Top Things To Do & Review Before 30 June
Private health insurance
From 1 July 2012, the private health insurance rebate will be subject to an income test affecting singles earning above $84,000 and families above $168,000. Also, the rate of Medicare levy surcharge will increase for these taxpayers who do not hold appropriate private health insurance policies from 1 July 2012.
If you are likely to be affected by the changes, the tax office has recently confirmed that you can prepay your health insurance premiums for the new financial year and still claim the offset in your 2011/2012 tax return. But, to qualify for the offset:
Review salary sacrifice agreements
Personal tax rates will change from 1 July 2012 and the flood levy will no longer apply. Also, the concessional contribution cap for superannuation for those 50 and over is also changing (from $50,000 to $25,000).
If you have a salary sacrifice agreement in place, it’s important to review this agreement to make sure it is still relevant. And, in the case of the superannuation contribution cap changes, your existing agreement does not tip you over the contribution cap for 2012/2013.
Living away from home allowance changes
If you receive a living away from home allowance (LAFHA) for working away from home, there are a number of changes that will affect you and your employer. These changes are not yet law but are expected to apply from 1 July 2012.
From 1 July 2012, cash LAFHAs will now be included in your taxable income and taxed at your marginal tax rate. You will now need to keep all the receipts and evidence of your expenses while living away from home: no receipt, no deduction.
Also, a new series of tests will apply to determine if you qualify for LAFHA concessions. The main condition is that you must have a usual place of residence in Australia that is maintained for your “personal use and enjoyment” while you are living and working in another location. That is, you cannot rent out your usual residence while you are away. LAFHAs will also be time limited in most cases to 12 months.
While the changes apply to all new LAFHA arrangements from 1 July, there are some transitional rules that will apply to existing arrangements.
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