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Carbon Tax

The new Carbon Tax – what it means for you

Chris Morcom
Partner/Private Client Adviser
10 Nov 2011

This week saw the passing of legislation that made the government’s Carbon Tax a reality for Australians.  So whether you agree or not with the approach, the law is now in place and we all must now begin planning for the new system to start from 1 July next year.

The tax puts a price on carbon, or more specifically requires those who emit more than 25,000 tonnes of carbon dioxide equivalent per year to either pay a price per tonne for their emissions, or provide appropriate permits.  
The initial price per tonne of carbon will be fixed at $23 until the end of June 2015, at which time the price will become flexible based on market pricing within set minimum and maximum parameters.  
Those affected directly by the carbon tax are the large emitters of carbon pollution, estimated to be around 500 businesses.  Those excluded from the carbon tax are household transport users and agricultural emissions.
The main impact for individuals will be on the cost of living, which is expected to rise by around $9.90 per week (around $515 per annum) on average.
To compensate, proceeds raised from the carbon tax are to be used to increase the Tax Free Threshold for individuals from $6,000 currently to $18,200 from 1 July 2012.  There will also be an increase in pensions, allowances, and benefits to assist the less well-off to cope with the increased cost of living.
Given the changes, you might like to consider your financial plans for the next eight months.  If you have the opportunity to bring forward tax deductible expenditure into the current financial year, then the tax offset is likely to have greater benefit than in the next financial year.  The same goes for capital gains – delaying the sale of an asset until after the end of June next year would allow you to take advantage of the higher tax free threshold.  
Tax should never be the sole focus of an investment strategy, however it does pay to keep these changes in mind should you be planning transactions for the next twelve months.
For self-funded retirees, there is a small amount of compensation.  Those with a Commonwealth Seniors Health Card will receive a one off payment of $250 for singles and $190 each for couples.  They will also receive a quarterly Seniors Supplement totalling $338 per annum for singles and $255 per annum each for couples.  These amounts are all indexed annually.  While Treasury calculations show you should be better off as a result of these subsidies, your actual position will depend on just how much of your income is used to pay for energy bills.
To find out more about the new carbon tax and how it affects you, the government has established a website with many links and calculators, at www.carbontax.net.au.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.