The new Coalition Government has announced they intend to repeal or change a number of tax measures proposed by the previous Government. A number of these will affect small businesses:
+ Minerals resource rent tax - The Government intends to repeal the minerals resources rent tax (MRRT) law with effect from 1 July, 2014. An exposure draft was released on 24 October, 2013. The Bill discontinues or changes some of the measures that were funded by the tax.
+ Company Loss Carry Back - The Government plans to repeal the loss carry back rules from 1 July, 2014. As a result, the only year that these rules will apply is for the financial year ended 30 June, 2013. Thereafter, companies will once again only be able to claim their carry losses as a deduction against future profits.
+ Reduction in the small business instant asset write-off threshold - From 1 January, 2014 the immediate deduction for depreciating assets for small business entities (SBE) will reduce from $6,500 to $1,000. The assets must be used or installed ready for use prior to 1 January, 2014 to comply with the $6,500 immediate deduction write-off.
URGENT ACTION - If you were planning to buy depreciating assets worth less than $6,500 you should consider doing so before 31 December, 2013 to take advantage of the instant write-off before it is reduced.
+ Repeal of accelerated depreciation for motor vehicles - The $5,000 immediate deduction for motor vehicles will also be repealed from 1 January, 2014. Once again SBEs have until 31 December, 2013 to take advantage of this deduction.
+ Re-phasing the Superannuation Guarantee (SG) percentage increase - The SG percentage was to increase from 9.25% to 9.5% starting 1 July, 2014 gradually increasing to 12% by 1 July, 2019. The government has announced they will pause the SG at 9.25% and increase it to 9.5% from 1 July, 2016.
+ Repeal of the low income superannuation contribution (LISC) - From 1 July, 2013 individuals earning up to $37,000 a year will no longer receive a refund for contributions tax paid on concessional contributions.
+ Repeal of the income support bonus - The income support bonus paid twice annually to eligible social security recipients will be repealed. This will be repealed from the date of amendment.
+ Repeal of the school kids bonus - The school kids bonus will be repealed. This will be repealed from the date of amendment.
The government has also set a deadline of 1 December to resolve uncertainty over dozens of taxes and policies announced but not legislated. Some of those already announced are as follows:
+ Cap on self-education expenses - The government announced on 6 November, 2013 that they will not proceed with the $2,000 cap on self-education expenses announced in the last budget.
+ Fringe Benefit Tax (FBT) changes Motor Vehicles - The FBT changes removing the statutory percentage formula for motor vehicles will not proceed.
+ Superannuation pensions - The tax changes to superannuation pension earnings above $100,000 a year will not become law.
The review of the remaining measures will be completed and announced before Christmas.