As you may already be aware, the federal budget for 2016 has been announced.
Here are some excerpts from the budget that may directly affect your tax situation. This information can be found in more detail at www.nortonrosefullbright.com
Company tax cut
The Government intends to reduce the company tax rate to 25 per cent over 10 years. Businesses with an annual aggregated turnover of less than $10 million will be taxed at 27.5 per cent from the 2016-17 income year. All companies will be taxed at 27.5 per cent in the 2023-24 income year and the company tax rate will then be progressively lowered until it reaches 25 per cent in the 2026-27 income year.
The Federal Budget has been announced for 2015/2016 years, and there are some interesting updates to tax related matters. As per the NTAA, here are some important developments for tax matters, mostly pertaining to small business;
1. Changes effective Budget Night – 7.30pm (AEST) 12 May 2015
1.1 Expanding accelerated depreciation for small business – immediate write-off and small business pool
The government will significantly expand accelerated depreciation for small businesses. It will do this by allowing small businesses with aggregate annual turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000 (currently, an immediate write-off is generally available for assets costing less than $1,000). This will apply for assets acquired and installed ready for use between 7.30pm (AEST) 12 May 2015 and 30 June 2017. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed in the small business simplified depreciation pool (‘the pool’) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools). The government will also suspend the current ‘lock out’ laws for the simplified depreciation rules until 30 June 2017. Currently, these ‘lock out’ rules prevent small businesses from re-entering the simplified depreciation regime for five years, if they opt out. From 1 July 2017, the thresholds for the immediate depreciation of assets and the value of the pool will revert back to existing arrangements (which are currently based on a ‘less than $1,000’ threshold).
As most of you may already be aware, the proposed changes for the federal budget were announced this month.
So what does this mean for for tax clients?
Below is a concise list of details regarding the latest updates in the budget, as given by the NTAA;
1. Changes effective 1 July 2013 (i.e., 2013/14 income year)
1.1 Medicare levy low income thresholds
For 2013/14, the Medicare Levy low income thresholds will be as follows:
• Individuals $20,542 (no increase from 2012/13)
• Families $34,367 (previously $33,693)
The families income threshold (i.e., $34,367) will be increased by $3,156 (previously $3,094) for each
dependent child or student.
This information can be found on the ATO website:
With only a month left for people who prepare their own tax return to lodge, the ATO is warning taxpayers to protect their personal and financial details following a sharp spike in reports of tax-related email scams. Since June, reports from the public of phishing scams have quadrupled to 15,441 compared with just 3,586 during the same period last year.
“While the public is reporting scam emails to ATO in increasing numbers, scammers are also becoming more sophisticated in the way they trick taxpayers into handing over their personal details,” Tax Commissioner Chris Jordan said.
“We advise people to be vigilant of emails that mimic the ATO’s online publications. Think very carefully before clicking on links and attachments in emails or on social networking sites.
Here are some of the important changes that have been announced in this year's federal budget:
As reported in the lead up to the Budget, the Medicare levy will increase to 2% from 1 July 2014 to fund the Government’s DisabilityCare Australia reforms. Revenue raised from this measure will be paid into a dedicated fund administered solely for the purpose of meeting DisabilityCare funding needs.
In addition to the Medicare Levy, higher income earners without sufficient private health cover will continue to be assessed to a further 1% surcharge.
The increase in the Medicare Levy brings the effective top marginal tax rate to 47%. A number of tax laws apply the top effective rate as a penalty rate of tax. As a consequence, the following items will also be subject to tax of 47% (currently 46.5%):
The increase in the tax-free threshold to $19,400 which was to take effect from 1 July 2015 has been deferred.
Climate Change Minister Greg Combet says the tax-free threshold increase will be deferred "until such time as the carbon price exceeds $25.40 (a tonne), whenever this may be."
As such, personal income tax rates are unchanged.
Excerpt from the ATO website:
From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year.
You need to report these payments to us on the Taxable payments annual report.