Money
Issue No. 47 - June/ july
Budget adds personal tax measures
by Mr Steven Toth
Behind the headline-grabbing record budget deficits, several measures announced in the Federal Budget will have a direct impact on individual and business taxpayers.
Individual Income Tax Rates
The Government will honour individual income tax rate cuts in last year’s Budget. The rates for the year ended 30 June 2010 are in Table 1. The rates for the year ended 30 June 2011 and subsequent years are in Table 2. The low income tax offset will also be increased to $1350 for those with a taxable income of less than $30,000. These changes require employers to withhold less tax from their employees’ wages and employers should update their PAYG tables.
Employee share schemes
Many employers offer their staff company shares or
options at a cost below normal market value. Formerly, an employee could choose whether to be taxed up-front on the discount - the difference between the value of the shares or options and the amount paid - or defer the tax until the shares or options are sold, or they leave that employment. The first $1000 of discount was taxexempt when taxed up-front.
For transactions after 12 May, the option to defer tax
has been removed. Instead, the discount will be taxed in the year the shares or options are received. Employees with an adjusted taxable income of $60,000 or can no longer claim the $1000 exemption. The Government is reconsidering this measure.
Foreign employment income
Formerly, an employee working overseas, who paid tax overseas, did not have to pay tax in Australia on the income although the exempt foreign income had to be reported. From 1 July, all of an Australian resident’s foreign employment income will be subject to Australian income tax, at normal marginal tax rates, with an offset available for foreign tax paid to avoid double taxation.
Personal use of private company assets
From 1 July shareholders who use company assets on terms that are...
