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Tax Changes Affecting Small Business under a Coalition Government

| Accounting & Tax

With the new coalition government having now been sworn in, we thought it timely to summarise the tax changes that are directly targeted towards helping small business, along with those that they have promised to remove.

Firstly, the positives:

  • Abolishing the carbon tax will be seen by many to ease the cost pressures on small business.

  • Abolishing the mining tax is also hoping to bring additional investment back into Australia, improving the overall economy.

  • Cutting the company tax rate by 1.5%, to 28.5%, from 1 July 2015.

  • Scrapping the proposed changes to fringe benefits tax for cars, meaning the statutory formula would still be available for calculating the taxable value of car fringe benefits.

  • Simplifying the way small business pays the Superannuation Guarantee Charge. Currently small business pays superannuation quarterly, either directly to an employee’s superannuation fund or via the Small Business Clearing House. The proposed changes would allow small business to pay the Superannuation Guarantee Charge directly to the ATO along with PAYG tax withheld from wages, and the ATO would then transfer the payments to employees’ individual superannuation accounts.

  • Delaying the next legislated increase to the compulsory Superannuation Guarantee Charge (from its current level now 9.25% up to 9.5%) by two years, to take effect from 1 July 2016.

The Coalition will also look to make the following changes that could potentially have a negative impact on small business:

  • Removing the instant asset write-off available to small business purchasing assets up to the value of $6,500.

  • Removing accelerated depreciation of motor vehicles. Previously, small businesses were entitled to an immediate deduction of $5,000 for the cost of a motor vehicle, with the remainder of the cost being written off at 15% per year.

  • Discontinuing the company tax loss carry-back measure. This measure was introduced during the 2012 Federal budget and allowed companies to claim a refund for tax paid in a previous year if the company had a tax loss in the current year.

If you would like to discuss how these changes will affect your business and seek advice on how to best manage them, please contact your Altitude Accountant.