Interaction

Improvements to small business concessions - Bill introduced into parliament

From 2012-2013 the small business low value asset immediate write-off will increase from $1,000 to $6,500. The general business pool and long life small business pool will be consolidated into a single pool to be written off at one rate. The 25 per cent Entrepreneurs Tax Offset will be cancelled. Small Businesses will be able to claim $5000 initially in accelerated depreciation for motor vehicles acquired in the 2012-2013 and later tax years. 

(Reminder: a small business has aggregated turnover less than $2 million)

The amendments aim to define the appropriate method used to work out the capital/dividend split of share buy-backs and 
provided that where the approved method is used to determine the dividend/capital split certain tax avoidance measures will not apply (i.e. streaming rules). Where a listed company undertakes an off-market buyback notional losses on the disposal of the shares/interests will be denied. The market value uplift will be removed and the time to provide a distribution statement will be extended. 

Increase in Superannuation Guarantee - Bill introduced into Parliament 

From 1 July 2013 the Superannuation Guarantee percentage will gradually be increased from 9 per cent to 12 per cent in the 2019-20 financial year and the Superannuation Guarantee age limit will increase from 70 to 75 years.

Directors of Companies to be personally liable for outstanding Super Guarantee and PAYG withholding.

The ATO are seeking to reinforce a director's obligation to ensure their company complies with its PAYG and Super Guarantee requirements by making the directors personally liable for their company's overdue amounts. The new measures will allow the ATO 90 days after the relevant due date to commence proceedings to recover from Directors any amounts that are unpaid and unreported by making directors and their associates personally liable.

Default Assessment Notices

The ATO has announced that they will be issuing default assessment notices based on the information they have received from third-parties e.g PAYG payment summaries, interest and dividend etc to individual tax payers with overdue lodgement returns. The taxpayer will first receive a letter titled 'Default assessment warning' if the overdue returns are not lodged by the date specified, they will issue a default assessment based on the estimated taxable income included in the letter. 

Standard work-related and tax-related deduction

The government have released draft legislation about the announcement made in the May Budget to introduced a standard work-related / tax-related deduction for individuals. To refresh your memory, the amount of the deduction is set to be $500 for 2013 tax return and $1000 for the 2014 tax return and onwards. The deduction aims to cover all work-related items including clothing, telephone, subscriptions, travel, self-education and home office and tax related items such as your tax preparation fee. If your actual deductions are more than the standard deduction you are entitled to claim but you must maintain records to support all claims. Importantly the standard deduction does not include motor vehicle or car expenses so a claim can be made in addition to the standard deduction.

CGT relief for natural disasters

The Government have released a discussion paper regarding Taxpayers affected by a natural disaster and who are eligible to participate in the Australian government agency replacement asset programs or receive assistance such as cash grants to be exempt from paying CGT or to be able to retain pre-CGT asset status for their replacement assets. Importantly the proposed date of the effect is 1 July 2011 which may be of no benefit to the taxpayers who were affected by the storms and floods earlier this year. We will keep you updated.

Ever wonder what happens after the Government announces Tax Reforms in the May Budget? 

The Government releases Discussion Papers to allow the opinions of members of the public and its stakeholders to be considered.Once the discussion period is complete a Bill will be introduced into Parliament to be voted on. If the bill is passed it receives Royal Assent and becomes law.  In the last few weeks a number of Discussion Papers have been released. Here's the ones that we think are likely to impact you and should be considered as part of your future tax planning.

Business

• Reduction of the company tax rate to 29 per cent from the 2013-14-income year, with small companies starting from the 2012-13-income year.
• Replacement of the Entrepreneurs’ tax offset with a depreciation scheme allowing small businesses to immediately write-off assets valued at under $6,500 and the first $5,000 of a motor vehicle. 
• Fringe Benefits Tax Introduction of one statutory rate (20 per cent) regardless of the number of kilometers travelled by a car.

Individuals

• Increasing the tax-free threshold from $6,000 to $18,200 in 2012-13.
  
• A standard personal tax deduction for work-related expenses of $500 for 2012-13, increasing to $1,000 for 2013-14 onwards. 
• Introducing a 50 per cent tax discount on up to $500 of net interest income from 1 July 2012, increasing to $1,000 from 1 July 2013.

Superannuation

• The $50,000 concessional superannuation contributions cap to remain post-1 July 2012 for over 50s with balances below $500,000.
• Superannuation Guarantee will be increased to 12 per cent by 1 July 2019
• A $500 government contribution to super will be introduced for low-income earners

Following on from announcements made in the May Budget on changes to tax legislation a number of bills are at various stages on the path to becoming the law. We will keep you updated on the amendments that we think will impact you.

What's New?

Definition of "reportable employer superannuation contributions" will be revised to exclude employer contributions exceeding the compulsory 9% that the employee does not have any influence over because their employer is required under mandates to pay a higher percentage.  This amendment will have affect from 1 July 2009. If you think that this may affect you please contact us here.

The government is proposing a reporting regime for payments made to contractors in the building and construction industry. Businesses in the industry would be required to report payments for labour undertaken by contractors using an ABN annually to the ATO. It will be like the Annual Payment Summary you do for wages paid to employees. We think this legislation will be put in place to catch out tradies who do not declare the full amount of income they earn in their tax return. We will let you know from what date this will take affect.

Another proposal issued is for a tax offset to be provided to superfunds up to $500 on taxable contributions received for individuals who have an adjustable taxable income of less than $37,000. Basically if you a low incomer earner your superfund will not pay tax on contribution made by your employer. Proposed date of affect is 1 July 2012. Great news for those who need $ the most!!!

From 1 July 2011, the fuel tax credit rate for heavy road vehicles travelling on public roads is 15.043 cents per litre.

SMSF

The ATO is going tighten the rules on trustees of a SMSF investing in collectables and personal use assets like artwork, coins, jewelry, stamps and recreational boats. If your SMSF holds these types of assets – click here to read more on how this will affect you.