What's New @ Dewings?

Amongst the recent bickering between the major parties over their respective budget costing announcements, the changes proposed by the Coalition for small-medium businesses may have been overlooked a little.

As a part of its promised $31 billion in savings, the Coalition has pledged to:

• abolish the instant tax write-off for assets costing less than $6,000;
• abolish the up-front deduction of $5,000 for the cost of a motor vehicle; and
• scrap the company loss carry back provisions, which allows companies that make a loss in one year to offset that loss against prior year profits (rather than carrying it forward and having to wait for future year profits to offset it) - effectively giving businesses a cash injection in the form of a tax refund.

This is indicative of more pain to come, regardless of who wins the election this weekend. A change in Government will likely not be the panacea for the economy that many expect as global economic factors, more than anything else, continue to weaken the Federal Budget position. A surplus is unlikely for a number of years yet, despite the rhetoric from both sides.

You can read more of of the Coalition's costing analysis here.

If you were 59 years of age or older as at 30th June 2013, you can now put away up to $35,000 in concessional superannuation contributions. 'Concessional' contributions are those amounts which are taxed at the lower super fund rate of 15%. It's this rate that makes superannuation such a tax effective savings strategy.

The previous cap on concessional contributions was $25,000 for everyone. This is part of an overall strategy to increase the concessional limit for all taxpayers. This same increase will apply for those aged 50 and over from 1st July 2014 and for all taxpayers by 1st July 2018.

If you are over 60 and have the funds available, this increase is welcome news and may result in your retirement nest egg being considerably larger. Please contact us if you'd like any further information.

Peak industry professional bodies have joined together to call on the government to abandon its proposal to cap self-education expenses at $2,000, as proposed in the recent Federal Budget.

Among them, the Tax Institute of Australia (TIA) has recently issued a media release calling the proposal 'bad policy' which will result in 'unintended consequences'. They, and other bodies, will continue to pressure the government to consider alternative measures that would tighten the existing law to prevent exploitation without penalising those legitimately seeking to further their education by funding it themselves.

We hope the government reconsiders this blunt initiative, and will continue to keep you posted.

You can read the full text of the TIA's media release here.

Morgan Stanley here in Adelaide have released their July Investment Viewpoint. 

"In June, Australian equities were unnerved by - 1) US Federal Reserve comments on the winding down Quantitative Easing (QE); 2) A spike in money market interest rates in China; and 3) Concerns over a domestic downturn...Nevertheless, an imminent resources production boom, the lagged impact of stimulative monetary policy, and even a change in Government, are some tailwinds that should mitigate the downside (in our firm’s view)."

Read more: Morgan Stanley Investment Viewpoint July 2013

From 1st July 2013, the Tax Office will require individuals expecting a refund to provide bank account details to process the refund via EFT. This means the days of receiving a cheque for your refund, attached to the bottom of your assessment notice, are over. All refunds arising from the lodgement of individual income tax returns will now be electronically transferred.

Naturally, if you're a Dewings client, we'll make sure that we have asked you for your bank account details before lodging your return, to ensure there is no disruption to the timely receipt of your refund.

You can read more about the change at the Tax Office website.