Do the Aussie Budget 2011 changes affect you?
STEVE DOUGLAS of Australasian Taxation Services highlights some of the tax issues and changes in the recent Australian Federal Budget, which could affect expatriates, intended migrants and foreign investors.
Personal Tax Rate Unchanged For the first time in nine years, there were no reductions in Australian personal tax rates, however, from 1 July, 2013 top tier earners – those above A$180,000 – will enjoy a reduced tax rate of 40 percent. The current A$37,000 to A$180,000 income bracket will merge into a single rate of 30 percent. Non-resident taxpayers and the 15 percent rate will not incur a tax-free threshold – rather, it will be a single rate of 29 percent up to A$37,000 of taxable income. Provided you’re genuinely living abroad for extended periods, Australians will continue to enjoy tax-free offshore salaries.Property Gearing & Tax Credits Full deduction for all costs, including interest and the allowance to write-off construction costs, remains unchanged for property investors. Together with sensible tax planning and debt management, a nil tax environment can continue to be enjoyed on an Australian property investment for offshore-based expatriates and
investors. Upon your return to Australia, you can then use property investment as a tax planning tool to provide for a tax-free salary. These rules for expatriates and intended migrants also remain unchanged.
investors. Upon your return to Australia, you can then use property investment as a tax planning tool to provide for a tax-free salary. These rules for expatriates and intended migrants also remain unchanged.
HECS Discount Reduced The current early payment discount option for outstanding University loans will be reduced. Effective 1 January, 2012. The current upfront discount will reduce from 20 percent to 10 percent, while the voluntary repayment discount will decrease from 10 percent to five percent. If you have surplus funds, reducing your HECS debt prior to the change may appear appealing. In effect, it remains a low cost loan with interest charged at the rate of inflation, which is approximately three percent per annum at present.
The Flood Levy For resident and non-resident taxpayers the Flood Levy applies only to the financial year ending 30 June, 2011. No levy will apply if your taxable annual income is A$50,000 or less. There will be a 0.5 percent charge for income between A$50,001 and A$100,000 and one percent for income more than A$100,001.
For further information and to read about other announcements made during the 2011 Australian Federal Budget, visit www.aussieproperty.com.
Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas. Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.
