Federal Budget 2011 Highlights
- Arnold Shields
- May 11, 2011
- 3 min read
Updated: Jun 12
The 2011 Federal Budget introduced minimal changes affecting small businesses and individuals. While many of the tax reform measures had been previously announced, a few targeted updates were included to refine compliance and support working families.
Personal Tax Changes
Low Income Tax Offset for Minors
Effective 1 July 2011, minors will no longer be able to apply the low income tax offset (LITO) to reduce tax on non-work income (e.g. dividends, trust distributions). This reduces the tax-free threshold for such income to $416 per year. Minors can still claim LITO against work-related income.
Medicare Levy Thresholds Increased
From the 2010-11 income year, the Medicare levy low-income thresholds were updated:
Singles: Increased to $18,839 (from $18,488)
Couples: Increased to $31,789 (from $31,196)
Dependent Spouse Tax Offset Phased Out
From 1 July 2011, taxpayers with a dependent spouse born on or after 1 July 1971 will no longer qualify for the dependent spouse tax offset. This does not affect families receiving Family Tax Benefit Part B.
Family Tax Benefit Increases
Families receiving Family Tax Benefit Part A will benefit from an increase of up to $4,208 per year for teenagers aged 16–19 who stay in school or vocational training. Families will also have the option of receiving an advance payment of up to 7.5% (max $1,000).
Deductions Disallowed for Government Payments
From 1 July 2011, deductions cannot be claimed against government assistance payments, following the FCT v Anstis High Court ruling.
Superannuation Changes
No Change to Contribution Caps
Superannuation contribution caps remain unchanged for the 2011–12 income year.
Phasing Out of Minimum Pension Relief
The temporary relief for minimum pension withdrawals is being phased out. The required withdrawal rates will increase progressively over the next two years, depending on the member’s age.
Age | 2011–12 Rate | 2012–13 Rate |
Under 65 | 3.00% | 4% |
65–74 | 3.75% | 5% |
75–79 | 4.50% | 6% |
80–84 | 5.25% | 7% |
85–89 | 6.75% | 9% |
90–94 | 8.25% | 11% |
95+ | 10.50% | 14% |
Excess Contributions Relief
From 1 July 2011, once-only relief will be available to taxpayers who exceed concessional contribution caps by up to $10,000. Rather than incurring the excess contributions tax, these funds can be withdrawn and taxed at the individual's marginal tax rate.
Small Business Tax Measures
Reduced Company Tax Rate
From the 2012–13 income year, the company tax rate for incorporated small businesses will be reduced to 29%.
Enhanced Asset Write-Offs
From 1 July 2012, small businesses can:
Immediately write off any asset purchased for less than $5,000
Allocate other depreciable assets to a single pool depreciated at 30%
Accelerated Motor Vehicle Depreciation
From 1 July 2012, an immediate $5,000 write-off is available for new motor vehicles. The balance of the cost can be depreciated in the general pool.
Entrepreneurs’ Tax Offset Removed
The entrepreneurs’ tax offset will be discontinued from the 2012–13 income year.
Lower PAYG Instalments
From 2011–12, PAYG instalments for small businesses will be calculated at 4% above prior year taxable income, half the previous statutory rate.
Fringe Benefits Tax (FBT) Reform
Statutory Rate Method Simplified
From 10 May 2011, a single flat statutory rate of 20% will apply to all new car fringe benefit arrangements. This change will be phased in over four years, replacing the tiered structure.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
