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Newsletter February 2009

The Government has announced (the regulations have yet to be released) that the Minimum Pension Rules for 2008/09 will be halved as follows;

Age of member	New rate	Previous rate
Under age 65	2%	4%
65 to 74	2.5%	5%
75 to 79	3%	6%
80 to 84	3.5%	7%
85 to 89	4.5%	9%
90 to 94	5.5%	11%
95 and older	7%	14%

This means that the minimum pension payments we have previously advised will be reduced by 50% for the 2008/2009 tax year. The announcement applies to:

• the 2008/09 year only and will go back to the old rules on 1 July 2009.
• Account Based Pensions
• Allocated Pensions and Market Linked Pensions.
• Transition to Retirement Pensions. However, the 10% ceiling on pension payments remains

The announcement does not apply to Defined Benefit Pensions.

If the fund has already paid a pension greater than the new pension, the now excess pension payments cannot be reversed and repaid to the fund.

Further updates will be provided when the regulations are released.

The Government has announced an investment tax break for business. The tax break, in the form of an investment allowance will provide:          

• an additional tax deduction of 30 per cent of the cost of eligible new depreciating assets acquired under a contract, or started to be constructed, after 12.01am AEDT 13 December 2008 and before the end of June 2009 and installed ready for use by the end of June 2010.
• an additional tax deduction of 10 per cent of the cost of eligible new depreciating assets acquired under a contract, or started to be constructed, between 1 July 2009 and 31 December 2009 and installed ready for use by the end of December 2010.

New expenditure on existing assets may also qualify. Leased assets does not qualify for the tax breaks, businesses must legally own the depreciating asset.

For both periods, small businesses will be able to claim the deduction for eligible assets costing $1,000 or more. Small businesses must have a turnover of less than $2 million a year to qualify. For other businesses, a minimum expenditure threshold of $10,000 applies.

First home buyers in NSW who qualify for the First Home Owner Grant and are buying a newly constructed home or building their first home will be eligible for an additional $3,000 payment known as the NSW New Home Buyers Supplement.

The $3,000 New Home Buyers Supplement is in addition to the $7,000 First Home Owner Grant and the Australian Government’s $14, 000 First Home Owner Boost. With the NSW Government’s New Home Buyers Supplement Scheme, first home buyers of new homes will receive maximum benefits of up to $24,000.

The tax office was announced that people donating to help victims of the Victorian bushfires and Northern Queensland floods by way of ‘bucket donations’ will be able to claim a tax deduction of up to $10 in their 2008/2009 tax return without a receipt.

Further, people making donations over $10 through the web or by phone need only keep their web receipt or credit card statement for deduction purposes.

The Departing Australia Superannuation Payment (DASP) withholding tax rates will increase for benefits requested on or after 1 April 2009. The increases to DASP withholding tax rates are as follows;

DASP Component	Old DASP Withholding Tax Rate	DASP Withholding Tax Rate from 1 April 2009
Tax free component	Nil	Nil
Element taxed in the fund	30%	35%
Element untaxed in the fund	40%	45%

In recent years in Australia, there has been a general trend towards providing concessional tax treatment for temporary residents in order to help attract mobile, highly skilled labour to Australia. These new provisions appear to reverse this trend and largely remove any incentive for temporary residents to make superannuation contributions while in Australia.

Transfer to the Tax Office of any unclaimed account balances of temporary residents will occur after six months following cessation of their temporary visa and departure from Australia. Departed temporary residents will be able to claim back at any time superannuation that has been paid to the Tax Office.