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)

Off-Market Share Buy Backs - Release of exposure draft and explanatory memorandum

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.

The big news this month is centred around the two-day Tax Forum which kicked-off in Canberra today. The forum brings together around 200 representatives of the community, business, unions, government, academics and other tax experts, to discuss priorities and directions for further tax reform in light of the Henry Tax Review. The outcome of day 1 is that small business, big business and unions have failed to find common ground on most issues including cutting the corporate tax rate to 29% however most agree that simplifying the tax system is the way forward.


Tax Update

Tax Law Amendment to Research and Development has received Royal Assent. 
From 1 July 2012 The R&D tax concession will be replaced with the new R&D tax incentive.

The R&D tax incentive provides a:
 
• 45 per cent refundable R&D tax credit for eligible companies with aggregated turnover of less than $20m; 
• 40 per cent non-refundable R&D tax credit for other entities.

This equates to 150% tax deduction for eligible companies. The eligibility criteria for amounts that can be claimed has been restricted. Click here for more details


Proposed Changes to claiming GST upfront on Hire Purchase Agreement for small businesses who are on a cash-basis 
An Exposure draft titled GST financial supply provisions from 1 July 2011 allows small businesses accounting on a cash basis to access full input tax credits upfront when they enter into hire purchase agreement

 
Draft legislation for Small business tax law amendments
 The amendments are due to be effective from 1 July 2012 but will only be introduced if the mineral resources tax passes. If the Government is defeated in the Carbon Tax the existing rules will stay in place:
 
• increase the small business instant asset write-off threshold from $1,000 to $6,500
• consolidate the long life small business pool with the general small business pool, resulting in a single pool
• enable small businesses to claim an initial deduction of $5,000 for motor vehicle purchases
• abolish the Entrepreneurs Tax Offset  

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.