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The Federal government’s 2011 budget, released last evening, has been widely reported as having little impact on most. This is certainly true from the perspective of taxation and accounting related changes. However the broader economic impact and its effect on interest rates, CPI increases and the Australian dollar may be very interesting to watch.

The following points are the major taxation and accounting changes from the budget:
1.Higher taxes for higher income earners
Various measures have been announced that will leave higher income earners out of pocket, albeit, not necessarily significantly, these include:
a.Reductions in discounts for early payments of HECS debts;
b.Re-introduction of proposal to means-test access to the 30% government funded discount for private health insurance; and
c.Removal of the low income offset for unearned income of minors, effectively reducing their tax-free income from $3,333 to $416 p.a.
2.Taxation of commercial activities of not-for-profit entities
Tightening of the taxation of commercial activities conducted by the not-for-profit sector. This matter has been the focus of government and ATO scrutiny for some time and failure of recent cases where the ATO has sought to narrow the availability of the tax concessions appears to have led to these proposals.
The announcements are light on detail but propose:
a.Tax will be payable on profits of unrelated commercial activities that are not directed back to their altruistic purpose; and
b.Such entities will also lose various Fringe Benefits Tax, Goods and Services Tax and Deductible Gift Recipient concessions in relation to the affected activities.
3.Greater ability to collect company tax and superannuation related debts from directors personally
The government will widen the occasions when directors of companies may be held personally liable for their company’s debts to encompass compulsory superannuation obligations for staff. In addition, if amounts of Pay As You Go Withholding and compulsory superannuation remain unreported for three months after becoming due, the ATO will be given the power to collect the debts arising from company directors personally without being required to provide a 21 day grace period as is presently the case.

Pilot’s detailed report of the budget’s taxation and accounting matters may be accessed at the following link:

https://www.pilotpartners.com.au/files/2011-2012-federal-budget-summary.pdf

Please contact us on 07 3023 1300 if you would like further information in respect of these announcements.