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Proposed tax changes for 2014

The Government’s plan to abolish a number of tax measures could cost individuals and businesses several thousands of dollars.

It is important to be aware of these potential changes as decisions pre and post 1 January 2014 could have serious implications.

Below are some of the potential changes, however, take note that these changes are still yet to become law:

Reduction in instant asset write-off threshold

Small business (generally those with a turnover of less than $2 million) can currently claim an immediate deduction for depreciating assets costing less than $6,500.  From 1 January 2014, this threshold will drop to $1000.

$5000 deduction for motor vehicles scrapped

From 1 January 2014, the $5000 immediate deduction for motor vehicles purchased by small businesses will be removed.  If businesses are considering purchasing a motor vehicle they have until 31 December 2013 to be able to claim the deduction.

Loss carry back measures

The loss carry back measures allows companies to offset tax they have paid in the previous years against current year losses.  The repeal of this measure will mean that companies will only be able to use the loss carry back measures for the 2013 income year.

Posted on 13 December '13 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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