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August 2013 Newsletter-Tax Rates Update

Tax Rates Update

2013 and 2014 Tax Rates and Thresholds


With the 2013 financial year now finished and the 2014 financial year underway, we provide a summary of the key rates, thresholds and changes you should be aware of as your prepare for lodging your 2013 tax return and make plans for 2014.

Resident Tax Rates 2012-2013 and 2013-2014

Changes to the Tax Free Threshold
From the 2013 financial year the tax free threshold has increased to $18,200, and the low income tax offset has reduced to $445. This means you could have effectively earned up to $20,542 before being required to pay tax and lodge a return.

If your taxable income is below $20,542 you may still need to lodge a return. Please contact us if you are unsure whether or not you are required to lodge for the 2012/13 year.

Medicare Levy
The general rate of the Medicare levy for the 2013 and 2014 years is 1.5% of taxable income, subject to exclusions and reduced levy below. 

* You are a senior if you have reached pension age and are eligible for an age pension.
From 1 July 2014, the levy will increase to 2.0%.

Medicare Levy Surcharge
An additional surcharge will apply if you and all of your dependents are not covered by private health insurance and the below thresholds are exceeded. A three tiered Medicare levy surcharge is in effect for the 2012/13 and 2013/14 year.


2012 - 2013

2013 - 2014

* Add $1,500 for each additional child after the first.

Private Health Insurance Rebate

* Add $150,000 for each additional child after the first.

Medical Expenses Offset

2012 - 2013
From 1 July 2012, the medical expenses offset is means tested on a two-tier income basis and given on assessment. For taxpayers with income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples/families for 2012/13) the medical expenses claim threshold is $5,000, and the offset is 10c for each $1 in excess of $5,000.

For taxpayers with income below the Medicare levy surcharge thresholds the medical expenses claim threshold is $2,120 and the offset is 20c for each $1 in excess of $2,120.

2013 - 2014
The government will phase out the Medical Expenses offset with transitional arrangements for those currently claiming the offset. From 1 July 2013, only those taxpayers who claimed the offset in their 2012/13 returns will continue to be eligible for the offset in 2013/14 if they have eligible expense above the relevant thresholds. 

Please keep all of your out of pocket medical expenses such as chemist costs, doctors gaps, dental and optical expenses in order for us to determine if you are able to claim this year and keep you running for future years.

Motor Vehicle per km rates 2012-2013

Note that the rates for the 2013-2014 year will not be available until April 2014.

Luxury Car Tax Threshold
There are no changes to the motor vehicle depreciation cost limit ($57,466) or the 'fuel efficient car limit' ($75,375).

From 1 July 2013 the luxury car tax (LCT) threshold is $60,316.

Small Business Entities - Depreciation Rules
From 1 July 2012 the small business instant asset write-off threshold increased from $1,000 to $6,500. Also from 1 July 2012 you are able to write off the first $5,000 of any vehicle purchase costing more than $6,500 in the year of purchase and the balance of the purchase cost will be added to your general pool and depreciated as normal (i.e. 15% deduction in the first year and 30% deduction in subsequent years).

Please contact the team at Goodwin Chivas and Co. if you have any queries.

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