the report tax news | views | clues Tax Rates Changes TIP: Taxpayers who hold their private health insurance with NIB Fuel Tax Credits The Bill amending the personal should consider the impact of the The eligibility for fuel tax credits income tax rates for the 2008-09 proposed amendments, which will has been expanded from 1 July income year and later income provide CGT relief when a health 2008 to include all taxable fuels fund demutualises. years has become law. that a taxpayer uses in his or her business activities, provided the The Bill also increases the low- income tax offset for those income Taxpayer Alerts fuel is not used in a vehicle with a gross vehicle mass of 4.5 tonnes years ($1,200 for the 2008-09 The Tax Office has issued two financial year). In addition, the or less travelling on a public road. Taxpayer Alerts warning Bill increases the income taxpayers of arrangements that are According to the Tax Office, the threshold at which Medicare levy currently being examined: changes to the fuel tax credits becomes payable for taxpayers scheme means that most who are eligible for the senior 1. land impairment trust businesses, including those Australian tax offset. arrangements which are operating in construction, TIP: Taxpayers earning less than associated with forestry manufacturing, wholesale/retail, $30,000 for the 2008-09 income managed investment schemes. property management and year will qualify for the full low- landscaping, will be able to claim The Tax Office is concerned credits. income tax offset. Taxpayers earning between $30,001 and about whether these $60,000 will qualify for the offset, arrangements give rise to a Broadly, fuel tax credits provide a which will be pro-rated revenue or capital loss and taxpayer with credits for the fuel accordingly. how distributions from the tax (excise or custom duty) land trust should be treated included in the price of the fuel. Tax Law Changes for tax purposes; and In June 2008, the Government Artworks and introduced into Parliament a Bill to: 2. arrangements that have Antiques features which are designed provide relief from CGT for to allow a member of a In a recent decision, the AAT set private health insurance policy superannuation fund to aside the Commissioner’s decision holders when their insurer circumvent the annual to cancel retrospectively the GST demutualises to a for-profit superannuation contributions registration of a taxpayer whose insurer; and limits. sole activity was the acquisition of change the definition of artworks and antiques. Based on The Tax Office is concerned the evidence presented, the "family" and remove the that certain features of these ability for family trusts to Tribunal was satisfied that the arrangements may give rise to taxpayer was carrying on an make a one-off variation to taxation and superannuation the test individual specified in enterprise despite minimal sales regulatory issues. over a number of years a family trust election. August 2008 Two basic conditions must be PAYG Withholding The tax laws contain provisions satisfied before a taxpayer can that allow loans by a private register for GST: the taxpayer From 1 July 2008, 50% of the company to its shareholders (or must be an entity, and either be low-income tax offset will be their associates) not to be treated carrying on an enterprise or taken into account in determining as an unfranked dividend if the intending to carry on an the PAYG withholding amount for loan is made under a written enterprise. eligible individuals. agreement. One of the The remainder of the offset requirements of the agreements is For GST purposes, the carrying on entitlement will be paid upon that the interest rate to be used in of an enterprise focuses on the assessment of the individual’s calculating the interest payable on activity or series of activities that income tax return. the loan for a financial year must a taxpayer engages in, and equal or exceed the benchmark includes running a business. PAYG Summary interest rate for that financial year. Super Rates and The Deputy Commissioner has Thresholds issued a Legislative Instrument Car Limits that removes the requirement for The Tax Office states that the car The Tax Office has released the superannuation funds to issue a depreciation limit for the 2008-09 2008-09 indexed superannuation payment summary to a recipient financial year is $57,180. rates and thresholds, which cover for a superannuation lump sum contribution caps, concessionally The Tax Office also states that the benefit paid, where the recipient is taxed superannuation lump sums, luxury car tax threshold for the classified as having a terminal employment termination 2008-09 financial year is $57,180. medical condition. payments, superannuation guarantee and superannuation co- The Legislative Instrument applies contributions. from the 2007 income year. GIC and SIC Rates Released The concessional and non- GST and PAYG concessional contributions caps are $50,000 and $150,000 Instalment Rate The Tax Office has released the general interest charge and respectively, which did not change The Tax Office has advised that shortfall interest charge rates for from the 2007-08 income year. the Gross Domestic Product the first quarter of the 2008-09 (GDP) factor used to calculate income year: If the assessable income and taxpayers’ GST and PAYG reportable fringe benefits (if any) Rate Annual Daily instalment amounts will increase of a taxpayer do not exceed to 8% from 1 July 2008. (%) (%) $30,342 for 2008-09, the taxpayer will qualify for the maximum co- Taxpayers who use the GDP- GIC 14.75 0.04030054 contribution of $1,500. adjusted notional tax method to calculate their PAYG or GST SIC 10.75 0.02937158 Child Support and instalments may see an increase in Tax their instalment amounts from the first quarterly instalment for the The Tax Office has also released The Government has announced a the interest rate for overpayments, 2008-09 income year. range of new measures aimed at early payments and delays in boosting the collection of child Division 7A Interest refunds for the first quarter of the support payments. The measures include: Rate 2008/09 income year. The applicable interest rate is 7.75%. The Tax Office has stated that the requiring both parents (the benchmark interest rate for the liable parent and the recipient 2008-09 income year for the parent) to lodge a tax return; purpose of calculating the interest and component of a loan from a stopping salary sacrifice being private company to its used to minimise child shareholders (or their associates) support obligations. is 9.45%. Important: This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Items h erein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Bulletin is issued as a helpful guide to clients and for t heir private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.