Client Alert for August 2013

Specific tax rule to prevent dividend washing

Individual denied interest deduction

Overseas doctor a tax resident of Australia

Partnership denied GST credits

Division 7A benchmark interest rate

Reasonable travel and meal allowance amounts

Car depreciation limit

Key superannuation changes

Excess concessional contributions

TIP: These proposed changes will undoubtedly be welcomed by the 40,000-odd taxpayers who are expected to pay (on average) $1,100 less tax on their excess concessional contributions in 2013-2014.

However, taxpayers on the top marginal tax rate are expected to have a slightly higher tax liability for their excess concessional contributions (due to the additional interest charge).

Higher contributions cap of $35,000

TIP: Eligibility for the higher cap depends on a person's age on 30 June in the previous income year. This means:

- persons who were aged 59 years or over on 30 June 2013 are eligible for the higher cap in 2013-2014; and
- persons who will be aged 49 years or over on 30 June 2014 will eligible for the higher cap in 2014-2015.

Please contact our office if you wish to discuss your eligibility for the higher cap.

TIP: Taxpayers aged 59 years or over on 30 June 2013 should consider reviewing their salary-sacrificing arrangements, deductions for personal contributions and transition to retirement pensions to take into account the higher concessional cap of $35,000 for 2013-2014.

Extra 15% contributions tax for $300,000+ incomes

TIP: Individuals with incomes above $300,000 may want to consider limiting their concessional contributions to compulsory superannuation guarantee contributions (9.25% for 2013-2014) where such benefits can be packaged in a more tax-effective manner. Alternatively, these individuals may want to consider whether it is more beneficial to instead make after-tax non-concessional contributions.