Instant asset write-off

Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 and were purchased between 7:30pm on 12 May 2015 and 30 June 2017.

They can claim the deduction through their tax return.

They can also immediately deduct the balance in the small business pool if it is less than $20,000 at the end of an income year ending on or after 12 May 2015 to 30 June 2017 (including an existing pool).

 

Accelerated depreciation for primary producers

As of 12 May 2015, primary producers can immediately deduct the costs of:

  • fencing – previously deducted over a period up to 30 years
  • water facilities – previously deducted over three years.

They can also deduct the cost of fodder storage assets over three years, instead of over a period up to 50 years.

Primary producers who are small businesses can also use the simplified depreciation rules including instant asset write-off.

 

Company tax cuts for small business

The small business company tax rate reduced from 30% to 28.5% for income years commencing on or after 1 July 2015. This lower rate also applies to small businesses that are corporate unit trusts and public trading trusts.

The maximum franking credit that can be allocated to a frankable distribution is unchanged at 30%, even if a small business is eligible for the 28.5% tax rate.

The company tax rate remains at 30% for all other companies that are not small business entities.

 

Immediate deductions for start-up costs

As of 1 July 2015, small businesses can immediately deduct a range of start-up expenses, including professional, legal and accounting advice and government fees and charges.

 

Small business income tax offset

From 2015–16, an individual is entitled to a tax offset of up to $1,000 on the tax payable on their total net small business income, which is their:

  • net small business income from sole trading activities
  • share of net small business income from a partnership or trust .

Eligible individuals need to work out their total net small business income. We will work out their offset based on the total net small business income reported in their income tax return.

 

Changes to gender identifiers

The Attorney General’s guidelines on the recognition of sex and gender acknowledge that individuals may identify and be recognised within the community as either:

  • a gender other than the sex (male or female) they were assigned at birth/infancy
  • an indeterminate sex and/or gender.

The guidelines standardise the way the Australian Government collects and uses sex/gender information. We no longer ask for the taxpayer’s sex on page 1 of the tax return. The ‘Spouse details’ section now asks for gender and provides three options to select from. This item has been retained for administrative purposes.

 

Net medical expenses tax offset phase-out

As of 1 July 2015, the offset can only be claimed by taxpayers with net expenses for disability aids, attendant care or aged care. The offset is income tested.

The offset will be abolished from 1 July 2019.

 

First home savers accounts abolished

First home saver accounts (FHSA) were abolished on 1 July 2015 and became ordinary savings accounts.

Account holders must include earnings in their tax returns. Account providers don’t pay tax on FHSA earnings for any period after 30 June 2015.

 

New tax system for managed investment trusts

Managed investment trusts (MITs) have access to a new tax system, which modernises the tax rules for eligible MITs and increases certainty for investors.

If enacted, the proposed rules will apply from 1 July 2016. Eligible MITs can elect to apply the rules from 1 July 2015. They can attribute trust income to beneficiaries on a fair and reasonable basis according to their ownership interests in the MIT. An eligible MIT electing into the system is known as an attribution managed investment trust (AMIT).

Among other things, the new tax system introduces provisions relating to amounts that affect the cost base of a member’s interest in the trust.

 

Exploration Development Incentive

The Exploration Development Incentive (EDI) encourages shareholder investment in small exploration companies undertaking greenfields mineral exploration in Australia.

The scheme enables eligible exploration companies to give up a portion of their tax losses from greenfields exploration to create and issue exploration credits to their shareholders.

Certain Australian resident investors are entitled to a refundable tax offset for the exploration credits that they receive.

 

Business services wage assessment tool payment

If an individual received a lump sum in arrears business services wage assessment tool (BSWAT) payment, they may claim a lump sum in arrears tax offset.

The BSWAT lump sum in arrears payment is not salary and wages or an Australian government pension or allowance.

To claim the lump sum tax offset, they must report the payment at label 14 Other Australian income on their tax return.