Budget 2015/6 – The “have a go” budget

If you’re like us, you would have had popcorn at the ready when Joe Hockey delivered his 2015/6 Budget last night.

Just in case you had a better offer in terms of plans, please take a minute to review some of the key changes which may go ahead subject to Royal Assent.

For Individuals

1. Changes to motor vehicle claims – the 1/3 of actual expenses method and 12% of original value methods will be scrapped. Cents per km method will remain at 66 cents per km irrespective of engine size along with the logbook method. (We strongly recommend our clients to logbook their travels ASAP!) Applicable from 1 July 2015.

2. Tighter eligibility of the zone offset for fly-in/fly-out and drive-in/drive-out workers.

3. Starting a new business? Professional, legal and accounting advice will be immediate deductible in the year of expenditure (formerly deductible over 5 years!).

4. Temporary working holiday makers will be considered non-residents for tax purposes, regardless of time in Australia. Thus no tax free threshold will apply to them. Applicable from 1 July 2016.

5. Changes to HELP repayments for overseas debtors (those living overseas for more than 6 months with a HELP debt) whereby repayment of their HELP debt will no be based on their worldwide income. Applicable from 1 January 2016.

6. Parental leave – individuals will no longer be able to take payments from both their employer and the Government. The Government will ensure that all primary carers would have access to parental leave payments that are at least equal to the maximum Parental Leave Pay benefit (currently 18 weeks at the national minimum wage). Applicable from 1 July 2016.

7. Employee share schemes changes – currently employees pay tax when they receive these shares. The tax will now be deferred until the shares are realised. Applicable from 1 July 2015.

8. Personal tax rates remain unchanged. Medicare low levy income thresholds slightly increased for 2014/5 released:
• Individuals $20,896
• Families $35,261 + $3,238 for each dependent child
• For single seniors and pensioners, the threshold will be increased to $33,044.

For Families

1. Loosening of superannuation release criteria for terminal medical conditions

2. A new single Child Care Subsidy (‘CCS’) will be introduced.
• Families meeting the activity test with annual incomes up to $60,000 (2013/14 dollars) will be eligible for a subsidy of 85% of the actual fee paid, up to an hourly fee cap.
• The subsidy will taper to 50% for eligible families with annual incomes of $165,000.
• The CCS will have no annual cap for families with annual incomes below $180,000.
• For families with annual incomes of $180,000 and above, the CCS will be capped at $10,000 per child per year. Eligibility will be linked to a new activity test.
Applicable from 1 July 2017.

3. Parental leave – individuals will no longer be able to take payments from both their employer and the Government. The Government will ensure that all primary carers would have access to parental leave payments that are at least equal to the maximum Parental Leave Pay benefit (currently 18 weeks at the national minimum wage).
Applicable from 1 July 2016.

For Pensioners

1. The Government will make the pension fairer by increasing the asset free thresholds and asset taper for pensions. This means pensioners with modest assets will receive more pension. Pensioners with more substantial assets will need to rely more on their own means Applicable from 1 January 2017.

2. The Government will not proceed with indexation of pensions by CPI only. Pensions will continue to increase twice a year with the higher of inflation or wages.

For Small Business (Aggregated annual turnover less than $2 Million)

1. Small businesses will be able to immediately deduct assets they start to use or install ready for use, provided the asset cost less than $20,000. This is not a cheque in the mail for assets up to $20,000. This is an immediate tax deduction against your income in the year of purchase, which in turn reduces the business net income and in turn the business tax bill for the year in question.
Applicable from 12 May 2015 to 30 June 2017.

2. A reduction to Company tax rate – the tax rate will be reduced to 28.5%, from the current 30% rate.
Applicable from 1 July 2015.

3. Non company structures such as sole traders will be eligible for a small business tax discount. The discount will be 5% of the income tax payable, capped at $1,000, per individual for each income year.
Applicable from 1 July 2015.

4. Starting a new business? Professional, legal and accounting advice will be immediate deductible in the year of expenditure (formerly deductible over 5 years!).
Applicable from 1 July 2015.

5. National wage subsidy pool set up to encourage employment of young and mature age workers.

Other:

From 1 July 2017, GST will be extended to cross border supplies of digital products and services imported by consumers. Crowdsourced equity funding under review by ASIC. Stay tuned for more information about this area.

For any further information on the above or other financial matters, we invite you to contact our office for more information.