Although only draft at the time of writing this newsletter, these proposed tax changes could have an impact on decisions you need to make before the 1st January 2014. The repeal of the Mineral Resource Rent Tax (Mining Tax) is unlikely to affect small business entities or individuals but some of the other tax measures may have a wider impact.
Immediate Deductions Reduced for Small Businesses
At this point in time, small business entities (generally with a turnover of less than $2M) are entitled to claim an immediate deduction for depreciating assets costing less than $6,500 (e.g. a $3,000 laptop can be claimed in full by a small business entity). As of 1st January 2014, this deduction will drop to only $1,000. Therefore, if your business needs to purchase assets costing less than $6,500 and your cash flow allows it, you have until the 31st December 2013 to purchase the asset and claim the full immediate deduction.
The $5,000 Immediate Deduction for Motor Vehicles Scrapped
If you are toying with purchasing a motor vehicle for your business, be aware that the immediate deduction of $5,000 for small businesses is also proposed to be scrapped as of the 1st January 2014. If a new car is on the agenda, it could be advantageous to buy before December 31 and make sure you talk to us about the best way to finance the vehicle for tax purposes.
Loss Carry Back Measures Repealed
Recently introduced, the loss carry-back measures enabled a company to offset tax paid in previous years against current year losses. This repeal means companies would only be able to use this measure for the 2013 income tax year as they are set to be repealed from the start of the 2014 year.
Superannuation Guarantee Charge Rates Delayed
The percentage of Superannuation Guarantee (SG) was set to increase gradually from 1st July 2013 until it reached 12% by July 2019. The SG rate is now set to remain at 9.25% for the 2014, 2015 and 2016 financial years and increase to 9.5% from 1st July 2016. The rate won’t reach 12% until 1st July 2021.