Summary of 2009/2010 Federal Budget

2009/2010 FEDERAL BUDGET – SUMMARY OF MAJOR CHANGES

1.      Investment Allowance For Small Business Entities

The temporary bonus investment allowance has increased from 30% to 50% of the cost of the eligible depreciating asset.

Small Business

Eligible Asset Installed by:

Rate of Investment Allowance:

30 June 2009

50% in 2008/2009

30 June 2010

50% in 2009/2010

31 December 2010

50% in 2010/2011

Larger businesses are still eligible for the previously announced 30% tax deduction for assets acquired before 30 June 2009 and installed before 30 June 2010 and 10% for assets acquired between 1 July 2009 and 31 December 2009 and installed before 31 December 2010.


Larger Business

Eligible Asset Installed by:

Rate of Investment Allowance

after 12 December 2008 and Before:

30 June 2009

31 December 2009

30 June 2009

30% in 2008/2009

30 June 2010

30% in 2009/2010

10% in 2009/2010

31 December 2010

10% in 2010/2011

10% in 2010/2011

2.      Personal Tax Rates

For the income year commencing 1 July 2009 the Resident Personal Tax Rates (excluding Medicare Levy) will be:

Taxable Income

$

Rate

%

$0 – $6,000

0%

$6,001 – $35,000

15%

$35,001 – $80,000

30%

$80,001 – $180,000

38%

$180,000 +

45%

3.      Superannuation Caps

From 1 July 2009, the concessional contributions cap will be halved from the current standard cap of $50,000 to $25,000.

A reduction will also apply to the transitional caps to taxpayers aged 50 and over.  The transitional concessional cap will be reduced from the current annual threshold of $100,000 to $50,000 per year.  The new transitional concessional cap will apply until 30 June 2012.

Non-concessional contribution caps remain at $150,000 (indexed) per year which will be six times the standard concessional contribution cap.

4.      Superannuation Co-Contributions

The superannuation co-contribution scheme will be reduced to 100% of eligible contributions from 1 July 2009 until 30 June 2012.  The rate will increase to 125% of contributions from 1 July 2012 until 30 June 2014 and returned to its former level of 150% from 1 July 2014.

5.      Age Pension

Eligibility for the age pension will gradually increase to 67 years of age. Pension changes will apply to new pension entrants from 1 July 2017, which means that it applies to people who are 57 or younger in July 2009.

Date

New pension age

Affects taxpayers

born

When group reaches new age pension age

1 July 2017

65 years &

6 months

1 July 1952 to

31 December 1953

1 January 2018 to

30 June 2019

1 July 2019

66 years

1 January 1954 to

30 June 1955

1 January 2020 to

30 June 2021

1 July 2021

66 years &

6 months

1 July 1955 to

31 December 1956

1 January 2022 to

30 June 2023

1 July 2023

67 years

From 1 January 1957

From 1 January 2024

6.      Changes To Superannuation Guarantee Ruling

The Australian Taxation Office has released Superannuation Guarantee Ruling SGR 2009/2 which was originally published in draft form as SGR2008/D2.  This ruling will apply from 1 July 2009 and employers will need to be aware of the position in calculating superannuation contributions and consider whether changes to their systems are necessary.

SGR 2009/2 generally recognises that ordinary hours of work, used to determine Ordinary Times Earnings (OTE), will be specified in an industrial award or employment agreement.

This Ruling provides clarification when an industrial award or employment agreement distinguishes between overtime and ordinary hours.  Overtime does not form part of OTE, even if employees work overtime on a regular basis.

The Ruling also adopts a simpler approach to determining what is included in Ordinary Time Earnings and what is excluded. Essentially, under this approach, all earnings are included in OTE, except overtime or payments that relate specifically to overtime or other payments expressly excluded from OTE.  Components of an employee’s Ordinary Time Earnings are shown in the table on the following page.


Components of Ordinary Time Earnings

Payment to an employee in

relation to:

Included as part of OTE?

DRAFT

GR 2008/D2

NEW

SGR 2009/2

Occasional overtime

No

No

Regular overtime

Yes

No

Occasional hours outside an Award or Agreement

No

No

Regular hours outside an Award or Agreement

Yes

No

Expense reimbursement

No

No

Annual Leave or Long Service Leave

Yes

Yes

Annual Leave Loading

No

No

Sick Leave

Yes

Yes

Allowance or Bonus

Yes

Yes

Christmas Bonus not solely related to overtime

No

Yes

Redundancy payments

No

No

Workers’ compensation payments where no work is performed

No

No

Workers’ compensation where work is performed

Yes

Yes

Sign-on bonus

No

Usually, Yes

Retention bonus

Yes

Yes