2015-16 Federal Budget

Jun 09, 2015

Small business is the big winner in this year’s budget.

From Budget night, small businesses with an aggregate turnover of less than $2 million can immediately deduct most assets acquired and installed which cost less than $20,000 (before GST). The cut-off date is 30 June 2017.

Where pools are used clients are eligible for immediate deduction of the pool balance once it becomes less than $20,000 (Including existing pools).

From 1 April 2016, small businesses can also provide employees with more than one FBT exempt work-related portable electronic device (mobile phone, laptop etc).

And from 1 July 2016, we expect to see new small business CGT rollovers that will make restructuring easier and extend beyond the limited incorporation rollover currently available. Stay tuned.

Company tax rate cut confirmed for incorporated small businesses with an annual turnover under $2 million, effective 1 July 2015

For franked dividends paid, the maximum benchmark franking percentage will be unchanged, i.e. it is still calculated by reference to the 30% rate. Actual franking account balances are unaffected.

Common tax planning strategies to defer income or bring forward deductions are even more important this year in order to maximize the tax benefits of the tax cut.

For unincorporated businesses there is a 5% discount on tax payable (up to a maximum $1,000 per individual per income year).

Professional fees associated with start-ups deductible immediately from 1 July 2015

But no need to wait if you are thinking about a new business, professional services performed just prior to 1 July 2015 can be invoiced on or after that date.

All primary production clients

Discuss with us the opportunities to take advantage of the immediate deduction of capital expenditure on fencing and water facilities since budget night (it was announced as from 1 July 2016 but this was changed on 27 May 2015).

Personal tax clients

A number of changes could impact your affairs:

The denial of the zone tax offset for fly-in fly-out (or drive-in drive-out) workers (1 July 2015)

Salary packaging of entertainment for those employed by hospitals, ambulance services, health promotion charities or public benevolent institutions. FBT changes from 1 April 2016 will ‘cap’ the benefits of this strategy to a grossed up amount of $5,000.

For personal motor vehicle use deduction claims, only a cents per kilometre or log book method will be available from 1 July 2015, with the former set at 66 cents per km.

Childcare changes

It’s not strictly tax-related, but child care costs are a major outlay for working family clients. From 1 July 2017, there will no longer be a:

Child Care Rebate – Covers 50% of out of pocket child care expenses for approved care, up to a maximum amount per child per year (not means tested)

Child Care Benefit – Means tested and usually paid direct to the provider

Instead, the Government intends to establish new childcare subsidy arrangements.

For clients with young families, put childcare on the agenda for our upcoming 2015 tax time conversation.

The Budget confirms that digital transformation is coming for individuals and businesses.

The new Digital Transformation Office will design and deliver more and more services accessible via the myGov site. Soon, all Australian businesses will have a revamped digital identity which overcomes current problems with authentication.

We are currently thinking ahead about how to work with our clients effectively online.

Do you and your staff have the skills to work effectively in an online business world?

How can your customers and suppliers be engaged on streamlining current processes?

And there’s been a lot of tax reform talk about superannuation…

Nobody has a crystal ball, but there’s lots of talk about changes to the superannuation arrangements for high income earners. We know the worry this causes, particularly among those approaching retirement.

The Government says there’ll be no changes in the current term of office, but the Federal Opposition has already announced its ‘Fairer Super Plan’.

Talk to us about your retirement planning, so that we can take into account the planned changes to the age pension asset taper rate (where relevant), and keep a close watch over your superannuation circumstances as we head towards a federal election (expected late 2016).

But the Budget did contain one change to the superannuation early release rules which we hope you’ll never need to discuss with us: the timeframe for the release of superannuation benefits due to terminal illness will be extended to cover situations where death is likely to occur within two years (not the current one year period), with this change effective from 1 July 2015.

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