From 1 July 2012 businesses in the Building and Construction industry will be required to report payments paid to each contractor paid during the year. The system will be similar to the PAYG Withholding system currently used for employees. A Taxable Payments Annual Report will be due for lodgement by 21 July each year. The following details will be required for each contractor paid during the year ended 30 June:

• ABN
• Name
• Address
• Gross amount paid during the year including GST
• Total GST included in the gross payment.

Good record keeping will be essential to enable this report to be prepared. Business in the building and construction industry will need to ensure that their accounting software or bookkeeping system can keep track of contractor payments.

These records will be used for ATO data matching purposes and information gathered may be passed on to building regulatory bodies eg BSA.

To see if you will be affected by the new regulations go to www.ato.gov.au and type in “taxable payments reporting” in the search. www.ato.gov.au/content/00313486.htm

Individuals and families

• The government will not proceed with the standard deduction for work-related expenses.
• The 50% tax discount for interest income will not proceed.
• A means test will be introduced for the net medical expenses tax offset (NMETO) from 1 July 2012.
  • For people with adjusted taxable income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples or families in 2012/13), the threshold above which a taxpayer may claim NMETO will be increased to $5,000 (indexed annually thereafter) and the rate of reimbursement will be reduced to 10% for eligible out of pocket expenses incurred.
• From 1 July 2012, the eight dependency tax offsets will be consolidated into a single, streamlined and non-refundable offset.
• From 1 July 2012, the mature age worker tax offset (MAWTO) will be phased out for taxpayers born on or after 1 July 1957.
• The Medicare levy low income thresholds will be increased to $19,404 for individuals and $32,743 for families for the 2011/12 income year.
• Exemptions for the temporary flood and cyclone reconstruction levy will be extended to individuals who were eligible for an Australian Government Disaster Recovery Payment in 2010/11 as well as certain individuals affected by a natural disaster in 2011/12.
• The education expenses tax offset will be replaced with a new Schoolkids Bonus from 1 January 2013.
  • The education expenses tax offset will be replaced with a new Schoolkids Bonus of $410 pa for each primary school student and $820 pa for each secondary school student. The bonus will be paid to eligible families in two equal instalments in January and July each year. As a transitional arrangement for 2011/12, the education expenses tax offset will be paid out in full to eligible families in June 2012.
• From 1 July 2012, the marginal tax rate for non-resident individuals participating in the Seasonal Labour Mobility Program will be reduced to 15%.

Companies and finance

• The proposed measure to lower the company tax rate from 2013/14 and from 2012/13 for small businesses will not proceed.
• The Tax Breaks for Green Buildings program will not proceed.
• From 8 May 2012, limited recourse debt will include arrangements where the creditor’s right to recover the debt is effectively limited to the financed asset or security provided.
• Companies will be allowed to carry back up to $1m of tax losses in 2012/13 to offset against tax paid in 2011/12. From 2013/14, tax losses can be carried back and offset against tax paid up to two years earlier.
• The taxable value of airline transport fringe benefits will be updated from the stand-by value to the market value for benefits provided after 7:30pm (AEST) on 8 May 2012.
• Small Business will be able to write off assets up to a value of $6,500 each from 1 July 2012
• The write off of bad debts owing from related parties will not be deductible effective from 7:30pm (AEST) 8 May 2012.

Superannuation

• The start date of the 2010/11 Budget measure increasing concessional contribution caps for individuals over 50 with low superannuation balances will be deferred by two years, from 1 July 2012 to 1 July 2014.
• From 1 July 2012, individuals with income greater than $300,000 will have the tax concession on their contributions reduced from 30% to 15% (excluding the Medicare levy).

CGT discount for non-residents abolished

• The 50% CGT discount for non-residents will be abolished for capital gains.
• The CGT discount will remain available for capital gains accrued prior to this time where non-residents choose to obtain a market valuation of assets as at 8 May 2012.