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2009 Federal Budget

The Small Business and General Business Tax Break will be expanded to allow a bonus deduction of 50 per cent to small businesses with a turnover of less than $2 million that acquire an eligible asset between 13 December 2008 and 31 December 2009 and install it ready for use by 31 December 2010.

The previously announced 30 per cent and 10 per cent bonuses will continue to apply to all other businesses.

The annual cap for concessional superannuation contributions has been halved, from 1 July 2009

The superannuation co-contribution scheme will be reduced to a rate of 100% for contributed amounts for the 2009/10, 2010/11 and 2011/12 years, increasing to 125% for the 2012/13 and 2013/14 years and returning to 150% for the 2014/15 year.

The minimum drawdown amount for account-based pensions will be halved for the 2009/10 income year. This extends the current concession provided to self-funded retirees for the 2008/09 income year.

From the 2009/10 income year, taxpayers with an adjusted taxable income of over $250,000 will have excess deductions quarantined to the business activity under the non-commercial losses rules. The existing rules will continue to apply to taxpayers with an adjusted taxable income of $250,000 or less. Taxpayers will still be able to apply for relief from the rules if there are exceptional circumstances or because the nature of the activities means that a taxpayer is temporarily carrying on an uncommercial business.

The First Home Owner’s Boost (FHOB) will be extended for an extra six months and will be reduced by half for the last three months of the extension period.

For eligible first home buyers entering into contracts between 1 July 2009 and 30 September 2009 (inclusive) the FHOB will continue to provide $7,000 for the purchase of established homes and $14,000 for the purchase of new homes. This means that including the $7,000 First Home Owner’s Grant, until 30 September, purchasers of new homes will continue to be eligible for $21,000 of assistance, and purchasers of existing homes will continue to be eligible for $14,000 of assistance. 

Between 1 October 2009 and 31 December 2009 the FHOB grants will be $3,500 for the purchase of established homes and $7,000 for the purchase of new homes. This means that including the $7,000 First Home Owner’s Grant, from 1 October until 31 December, purchasers of new homes will be eligible for $14,000 of assistance, and purchasers of existing homes will be eligible for $10,500 of assistance. 

The FHOB grants are in addition to the existing $7,000 grant under the First Home Owners Scheme.

Currently, under qualifying share schemes, an employee can elect to be assessed on discounts provided on shares or rights in the income year in which the shares or rights are acquired. If no election is made, the discount (which includes gains on shares or rights) is taxed at a later time (eg when the employee disposes of the share). If an employee elects to be taxed up front, they receive a tax exemption of up to $1,000 on the discount. However, if the shares or options are issued under a non-qualifying share scheme, the employee is taxed on the discount when he or she acquires the shares or options. 

Under the new arrangements, all discounts on shares and options under an employee share scheme, whether qualifying or non-qualifying, will be assessed in the year in which they are acquired. Therefore employees acquiring shares or options under qualifying share schemes will no longer be able to elect to defer taxation on their discount to a later time.

Further, the $1,000 tax exemption will be limited to those employees with a taxable income of less than $60,000 after adjustment for fringe benefits, salary sacrifice and negative gearing losses.

The measure will apply to shares and options acquired after 7.30pm on 12 May 2009.

From 1 July 2010, the government will introduce three new “Private Health Insurance Tiers” in respect of the Private Health Insurance Rebate as follows.

Tier 1: for singles earning more than $75,001 (couples $150,001), the Private Health Insurance Rebate will be 20% for those up to 65 years (25% for those over 65, and 30% for those over 70 years). The Surcharge for avoiding private health insurance will remain at 1%. 

Tier 2: for singles earning more than $90,001 (couples $180,001), the Private Health Insurance Rebate will be 10%, for those up to 65 years (15% for those over 65, and 20% for those over 70 years). The Surcharge for avoiding private health insurance will be increased to 1.25%.           

Tier 3: for singles earning more than $120,001 (couples $240,001), no Private Health Insurance Rebate will be provided. The Surcharge for avoiding private health insurance will be increased to 1.5%.

• From the 2008/09 year, the Medicare levy low-income thresholds will be increased to $17,794 for individuals and $30,025 for individuals in families.
• From 1 July 2009, the foreign employment income exemption will only be available for income earned by aid or charitable workers, government aid workers, and specified government employees.
• A Paid Parental Leave scheme will be available to parents for births and adoptions that occur on or after 1 January 2011.