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Saving & Investment

• A 50% tax discount on the first $1,000 of income generated by products such as cash accounts, fixed interest and annuities will apply from July 2011.

• Investors with capital-protected loans will get a bigger tax deduction for the interest expense.

• Money in a first-home saver's account will be available to purchase a property after a minimum qualifying period instead of waiting 4 years.

Tax

• New calculations to determine the senior Australian tax offset could mean some retirees pay more tax.

• Simple tax returns from 2012-13 will let people opt to claim a standard $500 deduction for work-related expenses and the cost of tax affairs. This will double to $1,000 from 2013-14.

Social Security

• The child-care rebate will be reduced from $7,778 to $7500, a level that will not be indexed and apply for 4 years from July 2010.

• People will have to spend $2,000 rather than $1,500 on medical expenses before claiming the medical expenses tax offset.

Superannuation

• Temporary cuts to the super co-contribution announced in last year's budget will be permanent and the maximum income used to determine eligibility will be frozen for 2 years.

• Super funds will be able to claim a tax deduction for benefits paid for a terminal illness.

• The Australian Taxation Office will get to exercise its discretion regarding excess contributions tax before issuing an assessment to a taxpayer. This does not mean that the ATO will have any greater discretion to waive penalty tax according to Treasury officials.

• DIY super funds that use instalment warrants to buy shares or property will be able to do so with greater certainty about the ownership of the assets.

• Compulsory super will rise from 9% to 12% of salary in increments from July 2013 to July 2019.

• People over 50 will be able to make annual tax concessional super contributions of $50,000 if their fund balance is under $500,000. Those with a higher balance will be limited to annual contributions of $25,000.

• People with income of $37,000 or less will receive an annual super contribution from the government of up to $500.

• Employees will be able to receive compulsory super until the age of 75, rather than 70.

Important Information

Information provided in this newsletter is general in nature and does not constitute financial advice. While I have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and we recommend you seek financial advice.