How the dates of tax changes affect you

With the new financial year just getting under way, it is important to understand which of the tax and social security changes announced in the latest federal budget apply in 2011-12 and which don't.

One new tax arrangement that won't apply until 2012-13 is the abolition of the 25% entrepreneur's tax offset. This is also the case with its replacement - an immediate $5000 tax deduction when a small business or self-employed business person buys a new vehicle.

Another tax change deferred until July 2012 is the cut in the discount for paying HECS upfront, from 20% to 10%, and from 10% to 5% for voluntarily repaying at least $500 of it early.

In contrast, other changes apply from 2011-12. These include abolition of the dependent spouse tax rebate for a spouse born after June 30, 1971, removal of the low income tax offset on the unearned income of children under 18, and the much debated decision to retain the freeze on the income thresholds for family tax benefits.

Another change from July 1 is the decision to prevent students, in effect, claiming tax deductions against government assistance payments, such as Austudy.

One important tax change actually began to be phased in even earlier than July 1. This is the decision to reduce the fringe benefits tax concessions available to those who drive their company cars 25,000km or more. The change applies to cars bought after 7.30pm on budget night, May 10.

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