It's Tax Time Again!

The new financial year started last week, which means that not only is it time to start preparing those tax returns, but also a range of government measures affecting household budgets and property transactions have taken effect.

As of July 1, there are changes to the income tax rates, to family tax benefits, to the childcare rebate, to superannuation benefits, and to business tax breaks.

Some of the key changes affecting household budgets include:

• The low income tax offset (LITO) increases from $1200 to $1350, meaning the effective tax-free threshold for taxpayers eligible for the full LITO climbs from $14,000 to $15,000.
• The 30 per cent marginal tax rate threshold rises from $34,001 to $35,001.
• The 40 per cent marginal tax rate threshold falls to 38 per cent. The concessional contribution cap for superannuation is halved from $50,000 to $25,000 for those under 50 and from $100,000 to $50,000 for those older than 50. Three state government measures that are in effect as of Wednesday have particular resonance for homebuyers and property investors. These are:
• In New South Wales, stamp duty is halved for people buying newly constructed homes worth under $600,000 who are not first homeowners, a saving of up to $11,245.
• The Victorian Government’s increased incentives for first homebuyers, which mean first-time property buyers in that state are eligible for up to $36,500 in combined Commonwealth and state grants.
• In South Australia, all remaining mortgage duty and rental duty is fully abolished.

The Australian Tax Office (ATO) says property investors need to be clear about what expenses they can and can’t claim in their tax returns. The ATO says some of the commonly claimed deductions for rental properties are for money spent on:

• capital works;
• repairs and improvements to a property;
• some legal, interest and other expenses associated with the purchase of an investment property;
• mortgage broker and loan establishment fees;
• stamp duty charged on the mortgage;
• title search fees charged by the lender;
• fees for any valuation for loan approval;
• the costs for preparing and filing documents on the loan; and
• lenders mortgage insurance.

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Source: Australian Property Investor