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Newsletter July 2010

The Tax office has confirmed that, for the year of income beginning 1 July 2010, the benchmark interest rate is 7.4% (up from 5.75% for the previous year).

This benchmark interest rate is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2010, and to trustee loans made after 11 December 2002 and before 1 July 2010.

The Tax Office has set out the amounts they consider to be reasonable for the 2010/11 year of income in relation to claim for;

• Overtime meal allowance expenses,
• Domestic travel allowance expenses,
• Travel allowance expenses for employee truck drivers, and
• Overseas travel allowance expenses.

The allowances can be found from the following link www.ato.gov.au/businesses/content.asp?doc=/content/70617.htm

The government has announced that it will extend the drawdown relief for account-based pensions to the 2010/11 year for self-funded retirees.

Currently, it is a requirement that minimum payments be made from a superannuation account-based pension at least annually. Minimum payments are determined by age and the value of the account balance as at 1 July each year. The minimum annual payment rule is designed so that retirees draw down on their superannuation capital over their retirement.

As in the past two years, the drawdown relief will be in the form of a 50% reduction in the minimum payment amounts for account-based, allocated and market linked pensions.

Age	Minimum % withdrawal for the 2010/2011 year for certain pensions	Minimum % withdrawal (in all other cases)
Under 65	2%	4%
65-74	2.5%	5%
75-79	3%	6%
80-84	3.5%	7%
85-89	4.5%	9%
90-94	5.5%	11%
95 or more	7%	14%

 

The tax office has again warned people of sophisticated tax time phishing emails that purport to come from the ATO but are really designed to steal people’s banking emails and passwords.

People can avoid being targeted by keeping their browser, security and spam filter software up-to-date, never clicking on links contained in unsolicited emails and by being suspicious of any requests to enter account names, passwords and other confidential information.

Regulations have been made to specify the rates at which taxpayers can claim income tax deductions for car expenses for the 2009/10 year. The rates are the same for the 2008/09 year.

Taxpayers whose income-producing use of a car does not exceed 5,000 kilometres during the year can deduct car expenses on a per kilometre basis (ie, by multiplying the number of relevant kilometres by the rate per kilometre) as shown in the following table;

Description	Engine capacity of car not powered by a rotary engine	Engine capacity of car powered by a rotary engine	Rate per kilometre (cents)
Small car	Not exceeding 1600cc	Not exceeding 800cc	63
Medium car	Exceeding 1600cc but not exceeding 2600cc	Exceeding 800cc but not exceeding 1300cc	74
Large car	Exceeding 2600cc	Exceeding 1300cc	75

 

From the NSW state budget handed down in June, the payroll tax rate in NSW has been cut from the previous rate of 5.65% to 5.5% from 1 July 2010, six months earlier than originally planned, and will be further cut by 0.05% to 5.45% from 1 January 2011.

The payroll tax ‘wages’ threshold has also increased from $638,000 to $658,000 from 1 July 2010.

The payroll tax definition of wages includes salary and wages, superannuation payments, allowances, grossed up value of fringe benefits, directors’ fees, certain contractors and consultant payments, issued shares and options, and other payments.

Families can claim the Education Tax Refund for education expenses they incur while their child attends primary or secondary school. Families can claim 50% of their eligible education expenses if they receive family tax benefit (FTB) Part A for the child,

The maximum you can claim in the 2009/2010 income year is 50% of eligible expenses up to;

• $780 for each child in primary school – that is, a refund up to $390.
• $1,558 for each child in secondary school – that is, a refund up to $779.

Eligible education expenses include laptops, home computers, computer related costs, internet costs, school text books, stationery, and now school uniforms. Education expenses not eligible include school fees, excursions, sporting equipment or musical equipment.