Financial advisers will need to become quickly acquainted with a range of changes announced in the Federal Budget that affect the tax status of clients.
And according to an analysis compiled by ING, one of the most significant is the expanded definitions of ‘income’ contained in the Budget, which will come into effect from July 1 next year.
The ING team has pointed out that from the beginning of the next financial year, the Government will expand the definition of income used to determine eligibility for Government support programs and certain tax offsets, including with respect to salary sacrifice.
It said to ensure employees who have access to salary sacrifice arrangements are treated equally with those who do not, salary sacrifice contributions to superannuation will now be included in income, with the measure affecting payments such as income support for people below Age Pension age, family assistance payments, child support, superannuation co-contributions and financial and retirement savings assistance delivered through the tax system.
ING points out that net financial investment losses, net rental property losses and reportable fringe benefits will also be included in the definition of income for certain tax programs and tax offsets, including the senior Australians tax offset, dependency tax offset, pensions tax offset and the Medicare levy surcharge.
