 2014 Less than 15, ,000-24, ,000-40, More than 40, First Home Saver Account First Home Saver Accounts (FHSA) are proposed to be abolished with effect from 13 May First Home Saver Account Government contribution Account opening conditions Max government contribution 2013/14 Account balance cap 2013/14 17% of personal contributions Aged 18 to 64 Not previously owned a home in Australia in which they have lived Provide their TFN and meet proof-of-identity requirements $1,020 pa indexed annually with AWOTE $90,000 lifetime limit Indexed annually with AWOTE and rounded down to the nearest $5,000 Tax rate earnings 15% Tax free withdrawals to purchase 1st home to live in (if contributions $1,000+ in 4 fin years) to transfer to a super fund (as a non-concessional contribution) to transfer to a genuine mortgage (after 4 fin year qualifying period) to transfer to another FHSA at or after age 60 Note: When a FHSA holder turns 65 the FHSA must be closed and the balance may be paid tax free to the member or transferred into the FHSA holder s super fund as a non-concessional contribution. This non-concessional contribution is not eligible for the government co-contribution. First Home Owner Grant The First Home Owner Grant (FHOG) Scheme was introduced on 1 July 2000 and provides a grant to first home buyers to purchase their first home. The FHOG Scheme is funded by State Governments. Notes: Some State Governments offer additional grants such as Victorian First Home Bonus. Some payments are (or are proposed to be) capped. First home buyers usually have access to reduced rates of stamp duty. We recommend you check with the relevant revenue office for a comprehensive list of rules and entitlements. 62 It is proposed new FHSA will not be eligible for concessions, Government co-contributions will cease from 1 July 2014 and the various tax and social security concessions will cease from 1 July Not yet law at the time of writing. 24 of 81