2015-2016 Budget Highlights
There were no major surprises in the 2015 Budget, and at last there have been some small tax concessions and incentives granted to small business to provide support and encourage the growth of jobs.
It will be interesting to see how some of these initiatives will be achieved and whether there will be any difficulties with the Senate in the future.
Below are some highlights:
Tax, superannuation and social security highlights
Multinational profit shifting and international
· A targeted multinational anti-avoidance law will be introduced into the general anti-avoidance provisions of the Income Tax Assessment Act 1936.
· The maximum administrative penalties for companies that enter into tax avoidance and profit shifting will be doubled.
· The OECD's new transfer pricing documentation standards will be implemented from 1 January 2016.
· A voluntary corporate disclosure code will be developed to facilitate greater compliance with the tax system.
· To further combat multinational tax avoidance, the government will tackle treaty abuse in its treaty practices, consult on the development of anti-hybrid rules, exchange information with other countries on harmful tax practices, and further fund the ATO's profit-shifting investigations.
· The reforms to modernise the Offshore Banking Unit (OBU) regime and targeted integrity measures will proceed.
· The tax rate for companies with an aggregated annual turnover of less than $2 million will be reduced by 1.5 per cent (that is from 30 per cent to 28.5 per cent) from the 2015/16 income year. A 5 per cent tax discount for individual taxpayers with business income from an unincorporated business with an aggregated annual turnover of less than $2 million will also be introduced from the 2015/16 income year.
· The threshold below which small businesses can claim an immediate deduction for the cost of assets will be temporarily increased from $1000 to $20,000. The rules preventing small businesses from re-entering the simplified depreciation regime for five years after opting not to use it will also be temporarily suspended.
· Start-ups will be able to claim an immediate deduction for professional expenses associated with starting a business from the 2015/16 income year.
· Further changes will be made to the taxation of employee share schemes.
· Other measures to encourage business start-ups and entrepreneurship will be introduced.
· Capital gains tax (CGT) relief will be available to small businesses for a CGT liability arising from the alteration of their legal structure from the 2016/17 income year.
· Primary producers will be able to claim accelerated depreciation for water facilities, fodder storage and fencing from 1 July 2016.
· The fringe benefits tax exemption for portable electronic devices used primarily for work purposes will be expanded from 1 April 2016.
Fringe benefits tax and managed investment trusts
· A separate, single grossed-up cap of $5000 will be introduced for salary sacrificed meal entertainment and entertainment facility leasing expenses (meal entertainment benefits) for employees of not-for-profits.
· The start date of the new managed investment trusts (MITs) regime has been deferred to 1 July 2016 but MITs can choose to apply the new regime from Wednesday 1 July 2015.
GST and luxury car tax
• Offshore supplies of services and intangibles to Australian consumers will be subject to GST from 1 July 2017.
• The previously announced measure to implement reverse charge rules for going concerns and farmland sales will not proceed.
• The government will provide funding to the ATO over three years from 2016/17 to continue to promote GST compliance.
• A luxury car tax exemption will apply to cars acquired by endorsed public museums and public art galleries.
Individuals and families
• The methods of calculating work-related car expense deductions will be modernised from the 2015/16 income year.
• From 1 July 2016, the income tax exemption that is currently available to government employees who earn income while delivering Official Development Assistance overseas for more than 90 continuous days will be removed.
• From 1 July 2016, the tax residency rules will be changed to treat most people who are temporarily in Australia for a working holiday as non-residents for tax purposes, regardless of how long they are here.
• Income tax relief will be provided for Australian Defence Force personnel deployed on Operations AUGURY and HAWICK.
• The Medicare levy low-income thresholds for singles, families and single seniors and pensioners will be increased from the 2014/15 income year.
• From Wednesday 1 July 2015, the zone tax offset will exclude "fly-in fly-out" and "drive-in drive-out" (FIFO) workers where their normal residence is not within a "zone".
• Two organisations have been added to the list of specifically listed deductible gift recipients and two organisations have had their listings extended.
• The government will not be proceeding with elements of the 2014/15 Budget measure that relate to the pension income test free areas and deeming thresholds.
• A new Child Care Subsidy will be introduced from 1 July 2017 as part of reforms to the child care system.
• Families will no longer be eligible for subsidised child care or the Family Tax Benefit Part A end-of-year supplement unless their child is up-to-date with all childhood immunisations.
• The ability for individuals to access government assistance in the form of the existing Parental Leave Pay (PLP) scheme, in addition to any employer-provided parental leave entitlements, will be removed, from 1 July 2016.
• The Family Tax Benefit (FTB) Part A large family supplement will cease from 1 July 2016.
• From 1 January 2016, families will only be able to receive Family Tax Benefit Part A for six weeks in a 12- month period while they are overseas.
• Early access to superannuation will be provided to people with a terminal medical condition with effect from 1 July 2015.
• A package of measures will be implemented to remove redundant superannuation reporting obligations and to streamline administrative arrangements for lost and unclaimed superannuation.
• The supervisory levies paid by financial institutions will increase.
• An additional $130.9 million will be provided to the ATO over four years (including capital of $35.6 million) to deliver an improved experience for clients.
• The Inspector-General of Taxation's office will receive additional funding exceeding $14.6 million over five years to support its operations.
• The Global Infrastructure Hub will be specifically listed as an income tax exempt entity.
These highlights were compiled by CPA Australia and provided a good overall view of the key points of the 2015 Budget. More details can be found at www.cpaaustralia.com.au/~/media/corporate/allfiles/document/about/budget.pdf
The full 2015 Budget papers can be found at www.budget.gov.au.
Should you have any queries regarding the impact of these Budget measures, please contact our office.