Mining Tax Repeal: Other Revenue and Social Security Changes

  

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MINING TAX REPEAL: OTHER REVENUE AND SOCIAL SECURITY CHANGES

Following a political compromise, the Mining Tax has been repealed with effect from 30 September 2014.

A number of associated tax and social security measures were also repealed. The relevant operative dates vary as noted below.

MEANS TESTED SCHOOLKIDS BONUS TO CONTINUE UNTIL 31/12/2016

The schoolkids bonus is an indexed payment that is available to eligible families receiving Family Tax Benefit Part A and young people in school receiving Youth Allowance or certain other income support or payments (such as the Veterans' Children Education Scheme). The bonus is paid twice annually, with instalments ($211 for primary school students and $421 for secondary school students) generally paid in January and June each year. The payment, which is exempt from income tax, was designed to provide assistance to families in meeting education expenses.

Bonus payments will now cease on 31 December 2016.

Until that date the bonus will now be means tested. This will limit eligibility to individuals with an adjusted taxable income (ATI) of $100,000 or less. For bonus purposes ATI comprises the sum of:

  • Taxable income  Adjusted (reportable)  fringe benefits  
  • Target foreign income  
  • Total net investment losses  
  • Tax free pensions or benefits  
  • Reportable (eg salary sacrifice and voluntary tax deductible) superannuation contributions reduced by child maintenance expenditure.

LOW INCOME SUPERANNATION CONTRIBUTION REPEALED FROM 1/7/2017

The low income superannuation contribution (LISC) is a superannuation contribution made on behalf of individuals with an adjusted taxable income (see above) of $37,000 or less in an income year. The maximum contribution amount payable is $500. The contribution is designed to effectively return the 15% tax paid on concessional (ie tax deductible) contributions to an individual's superannuation fund.

The LISC is generally paid directly to the individual’s superannuation fund.

The LISC will now apply until 30 June 2017 and has been repealed in respect of concessional contributions made in respect of the financial year starting on 1 July 2017 and subsequent years.

INCOME SUPPORT BONUS REPEALED FROM 1/1/2017

The income support bonus is an income tax exempt, indexed, non means tested payment (currently $108.90 for singles and $90.80 if partnered) paid twice a year to eligible social security recipients.

The bonus will continue until 31 December 2016 and will be abolished from that date. The last payments will be made in September 2016.

COMPANY LOSS CARRY BACK MEASURES REPEALED FROM 1 JULY 2013

The company loss carry back rules have been repealed with respect to losses incurred in the income year starting 1 July 2013 and subsequent years.

This means that company losses can now only be offset against future years’ taxable incomes. This is subject to the company passing anti-avoidance rules such as the continuity of ownership test or the same business test.

The benefit of a loss carry back is still potentially available to companies which incurred losses of up to $1 million in the year ended 30 June 2013 and paid income tax for the previous year that has not been applied to frank dividend distributions and which satisfy other eligibility criteria.

The ATO will contact any companies which have previously claimed a loss carry back in relation to the year ended 30 June 2014.