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Federal Budget Update

Bag with federal budgetJoe Hockey handed down his second Federal Budget on 12 May 2015 for the 2015-2016 year. The Budget contained relatively few surprises with a number of announcements made in the previous weeks.
TAG Financial Services has prepared the following summary in relation to the taxation implications.

Small Business

Tax Rate Cut. The tax rate for small businesses (annual turnover under $2 million) will be lowered by 1.5 percent to 28.5 percent, effective from 1 July 2015.
Accelerated Depreciation. From budget night, there is a tax deduction for all assets under $20,000 to help small businesses. Businesses can buy as many items under that amount as they like and receive the deduction on each one.
Small Business CGT Concession. Small business owners will be able to change the legal structure of their business without incurring a liability to CGT.
FBT exemption for electronic devices. From 1 April 2016, small businesses (with a turnover less than $2 million) will be allowed an FBT exemption when they provide multiple work-related portable devices to their employees.
Assistance for Start-ups. Start-up businesses will be able to immediately deduct some of the professional costs that are incurred when setting up a new company.

Superannuation

No Change for Now. While it is likely that there will be superannuation changes in the near future, there was no major superannuation changes announced. The Government is currently reviewing taxation in its Tax White Paper, which is due to be released towards the end of 2015.

Personal Tax

Work-related car expenses. From 1 July 2015, the “12 percent of original value method” and the “one-third of actual expenses method” for calculating an individual’s work-related car expense deductions will be abolished. The “cents per kilometre method” will also be amended to replace the three current rates based on engine size with one flat rate set at 66 cents per kilometre.
Higher Education Loan Program (HELP) Repayments. The HELP repayment framework will be extended to graduates residing overseas. The repayment will not be required unless the graduate’s income exceeds the minimum repayment threshold (currently $53,000).
Medicare Levy. Effective 1 July 2014, the Medicare Levy low-income thresholds for singles, families, single seniors and pensioners will increase taking into account increases in CPI.

Retirees

Asset Tests. The Government has announced it will adjust the thresholds for asset tests on the pension from 1 January 2017. Previously singles over the age of 65 with assets (excluding the family home) of less than $775,000 were able to claim the part pension, however the new limit will now be $550,000.

Aged Care

Means Test. From the 1 January 2016, new aged care residents who enter aged care will have their rental income from renting out their former home included in the calculation of their means tested amount.
Home Care Packages. From 1 February 2017, Home Care packages will be allocated directly to consumers rather than to service providers through the Aged Care Approvals round.

Families with Young Children

Child Care Subsidy. From 1 July 2017, a new Child Care Subsidy will be introduced. This will replace several other benefits into a single benefit. Families earning $65,000 or less will get 85 per cent of their fees subsidised and it will reduce to 50 per cent for families earning $170,000 or more. The amount of childcare hours subsidised will be aligned to how much time parents spend working, training, studying or volunteering.
Paid Parental Leave. From 1 July 2016, individuals will no longer be able to double dip when applying for the existing Parental Leave Pay (PLP) scheme. Currently individuals can access payments from both the Government PLP scheme in addition to any employer-provided parental leave entitlements.

More Information

If you have any questions after reading this please contact your TAG Financial Services adviser on (03) 9886 0800 or via email.

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