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2015 Federal Budget

2015 Federal Budget what you need to know.

The 2015 Federal Budget was handed down on Tuesday 12 May. Following are some of the headline announcements that may impact you or your clients

Individuals/Families

• Car Expense Claims Simplified – The “12% of original value” method and the “one-third of actual expenses” method for claiming your motor vehicle travel will be abolished. Furthermore, the “cents per kilometer” method will be streamlined by replacing the three current rates based on engine size, with one rate set at 66 cents per kilometre to apply to all motor vehicles. Effective 1 July 2015.

• Fly-In Fly-Out and Drive-In Workers – The Zone Tax Offset will no longer be available for these types of workers where their normal residence is not within a “zone”. Effective 1 July 2015.

• Childcare Relief – A new, generous Childcare Subsidy covering up to 85% of your fees paid will be introduced. Effective 1 July 2017.  

• PPL Double-Dip Removed – Individuals will no longer be able to access both Government paid parental leave (PPL) as well as any PPL that is provided by their employer. They will only be able to access one of these. Effective 1 July 2016.

• Overseas HELP Debts Chased – The HELP (HECS) repayment scheme will now apply to individuals residing overseas for six months or more if their worldwide income exceeds the standard repayment thresholds (applying to both new and existing debts). Effective 1 July 2017.

Business

• Company Tax Cut – The company tax rate will be cut by 1.5% (from 30% to 28.5%) for companies who are Small Businesses. However the maximum franking credit rate for a distribution will remain at 30%. Effective from the 2015/2016 year.

• Tax Cut for Other Small Businesses – A new 5% tax discount will be given to individuals with business income from an unincorporated business (e.g. sole trader, trust or partnership structure) that has an aggregated turnover of less than $2 million. It will be capped at $1 000 per individual, per year and apply from 2015/2016.

• Accelerated Depreciation – The threshold at which small businesses can claim an immediate deduction for a depreciating asset will be increased from $1 000 to $20 000. This will apply for assets that are installed ready for use between 12 May 2015 and 30 June 2017.

• Assistance for Start-Ups – An immediate deduction will be available for professional expenses associated with starting a new business (such as legal or accounting advice in establishing your business structure). Effective from 2015/2016.

• CGT Relief for Restructures – Small businesses will be permitted to change their legal structure (e.g. from a sole trader to a trust) without attracting a CGT liability. This measure will apply for small businesses who change entity type from 2016/2017.

FBT

• More Work-Related Electronic Devices – Businesses with a turnover of less than  $2 million will now be permitted to provide employees with more than one eligible work-related portable electronic device during the year, without attracting FBT. Effective 1 April 2016.

• Not For Profit Crackdown – A separate, single grossed-up cap of $5 000 will apply for salary sacrificed meal entertainment and entertainment facility leasing expenses (meal entertainment benefits) for employees of not-for-profits. Such benefits exceeding this cap can also be counted in calculating whether an employee exceeds their existing FBT exemption or rebate cap. Furthermore, all meal entertainment benefits will become reportable. Under current law, these employees can salary sacrifice these benefits with no FBT payable and without it being reported. Effective 1 April 2016.

Miscellaneous

• “Netflix Tax” – Australian consumers will soon be forced to pay GST on offshore intangible supplies. “Intangibles” will be defined as anything other than goods or real property (such as digital products including streaming or downloading movies, music, apps, games, e-books, as well as consultancy and professional services). Effective 1 July 2017.  

• Multi-National Crackdown – There will be a general crackdown on tax avoidance by multi-national enterprises. In the main, this will be achieved by strengthening the anti-avoidance provisions of the Tax Act.

• Superannuation and Terminal Illness- Currently, individuals can access their superannuation early if they have two medical practitioners certify that they are likely to die within one year. This period will be increased to two years. Effective 1 July 2015. 

• Employee Share Schemes – To complement the generous concessions it has already announced to the tax treatment of employee share schemes (commencing 1 July 2015), further concessions were announced in the Budget and will commence from the same date. Most significantly, the CGT discount will apply to employee share scheme interests that are subject to the start-up concession, where options are converted into shares and the resulting shares are sold within 12 months of exercise.