Business Advisors & Tax Accountants Melbourne

The Australian Government is supporting small businesses through introducing the instant write-off for eligible assets costing less than $20,000 from 12 May 2015 to 30 June 2017, helping these businesses purchase assets and grow (this is being extended for an additional 12 months in this Budget).

Contact Balci & Associates to find out more and ensure you claim all deductions available.

It’s been tough recently without hearing arguments of pros and cons with the removal of residential property investors’ negative gearing taxation rebates. As it stands, the negative gearing process allows people to claim deductions against the income generated less the expenses on residential investment properties allowing for higher refunds to be claimed.

Proposed changes to cost more than they save

Negative gearing was stopped from 1987-89, and many landlords couldn’t afford to keep their investment properties. The ones that remained in the market, rents were astronomical and resulted in the pressure on the public housing system. Waiting lists grew as tenants were priced out of private rentals – a situation that can happen again if these proposed changes are reintroduced.

Why repeat history when it so clearly didn’t work the first time?

Both parties are looking at negative gearing as they’re under public pressure from people not fully aware of the implications for the housing sector if things were to change. On one side of the coin, it looks as though the government is paying out millions in taxation rebates but in actual fact, they wouldn’t be saving as much as they think they will. Any perceived ‘savings’ would actually end up as higher costs because the government would have to make up for the accommodation shortfall (via public housing) if investors leave the market.

From 1 July 2014:

  • no taxpayer will be able to claim the Dependent spouse tax offset in their 2015 tax return and subsequent year returns; and
  • no taxpayer will receive the Mature age worker tax offset in their 2015 and subsequent years Notice of Assessment.
  • a taxpayer, where eligible, will be able to claim both the Zone, overseas forces or the civilian tax offset and the Dependent (invalid and carer) tax offset. In previous years, where a taxpayer claimed at both T5 Zone or overseas forces and T7 Dependent (carer or invalid) offset the ATO would allow T5 and disallow T7.

In individual tax return:

From 1 July 2014, the Medicare levy will increase by half a percentage point, going from 1.5 per cent to 2 per cent.

The reportable fringe benefits (FBT) amount of $3,738 will increase to $3,773 as a consequence of the FBT rate increasing from 46.5% to 47% from 1 April 2014.

The calculation spouse’s ATI, the multiplier of FBT has changed from 0.535 to 0.53.

In non-individual return:

The increase in the Medicare levy will also apply to the rate of no-TFN-quoted contributions tax (paid by superannuation entities) and will increase this rate by 0.5%

At the same time (from 1 July 2014) the government has applied a 2% Temporary Budget Repair Levy to the rate of no-TFN-quoted contributions tax.

The no-TFN-quoted contributions tax rate, now reflects the increase of 0.5% for non-complying SMSFs and 2.5% for complying SMSFs to the no-TFN-quoted contributions tax rate, giving a change of:

  • 1.5% to 2% for non-complying SMSFs
  • 31.5% to 34% for complying SMSFs

To support the use of SuperStream standards for SMSF, the ATO will now collect and store SMSF superannuation bank account details and SMSF alias (electronic service address) details. The SMSF annual return has been modified to include two new data fields to capture SMSF superannuation bank account details and SMSF alias (electronic service address).

  • Applies to small business (turnover under $2m) assets acquired and installed ready
    for use between 7:30pm (AEST) 12 May 2015 and 30 June 2017.
  • Assets valued less than $20,000 can be immediately written off (low cost assets
    worksheet).

The pooled assets can be immediately deducted if the balance is less than $20,000

As part of the government’s election policy, financial assistance will be provided to specific apprentices on a special needs list by providing interest-free loans referred to as Trade Support Loan (TSL).

TSL will be a new income contingent loan and will have compulsory repayments raised on a taxpayer’s Income Tax Notice of Assessment (NOA) once the taxpayer’s repayment income exceeds a minimum repayment threshold. The repayment rates and thresholds for TSL will utilise the current Higher Education Loan Program (HELP) rates.

If the taxpayer has both a HELP and TSL debt, the priority is to pay off the HELP debt first.