The top tax changes you need to know about in 2012

Just as the new financial year brings a heap of legal changes entrepreneurs need to read up on, the tax system is also set for a refresh.

And it’s a big change coming this year. New tax brackets, two massive industry-wide taxes and a whole heap of new assistance means there’s a lot to get your head around.

Thankfully, here at SmartCompany we’ve done the hard yards. Here are the most important tax changes you need to know about in 2012-13.

The end of the flood levy

You may remember the huge debate last year over the Federal Government’s flood levy, which was introduced to help the Commonwealth pay for the damages caused by the Queensland floods. From July 2012, the levy will no longer apply.

Brand new tax brackets – including carbon tax assistance

As part of the government’s introduction of the carbon tax, there’ll be some dramatic changes to the income tax rates – including the adjustment of the tax-free threshold to $18,200 from the current level of $6,000. That means you’ll be able to earn up to $20,542 before any tax is payable at all.

These changes are crucial for employers. Next year, your staff will have less tax withheld from their paychecks, so you’ll need to make the necessary changes to ensure they’re being paid correctly.

Here are the tax brackets for the 2011-12 year, followed by the new tax brackets, which will take effect from the 2012-13 year.

2011-12:

• $0 – $6,000 = Nil
• $6,001 – $37,000 = 15c for every $1 over $6,000
• $37,001 – $80,000 = $4,650 plus 30c for every $1 over $37,000
• $80,001 – $180,000 = $17,550 plus 37c for every $1 over $80,000
• $180,001 and over = $54,550 plus 45c for every $1 over $180,000

2012-13:

• $0 – $18,201 = Nil
• $18,201 – $37,000 = 19c for each $1 over $18,200
• $37,001 – $80,000 = $3,572 plus 32.5c for every $1 over $37,000
• $80,001 – $180,000 = $17,547 plus 37c for every $1 over $80,000
• $180,001 and over = $54,547 plus 45c for each $1 over $180,000

At the same time, the maximum value of the low-income tax offset reduces from $1,500 to $445, and after that, will be reduced by 1.5 cents in every dollar over $37,000. Previously, that number was at $30,000. From 2015, that figure will be reduced to just $300.

The pensioner tax offset will merge with the new senior Australians tax offset. Meanwhile, there have also been some changes to the Medicare levy and Medicare levy surcharge thresholds.

From July 1, the Medicare levy surcharge thresholds will be changed, while the low-income thresholds will be changed as well. The full details of those changes are available on the Australian Tax Office’s website here.

Carbon tax assistance – individuals

This is a huge area of tax change, so we’ll break it down into two categories – individuals, and then businesses.

Most of the assistance is taken care of with the adjusted tax brackets, and they’ll mostly help lower-income earners. But there will be some changes to the way pensions and the Family Tax benefits are handed out.

For instance, pensioner payments have already started arriving, equating to $250 for singles and $380 for couples. After July, pensioners will start receiving supplements worth a 1.7% increase in the maximum pension rate.

Family Tax Benefit A recipients will receive up to $110 extra per child, while those receiving Family Tax Benefit B will get up to $59. Single parents will receive up to $234, as well.

Carbon tax assistance – business

While there are only 500 companies that will be directly affected by the carbon tax, the indirect effects will come in higher electricity prices, and other costs that will be passed along supply chains.

There are few regulatory issues required of SMEs, then. Some manufacturing businesses will be obliged to report their energy use under the National Greenhouse and Energy Reporting Act – manufacturing businesses should contact the ATO to determine if they’re in this category.

However, there are plenty of assistance programs businesses can tap into. Businesses that use up to $20,000 in electricity every year or have up to 10 employees can get a 50% rebate, and manufacturers will be able to access the $800 million Clean Technology Investment Program.

There’s also the Solar Credits scheme, which small businesses can use, and SMEs in Sydney and Perth which sign up to the CitySwitch Green Office program can get a rebate of $1,000.

But according to Andrew Douglas, principal at M+K Lawyers, looking for assistance isn’t the only thing you should be doing.

“Reducing your exposure; and businesses aren’t doing that. They’re not concentrating on their supply chain, they’re trying to pass through the carbon tax price but every major retailer is rejecting it, so right now it’s a real problem. The other issue is that people aren’t doing an assessment of the true cost,”