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Newsletter November 2011

From 1 January 2012, the Government has proposed the introduction of three new ‘Private Health Insurance Incentive Tiers’ which will affect the availability and level of the Private Health Insurance Rebate and Medicate Levy Surcharge.

The changes will reduce the Private Health Insurance Rebate for higher income earners and therefore increase the cost of private health insurance policies. The amendments will also increase the rate of Medicare Levy surcharge where taxpayers do not have complying private health insurance and their income exceeds certain thresholds. The Income Threshold Tiers are as follows; 

* Plus $1,500 per dependent child for each child after the first

For taxpayers with taxable income above the surcharge thresholds, and who do not have adequate private health insurance, the Medicare Levy Surcharge penalties will be as follows;

The reduced private health insurance rebates will be as follows;

From 1 July 2012, small businesses that account for GST on a ‘cash’ basis will be allowed to access full input tax credits upfront when they enter into a hire purchase arrangement. Currently, small businesses that account for GST on a ‘cash’ basis are only allowed to claim one-eleventh of the principal component of each instalment in the period it is paid, subject to the luxury car limits.

Small businesses that account for GST on an ‘Accruals’ basis can continue to claim full input tax credits upfront, subject to the luxury car limits.

From 1 January 2012, there will be reduced benefits for students making up-front HECS/HELP payments of over $500. Students will only receive a 10% discount, instead of the current 20% discount. Furthermore, voluntary repayments of $500 or more off existing HECS/HELP debts will only receive a 5% discount, instead of the current 10% discount.

Earlier this year, the Government proposed changes to the Director Penalty Notice regime with a view of imposing greater direct personal liability on directors. The proposals included:

• extending the existing Director Penalty Notice regime to include a company’s unpaid superannuation guarantee, effectively making directors personally liable for the company’s unpaid employee superannuation contributions,
• allowing the Tax Office to make a reasonable estimate of unpaid superannuation guarantee charge where a company has failed to meet its reporting obligations,
• allowing the Tax Office to immediately commence recovery action (without first issuing a Director Penalty Notice) for certain unpaid company liabilities that remain unreported and unpaid three months after the due date.

Directors who receive a Director Penalty Notice are given a 21 day notice period prior to the Tax Office commencing recovery action. The 21 days commences from the date of issue of the notice, not the date it was received.

If issued, the Director Penalty Notices will be issued directly to the director’s home address, as per the ASIC records. It is important that the ASIC records be kept up to date to include any changes of address, as the Australian Taxation Office will not accept any excuse for failing to receive the penalty notice.

A new national business name registration service will be set up with a view of reducing costs and saving time for businesses. The service will be managed by ASIC and will commence mid-2012. It will replace the current State and Territory systems meaning businesses no longer have to register their business name in every State and Territory they wish to trade in.

The new service will allow business to apply online to register a national business name. A joint application for an Australian Business Number (ABN) and national business name registration will also be available to simplify the establishment of new businesses.