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26 May 11 Budget and other amendments introduced

On 26 May 2011 the Minister for Financial Services and Superannuation introduced the Tax Laws Amendment (2011 Measures No 4) Bill 2011 into the House of Representatives.

The Bill will make the following amendments.

Reduction in 2011-12 PAYG instalments: The Bill will amend Schedule 1 to the Taxation Administration Act 1953 to set the GDP adjustment for PAYG instalment taxpayers who use the GDP adjustment method at 4% for the 2011-12 income year, instead of 8%. This measure applies to PAYG instalment amounts for the 2011-12 income year that become due on or after the day after this Bill receives Royal Assent. It does not apply where a taxpayer’s 2011-12 income year commenced before 1 April 2011. This measure was announced in the 2011-12 Budget.

Low-income taxpayer rebate: The Bill will amend the ITAA 1936 to remove the ability of minors (children under 18 years of age) to use the low income tax offset to offset tax due on their unearned income, such as dividends, interest, rent, royalties and other income from property. This will reduce the benefits of income splitting between adults and children and protect the integrity of the income tax system. This measure will apply to assessments for the 2011-12 income year and later income years. It was announced in the Assistant Treasurer and Minister for Financial Services and Superannuation’s Media Release No 072 of 10 May 2011.

Disability superannuation benefits: The Bill will allow the percentage of insurance costs for certain total and permanent disability (TPD) policies that can be claimed as deductions by superannuation funds to be specified in regulations. This measure will have effect from the 2011-12 income year. The Bill will also extend the current transitional relief for the deductibility of TPD insurance premiums to funds that self-insure their liability to provide disability benefits. This measure will apply to the income years 2004-05 to 2010-11. These measures were not previously announced.

Amendments to reportable employer superannuation contributions definition: The Bill will amend the Taxation Administration Act 1953 to exclude from the “reportable employer superannuation contributions” definition certain employer contributions to superannuation made pursuant to a requirement that employees cannot influence. This measure applies to the 2009-10 income year and later income years. It was announced in the former Minister for Financial Services, Superannuation and Corporate Law’s Media Release No 080 of 30 June 2010.