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Newsletter February 2006

Under current legislation, as from 1 July 2005, net dental expenditure incurred (after refunds from health funds) is not regarded as medical expenditure.  As such these costs cannot be included in determining whether you are entitled to a medical rebate for the year.  The legislation effecting this change is currently under review.

The NSW Premier, Mr Morris Iemma, has announced an increase to the NSW land tax-free threshold for the current year, from $330,000 to $352,000.

The rate of 1.7% plus $100 in excess of $352,000 remains the same.

Mr Iemma also said that he will examine options for an averaging system to be introduced from next year to protect property owners from sharp annual changes in land tax assessments.

Recent legislation has reduced the period in which the Australian Taxation Office can amend an income tax liability.  With effect from the 2005 income year, the following changes apply:

• Individuals with simple tax affairs (eg not carrying on a business, unless in the Simplified Tax System) will only be subject to amendment for a period of 2 years after assessment.  Individuals receiving income via a trust or partnership are excluded from this rule, unless the trust or partnership is in the Simplified Tax System.
• Other entities carrying on business in the Simplified Tax System will be subject to a 2 year amendment period.
• Other taxpayers will be subject to a 4 year amendment period.
• An unlimited period of amendment continues to apply for cases of fraud or evasion.

In addition, regulations exclude taxpayers affected by deemed dividend rules, related party transactions, certain types of foreign source income, and various anti-avoidance provisions from the 2 year period of review, meaning that the 4 year period applies instead.

The 30% child care tax rebate was announced by the Australian Government during the 2004 election campaign.  It helped families reduce their costs for approved child care.

The rebate is 30% of your out-of-pocket child care expenses incurred with a maximum rebate of $4,000 per child per year per primary claimant.  Out-of-pocket child care expenses are total child care fees less child care benefit (CCB) entitlement.  The rebate is a non-refundable offset.

If you are eligible, you can start to claim the rebate in your income tax return for the year ended 30 June 2006.  You will be able to claim for the out-of-pocket expenses you incurred from 1 July 2004 to 30 June 2005 in this return.

To be eligible for the rebate for 2005-06, you must have, in the 2004-05 year:

• received Child Care Benefit (CCB);
• passed the work/training/study test; and
• used approved child care.

It has recently been reported that there are millions of dollars in unclaimed superannuation accounts.  The Australian Taxation Office is now helping individuals in claiming back those accounts.

There are a number of ways you can search for your lost superannuation.  The Australian Taxation Office has suggested the following options:

• You can conduct your own online SuperSeeker search via the Australian Taxation Office website www.ato.gov.au
• You can phone the SuperSeeker self-help phone service on 13 28 65. This phone service is available 24 hours a day, 7 days a week.
• You can contact your current superannuation fund and ask them to conduct a search on your behalf.
• You can download and complete an enquiry form from the Australian Taxation Office website.

With the end of the Fringe Benefits Tax year fast approaching being 31 March 2006, it is time to start thinking about preparing this year's FBT return.  There are a number of benefits that are exempt from Fringe Benefits Tax.  The more common exempt benefits include:

• laptop computers or portable computers (one per FBT year per employee);
• mobile phones or car phones primarily used in employment;
• minor benefits valued at less than $100 which are provided infrequently
• some taxi travel;
• briefcase, calculator, computer software, tools of trade, or items of protective clothing required for employment;
• certain in-house benefits up to a value of $500.