Q Our first child is due in September, will we still get the baby bonus?
A The Baby Bonus will cease from 1 March 2014, so you will still qualify. The baby bonus is currently set at $5,000 per child. It will be replaced by an additional family payment under the Family Tax Benefit (Pt A). The benefit will be $2,000 for the first child and then $1,000 for subsequent children.
To qualify, family income will need to be less than $94,316 as opposed to the current threshold of $150,000 for the primary income earner for the Baby Bonus. If you take up Paid parental leave, you will be ineligible to receive the benefit.
Q Please explain how the Net Medical Expense Tax Offset will change?
A The Net Medical Expense Tax Offset (NMETO) will be phased out from 1 July 2013. The NMETO currently allows taxpayers to receive a tax offset equal to 20% of out of pocket medical expenses above $2,000. If your taxable income is above $84,000 for singles or $168,000 for couples, you were entitled to 10% on expense above $5,000.
Those who claimed NMETO for the 2012-2013 income year will be eligible to claim again in 2013-2014, and 2014-2015. Future entitlements will cease at that time unless expenses are related to age care expenses or disability aids where entitlements will continue until 1 July 2019 when DisabiltyCareAustralia will be fully operational.
Q We are looking to sell our family home and move into a retirement village. I hear we may have an exemption on proceeds from the sale of the home for Age Pension purposes?
A Under the Age Pension Assets test, the family home is exempt. Under current arrangement, on the sale of the home, proceeds not used to purchase accommodation become assessable. The government will pilot a scheme which offers a means test exemption for Age Pensioners who are downsizing their family home.
In order to qualify you must be of Pension Age, have owned the home for 25 years and invest at least 80% (up to $200,000) of the proceeds of sale into a special account. No details yet on what this is. These funds will be exempt for up to 10 years provided funds are not withdrawn. The pilot will commence on 1 July 2014 and be closed to new participants from 1 July 2017.
Q I am 72 and still work. Is there a change to my entitlements to Superannuation Guarantee (SG) Contributions from my employer?
A Under the current rules, if you are over 70, you are only eligible to receive SG contributions if you work 40 hours in a 30 day period in the financial year contributions are made. At age 75, you are ineligible to receive 9% Superannuation Guarantee Contributions. From 1 July the government will abolish the maximum age limit on SG contributions so you will continue to receive employer Superannuation support.
Q What are the changes to tax penalties on excess Concessional Contributions to Superannuation?
A Currently the Concessional Contribution Cap is $25,000. If contributions from employers or self employed exceed this cap, penalty tax is levied at the top marginal tax rate. From 1 July 2013, excess Concessional Contributions will be taxed at the individual’s marginal tax rate.
Q What are the proposed changes to the Higher Education Loans Program (HELP) for Uni Students?
A It is proposed to remove all discounts to upfront and voluntary payments made under the Higher Education Loan Program (HELP) effective 1 January 2014. Those discounts were a 10% discount on up front payments and a 5% bonus on voluntary payments to the ATO on contributions of $500 or more.
Q What are the changes to the Pension Bonus Scheme? I am 69 and haven’t registered yet. Have I missed out?
A The Pension Bonus scheme paid a lump sum bonus for those who elected to work beyond Age Pension age and have not drawn on the Age Pension. To be eligible, you needed to be of Pension Age on or before 20 September 2009 and otherwise qualify for the Age Pension. Centrelink currently accept applications for late registration if you would have qualified. This will cease from 1 March 2014. So register ASAP.