Superannuation

Reduction in the concessional contribution caps -  Date of effect: 2009/2010 financial year (grandfathering arrangements from 12 May 2009)

The concessional contributions cap will be reduced to $25,000 per annum (indexed) from the 2009/2010 financial year. The transitional concessional contributions cap (applicable to individuals aged 50 and over for the 2009/2010, 2010/2011 and 2011/2012 financial years) will be reduced to $50,000 per annum.

'Grandfathering' arrangements will apply to certain members with defined benefit interests as at 12 May 2009 whose notional taxed contributions would otherwise excedd the reduced cap. Similar arrangements were applied when the concessional contributions cap was first introduced.

The annual cap on non-concessional contributions is $150,000 per annum for the 2008/2009 financial year and will remain at that level in 2009/2010. In the future, the cap will be calculated as six times the level of the (indexed) concessional contributions cap.

Temporary reduction in the superannuation co-contribution -  Date of effect: 1 July 2009

The matching rate and maximum co-contribution that is payable on an individual's eligible personal non-concessional superannuation contributions will be reduced.

Under this measure, the matching rate will be:

Tax and Business

Investment Allowance increased -  Date of effect: acquisition of assets by small business between 13 December 2008 and 31 December 2009

Small businesses will now be able to claim an increased tax deduction of 50% (up from the 30% previous announced) of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009, and installed by 31 December 2010.

The expanded Investment Allowance is available to small businesses with a turnover of less than $2 million. All other businesses can continue to access the Investment Allowance at 30% for eligible assets contracted for prior to 30 June 2009 and 10% for eligible assets that they commit to investing in between 1 July 2009 and 31 December 2009.

Small businesses need to invest a minimum of $1,000 per asset to qualify for the Investment Allowance.

Foreign employment income taxed under new rules -  Date of effect: 1 July 2009

Under new rules set to be introduced, foreign employment income will generally become taxable with taxpayers entitled to a foreign income tax offset for Foreign employment incomes.

Currently, certain foreign employment income earned by Australians working overseas for a continuous period of 91 days or more is exempt from income tax. The government states that the original intent of the law was to relieve double taxation however, in practice they believe little foreign tax may actually be paid on the foreign income concerned.

Increase in Medicare levy low income threshold -  Date of effect: 1 July 2008

The Medicare levy low-income thresholds will increase to $17,794 for individuals and $30,025 for individuals in families. The additional amount of threshold for each dependent child or student will also increase to $2,757. In addition, the Medicare levy threshold for pensioners below Age Pension age will increase to $25,299.

Private health insurance rebate phases out at $120k -  Date of effect: 1 July 2010

Three new 'Private Health Insurance Incentive Tiers' will be introduced.

Tier 1 - applies to singles with income of more than $75,000 (more than $150,000 for familes), based on current projections. The private health insurance rebate will be 20%, increasing to 25% at 65 years of age, and to 30% at 70 years. The private health insurance surcharge for not taking out complying private health insurance will remain at 1%

Tier 2 - applies to singles with income of more than $90,000 (more than $180,000 for families). The private health insurance rebate will be 10%, increasing to 15% at 65 years of age, and to 20% at 70 years. The surcharge for not taking out complying private health insurance will be increased to 1.25%

Tier 3 - applies to singles with income of more than $120,000 (more than $240,000 for families). No private health insurance rebate will be provided. The surcharge for not taking out complying private health insurance will be increased to 1.5%

Existing arrangements will remain unchanged for singles with income of less that $75,000 per annum and families with incomes of less that $150,000 per annum. Income in this contect refers to income for Medicare levy surcharge (the surcharge) purposes.

All income thresholds will continue to be indexed to wages. The income thresholds will also be adjusted for families with more than one child in the same manner as existing arrangements for the surcharge.

ATO cashed up to pursue non-compliance and debt

The ATO is cashed up and raring to go with $302.1 million over 4 years to pursue risks that could erode Australia's revenue base, $70.9 million to ensure that small business meets its tax and super obligations, $100.1 million to work with small business and other taxpayers in financial distress, and $122 million to extend the work of Project Wickenby targeting tax fraud involving the use of offshore tax havens.

PAYG cash flow relief for small business

Cash flow relief for small business by reducing PAYG instalments for the 2009/2010 income year for all taxpayers who pay quarterly PAYG instalments based on their previous year's tax adjusted by GDP growth.

ASIC fees to increase -  Date of effect: 2010/2011

ASIC fees and charges will be indexed to the consumer price index from 2010/2011.