Tax Time 2013 Key Changes

AUSTRALIAN BANK ACCOUNT DETAILS ARE REQUIRED WHEN REFUNDS ARE EXPECTED FOR INDIVIDUALS

According to the ATO, the fastest, most-secure way for you to receive your refund is to have it paid directly into a nominated Australian bank account using electronic funds transfer (EFT).

From 1 July 2013, individual tax returns with an estimated refund will require bank account details including BSB, account number and name to be entered when lodging electronically. Joint accounts and trust accounts are acceptable.

INCREASE TO THE TAX-FREE THRESHOLD

From 1 July 2012, the tax-free threshold has been increased to $18,200 with the effective tax free threshold rising to $20,542. Taxable income below this threshold means you will no longer pay any tax or Medicare levy on that income.

If your taxable income is under the tax-free threshold, there are reasons why you may still need to lodge an income tax return. The most common reason would be that you had pay as you go (PAYG) withheld from payments received during the year. The only way you can get that tax refunded is to lodge an income tax return for that year.

CHANGES TO DEPENDANT TAX OFFSETS

There are changes to what you can claim for certain dependants:

• If your spouse was born on or after 1 July 1952, you can no longer claim a dependant spouse tax offset for them at item T1.
• You can only claim the housekeeper and child housekeeper tax offsets if you are eligible for a zone or overseas forces tax offset at item T5. If you are not eligible for a zone or overseas forces tax offset, you may be entitled to claim the new dependant (invalid and carer) tax offset at item T7 for a spouse born on or after 1 July 1952, parent, parent-in-law or invalid relative.

To be eligible for the new offset your dependant must receive a government payment as an invalid or carer or be caring for someone who receives a government payment as an invalid.

NET MEDICAL EXPENSES TAX OFFSET

The amount of net medical expenses tax offset you can claim now depends on your level of income. Net medical expenses are out-of-pocket medical expenses incurred minus any refunds received from Medicare or a private health insurer.

You can claim an offset of 20% of your net medical expenses over $2,120 for singles and families earning adjusted taxable income of up to $84,000 and $168,000, respectively, for the year ended 30 June 2013. Where these thresholds are exceeded, you can only claim an offset of 10% of your net medical expenses over $5,000. The family threshold will increase by $1,500 for each dependent child after the first.

The government announced in the 2013-14 Federal Budget that the net medical expenses tax offset will be phased out from 1 July 2013. Essentially, it is proposed that the net medical expenses offset will only be claimable in the 2014-15 and 2015-16 financial years where it has been claimed by an eligible taxpayer in the immediately preceding year.